Wednesday, March 24, 2010

Missing the Point on Healthcare

Two perspectives to share with you this morning on the healthcare debacle.  First sit back and learn you some from Charles Krauthammer's appearance on the O'Reilly Factor last night:

Krauthammer's key points:
1. This thing will cost a WHOLE lot more than advertised...and everyone knows it.
2. The "Deficit Reduction Commission" will report after the election and they will recommend a Value Added Tax - a national sales tax.
3. The insurance companies have BECOME the public option.  

That ties in with Holman Jenkins' piece in the Wall Street Journal this morning.  Essentially, Obamacare "doubles down" on a bad bet that has been made with the government and corporations: tax policy that allows corporations to get a subsidy for rewarding employees with generous health insurance plans:

Health insurers, and indeed Corporate America as a whole, are like monkeys who are caught by staking a glass jar to the ground with a shiny trinket inside. They won't let go so they can't get their hands out of the jar. That trinket is the ruinous and regressive $250 billion-a-year tax benefit for employer-provided insurance.
Corporate America isn't brave enough to argue against a direct subsidy to its employment costs, no matter how perverse its impact in insulating consumers from the true cost of their health care choices. Insurers are not brave enough to say: Give us a tax code that lets us go back to being insurers rather than a tax laundromat for the middle class's health-care spending.
Almost any bill would have been worth having that fundamentally fixed this tax distortion, regardless of its other elements.
We say this because any bill, including the one signed by the president yesterday, will be revisited many times in the future. Millions of pages of rules will be written by regulators before we see how it really works. Congress itself will return in predictable ways: It will reverse the proposed Medicare cuts that created ObamaCare's illusion of fiscal probity. It will tighten the mandate that requires insurers to cover the sick at favorable prices. It will not tighten the requirement that the young and healthy buy insurance at prices that subsidize the old and unhealthy.
More and more tax money will have to be found to keep the jalopy on the road. More and more administrative controls on medicine will attempt vainly to keep the jalopy from bankrupting the nation.

This is proof positive of the distortions in the marketplace that occur when the Federal Government tries to legislate social behavior.  The same is true of the housing market.  There is a direct line between the mortgage interest income tax deduction to the recklessness of Fannie and Freddie.  Unfortunately, the end of the line is in Greece or Argentina:

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