Monthly Archives: November 2009

Analysis of Republican Health Care Reform Bill

John Boehner

John Boehner

On November 3rd, the GOP made it’s new health care reform bill available for review.  The bill contains many elements of H.R.3400 which was the Republican-sponsored health care bill submitted in the House in July.  This new bill is being submitted as a substitute for Pelosi-care or H.R.3962.

The legislation is considerably smaller than the liberal bill it is intended to replace.  The Democrat bill is just under 2,000 pages while this new GOP proposal weighs in at a paultry 230 pages.  Good for me, as I wasn’t sure I could do another 2,000 page snooze-fest.

A quick summary of the bill is that it does seem to preserve state and individual rights, keep government out of health care and meets Americans desires to have health care be made more affordable and accessible.  The bill makes provisions for:

  • Lowering premiums
    • Restricts malpractice lawsuits to prevent ridiculous rewards
    • Limits the percentage of awards that can go to lawyers
    • Provides incentives to states to hit premium reduction targets
    • Provides for the purchase of health insurance from across state lines
    • Allows small businesses and groups to form “associations” in order to get the savings that only large companies or organizations usually can
    • Gives flexibility to provide rewards to those who adopt healthier lifestyles
    • Enhances HSAs (health care savings accounts) to allow that tax-free money to be used for premium payments
  • Increased access
    • Establishes high-risk pools to guarantee access to health care fro those with pre-existing conditions
    • Prevents insurers from canceling a policy except in the case of fraud
    • Eliminates lifetime spending caps
    • Allows young adults to stay on their parents health plans until age 25

There are no federal tax provisions in the bill, but there are at least $50 Billion in new costs for the incentive funds to the states.   The bill simply states that the money comes from “the Treasury” so one would assume this is to be paid out of existing funds.  The CBO will have to analyze if the bill saves $50 Billion or more during the same time period making the bill both cost and deficit neutral.

There bill does allow states to tax the new small business and small group associations for policy premiums.  It does not mandate it and I’m not sure why it’s necessary to even mention it.  If the states wanted to tax small group insurance policies, I believe they could – with or without federal legislation.

An interesting cost-reduction item in the bill is that it will allow young adults to be covered by their parents policies until age 25.  The 18-25 crowd is the healthy, but often uninsured population that could help spread the cost of the older and more-expensive crowd.   Young adults without children tend to forgo insurance due to the cost.  This could help moderate premiums for the rest of the pool, but it remains to be seen if a majority of parents would want to keep paying for the health insurance of their grown children.

Another premium reducer is the allowance of HSAs to be used to pay insurance costs.  I believe this allows HSA owners to purchase individual policies tax-free and those policies would not be tied to employment, making them fully portable.  This would also allow for the HSA to be used to pay premiums in the case of job loss.

The bill limits the availability of  the high-risk pool to only legal residents of the United Statesand limits the spending of federal funds on abortion to only cases of emergencies, rape, and incest.

The bill is fairly-conservative and a much easier read than the Democrat bill, but it remains to be seen if a Republican bill can get out of committee.  So far, every Republican health care initiative has been tabled in committee with the liberal leadership denying that it even exists.

*also check out the side-by-side comparison of this bill with Pelosi-care and the Senate Finance bill

Liberals Make Environmental Reform Impossible

Did you do a double-take on the title?  Well, it’s not a typo. Just like health care reform, climate reform isn’t being stopped by Conservatives, it’s the split left causing the stall.

While most lefties in Congress can talk-the-talk of curing global warming, they are putting together legislation that does little to curb emissions.  Similar to health care reform, politicians’ true desires are evident, and as Senator Boxer told AFP Blog, “There’s so much revenue that comes in from a cap-and-trade system that you can really go to a person in a congressional district and get enough votes there by saying, ‘What do you need? What do you want? You can really help them”.  Barbara Boxer is a co-sponsor of the new cap and trade climate bill and is showing the real reasons behind her desire to see a carbon exchange system – power.

Health care reform and climate reform seem inexorably-linked.  The liberal plans both do little to actually improve either issue and both give immense amounts of power to Congress.  Blue-dog, or Conservative, Democrats aren’t signing on to either of these two power-grabs.  This rift in the Democrat ranks is a sore point as not only could Barack Obama not unite both parties, he is actually creating a fracture within his own.

Solar FarmThe ultra-left is making its fight against “climate change” difficult at-best.  In Pennsylvania and Washington, liberal environmentalists killed planned windmill farms because birds kept flying into them (why aren’t sliding glass doors outlawed?) – ok, one strike for wind.  In California, leftie activists have now not only killed food farms in the San Jaquin valley, they have now managed to kill a massive solar power farm in … yes… the mojave desert.  If we can’t build solar in the desolate, barren reaches of a desert… where do they think we will build them?  Two strikes – down with solar.  Does this now make the ultra-left the “party of no”?

