By Gene Ogorodov
In the beginning of May
Gov. Deval Patrick signed legislation that would bring Mass Care into
accordance with the Federal Government's Affordable Care Act. This
will fundamentally change Mass Care making insurance more expensive
for residents of Massachusetts and increasing the tax burden required
to fund the plan. With a vote and the stroke of a pen the Governor
and the General Court have set in motion the forces that will
transfer hundreds of thousands of recipients of subsidized health
care into the outstretched arms of insurance companies along with our
public coffers too.
The math that
demonstrates the fiscal irresponsibility of subsidizing insurance
companies rather than patients should be obvious to anyone that has
ever opened an economics book. The movement of money to commodity to
money (M—C—M') requires the second amount of money to be greater
than the first, viz. (M'>M). If M'≯M
there is no intrinsic motivation for the movement of goods or
services, which in this case is Health Care. The magic little number
(M'-M) which is the catalyst for transferring health care from health
care providers to patients via insurance companies is called profit.
It would be a tautology
to observe that profit making corporations require a profit.
Nevertheless, the one thing that the Federal Government forgot in
2010 was that private insurance companies are private profit making
corporations. It is common knowledge that buying wholesale is cheaper
than buying retail. The middle man adds convenience but takes a cut
for that convenience.
In other words, the
Federal Government has forced Massachusetts to go from buying health
care at wholesale prices for its indigent population to being gouged
exorbitant rates buying insure at a premium for the un-insurable.
Rather than simply doing its moral duty to pay to provide health care
to the poorest of its citizens, Massachusetts will have to fork over
untold millions of dollars of taxpayer money to line the pockets of
an industry that has exacerbated costs of health care in the US.
However, insurance
companies are being set to receive an even greater windfall beyond
the insidious M'-M. Insurance is the collective mitigation of
individual risk. Private individuals choose to reduce the destructive
potential of a chance misfortune by paying into a common fund with
other private individuals that anyone of them can draw from under
specified conditions managed by a corporation that evaluates claims
upon the common fund. The cost of the premium is a function of risk,
supply, and demand.
Coercing every American
to buy health insurance overnight will increase demand much faster
than supply can match thereby forcing the price to rise to
astronomically high levels. By 2020 the insurance market will grow by
enough plans to cover over 50 Million more Americans, 15.7% of the
entire population of the United States!
To put this in
comparison, 50 Million people is 1.4x the population of Canada or 45%
of the population of Mexico. This is a larger number than the
populations of every single South American country except Brazil. The
effect of Obamacare on the insurance industry will be like the United
States annexing a large country—record profits for investors and
obscenely high costs for buyers paying for scarcity.
Furthermore, mandating
that insurance companies cannot mitigate risk by denying people
coverage or charging extremely high premiums, essentially requires
insurance companies to raise the marginal cost for everyone they have
insured. However, the marginal cost for a risky insurance plan is,
like the cost for a risky investment, much greater than for a safe
one.
The added costs are not
going to be carried by the indigent people incapable of covering the
cost of health insurance for themselves under the current system, nor
by a Federal Government paranoid about deficit spending, nor by
fairies sleeping under park benches in Boston Commons. The costs will
be on the backs of working Americans and State governments.
Subsidizing profits rather than subsidizing people will ensure the
future insolvency of the Commonwealth of Massachusetts.
The ACA has allowed
private corporations free access to despoil the the people of the
United States and bankrupt the States. In requiring all private
Americans and every State in the Union to use insurance companies as
the middleman or institute a single payer option, which without the
ability to control costs is impracticable, the ACA essentially has
allowed insurance companies to levy a private tax on the American
people. (I don't wish to sound overly dramatic, but in common
parlance that is generally called feudalism. The 10th
century will live along side the 21st....)
Health care currently
cost about 16x per patient in the US as it does in the EU. Obamacare
could, in the short term, balloon the cost to 50x per patient, most
of which would be covered by depleted State Treasuries. How is
Massachusetts going to cover the expense? Because the Commonwealth
doesn't have its own currency, infinite amounts of debt are not an
option. Tax-achusetts will become Tax-Your-Mass-Off!
Three years after the
Sub-Prime Mortgage Crisis Washington has, in its omniscience, decreed
that the health insurance industry will go down the same garden path.
The horrors that would result from the health insurance industry
collapsing like financial industry are unspeakable. This is not
stupidity. This can only be described as criminal.
However, Massachusetts
has been given a solution to avoid all this pain and suffering.
History has shown a way out. In 1814 in Hartford, Connecticut 26
delegates from all of the New England States convened to debate a
modest proposal.
New England had been
wracked by an un-winable war, and its statesmen were fretful of
public coffers shacked with debt. Its economy in ruins from a
recession caused by the impenetrable British blockade. Both the State
Governments and private individuals were in desperate need of cash
unable to get either revenue or credit. Massachusetts, New Hampshire,
Rhode Island, and Connecticut needed to find a way to survive and
alleviate the suffering of their people.
Yet, in spite of odds
these delegates found a way to end their woes. They found the mystic
incantation that could erase war, blockade, and debt in a single
vote—secede from the United States.
The Treaty of Ghent may
have superseded the Hartford Convention, but the principle is still
sound. Let us be frank, New England is much more closely
linguistically, socially, and frankly politically to the Canadian
Maritime Provinces than it is to any part of the United States. For
example, the last Republican Governor of Massachusetts passed health
care reform rather than denying Global Warming or Evolution. Imagine
for a moment that the border between Canada and the United States was
drawn on two sides of New York.
Boston would be the
largest city in the Canadian Maritime Provinces. New Englanders would
be one third of the national population rather than 5%. The National
Hockey League would be slightly more national; the Patriots would
dominate the Canadian Football League; and the rivalry between the
Yankees and the Red Sox would be more meaningful.
Harvard and Yale would
have enough vacancies to allow New England kids to go because they
would no longer be magnets for American elitism. No longer would
valuable spots be taken up with flunkies like George W. Bush and Paul
Bremer and countless other political drones. This is not to suggest
that these august institutions aren't meritocratic, but think about
how much more so they could be if they didn't feel the weight of
educating the next generation of Washington parasites. Furthermore,
both Harvard and Yale and the couple hundred other colleges and
universities in New England would be affordable since Canada, unlike
the US, controls the cost of higher education.
But all that is just the
icing on the cake. The real privileged for New Englanders in being
Canadian would be in enjoying Canada's cost effective single-payer
health care system. Gone would be the days of wrangling with
insurance companies over essential procedures and medicine. Medical
care would be about medical care rather than profits and ideology.
Health care would be available for those who needed it rather than
just for those who could afford it.
Freedom and Liberty are
wonderfully pleasing words, and one hears them quite frequently in
the United States. However, between being groped by the TSA,
constantly monitored by the NSA, hearing the American President
openly admit to targeting American citizens in drone strikes, and
being blown-up by terrorists, I have forgotten what Freedom and
Liberty really mean.
Considering that no
Canadian Prime Minister in living memory has openly bragged about
assassinating Canadian citizens, there might be some hope that these
two words are more than hollow cant for our northern neighbor. If New
England were to secede from the US, it might become part of a
civilized modern state with a functional democracy. Who know? It
could actually be nice to live in a country where our tax dollars go
to public services; rather, than to interminable illegal wars,
Orwellian surveillance, and ball-faced profiteering.
Note: The suggestion of
secession is exclusively for comic purposes only. I am not currently
nor have I ever been a member of the Tea Party. As far as Mass Care
is concerned, the Commonwealth is well and truly screwed.