So between the elitist power-mongers like boxer and the ultra-lib enviro-freaks, they won’t be able to agree on any climate relief at all.  Conservatives would gladly look into solar fields, wind farms, and nuclear plants as is evident by their movement of “do it all” which means, oil, coal, nuclear, solar, and wind.   A responsible path is to continue the use of cheap fossil fuels (put a tyrannosaur in your tank), while we implement alternative options and figure out which ones work and which don’t.

The full on libs have now successfully curbed all of the possible alternatives to fossil fuels: nuclear, wind and solar.  If they want to return us to the dark ages , I have bad news for them.  We’ll continue burning dinosaurs if they  won’t allow a few salamanders to migrate to a new water source or birds to evolve into species that won’t fly into moving objects.

Or better yet… can we power our cars on salamander extract?

China Seeing Record Inflation After Too Much Stimulus – Familiar?

A Bloomberg.com article stated that even a government-run economy can go awry when it pumps too much liquidity into the market under the guise of “stimulus”.

“China’s banking regulator plans to review debt levels at some real-estate developers on concern the companies’ borrowings are fueling excessive gains in property prices..”

More the concern is what happens when that stimulus is removed.  The U.S. economy faces the exact same threats.

Manufacturing Up as Factories Stop Cutting Inventories

As an almost total surprise, the Institute for Supply Management’s factory index(NAPMPMI:IND) rose to its highest level in three years.   The 55.7 level indicates stronger growth in manufacturing than any economists had predicted.  Most were looking for between 50 and 55.

The index is based on a survey of manufacturing executives.  Taken by itself, this index seems incredibly positive, but several questions arise when seeing such “growth”.  Unemployment is still edging up, expected to go to 9.9%-10.1% in this Friday’s numbers.  Consumer spending was just reported to have dropped by it’s largest margin in 9 months.  So if there are fewer consumers, and the consumers that do have money are spending much less of it, why would factory output go up?

Obviously, the index is a highly-subjective non-economic indicator of factory output so it’s difficult to know for sure if manufacturers are increasing production or simply slowing the rate at which they reduce their output.  If we assume that factories are truly making more goods, and we know fewer goods are being purchased, the only reasonable driver for this is inventory levels.

For several months, manufacturers have been idling factories and filling orders mainly from stockpiles in order to cut costs.  It would appear that by looking at the inventory index (now at 46.9%), manufacturers have stopped slashing their inventories and are now moving into a mode of sustaining their new lower levels of stock.  This would be more indicative of a sector of the economy that is not improving, but rather has adjusted itself to the new economic norm.

When hearing good or bad economic news, understanding the factors that cause the news is often more-important than the news itself.

Dede Scozzafava Endorses Democrat in NY 23 Race

I am sure there are one or two people out there surprised by this, but Scozzafava, the very liberal Republican candidate in the NY district 23 special election, is throwing her support behind Bill Owens, the Democrat.

Considering her liberal positions on abortion, unions, and life-in-general, it should surprise no one, except perhaps Michael Steele and New Gingrich – the only two people to think that she was a Conservative.  Full Story

Ford Held Hostage By Obama Administration

The government having a major stake in an American company was obviously in-conflict with the Constitution, but the United Auto Workers union (UAW) having a large stake in GM and Chrysler was an outright conflict-of-interest.  Obama followers said that it would not cause any problems and that Conservatives were just overreacting.  Bloomberg.com reported today, that the UAW is refusing to give Ford the exact same concessions it gave to the GM and Chrysler which will put Ford at a competitive disadvantage against its two propped-up competitors.

“Ford, the only major U.S. automaker to avoid bankruptcy this year, sought concessions similar to those secured by General Motors Co. and Chrysler Group LLC…Ford has said it needs the concessions to ensure that it doesn’t have a labor-cost disadvantage against GM and Chrysler, which unloaded debt, closed plants and eliminated dealership contracts in their court restructurings…About 75 percent of members voting nationwide rejected the deal, one of the people said. It called for a six-year ban on strikes over wages and benefits.”

Concerns over the UAW taking this approach at strengthening their financial stakes in GM and Chrysler by holding Ford to a non-competitive agreement have now been proven true.  The UAW stands to take a possibly-fatal financial blow if GM and Chrysler do not succeed.  By trading cash for stock in those companies, the UAW is now relying on the two bankrupt car companies to return to profitability.

GM is coming back to the government for another bail-out as it’s restructuring plans are not making the company successful.  How much of a hand does the Obama administration have in formulating this strategy to ruin the only non-government owned, non-union backed American automotive company?  The President would lose a large portion of his support if the UAW was destroyed by the fall of GM and Chrysler.  The administration now has a personal interest in seeing Ford at a disadvantage to its two new assets.

This is precisely why the government should not get involved in private industry.  It cannot be impartial, it will destroy the free-market system one industry at-a-time.  This is the disassembly of capitalism, “brick-by-brick” as Robert McChesney, an Obama Czar, claimed they would do.  How long until America wakes up?

I, for one, hope Ford shuts-down every factory in Michigan between now and the end of its current UAW contract (2011).  FMC should then open even more plants in right-to-work states such as Texas and see where the competitive advantages are then.