The Reid Plan, or a Better Way?

I had barely posted my previous submission and headed out the door for my 5 mile run/walk when the thought occurred to me, “I had failed to fully analyze and develop my thoughts regarding the cost of Reid’s plan.”

So, in an effort to correct that failure, I offer this update.

In my original post I discussed the addition of $518 billion in taxes associated with the Reid bill. I my rush, I didn’t consider that that $518 billion is over 10 years, not per year as stated. With that, the cost of “insurance” averaged per family of the “uninsured” is reduced to about $5,412 per year. On its face that’s a reduction, for those “families,” in the cost of their “health care insurance” at least as it relates to the American taxpayer when compared to the “average” cost of private insurance.

Score one for Reid.

But the Reid plan is not going to cost merely the $518 billion in new taxes. Democrats talk about a $1 Trillion cost over 10 years. Reid claims to pay for about half the cost of his plan through “found savings” in Medicare and other areas of health care.

That $1 Trillion expense, amortized over the “30 million uninsured” results in a cost per family of $10,477 per year, back above the cost of private insurance by 66%. So Reid’s plan will cost far more than it would to simply have the taxpayer foot the bill for private insurance for the targeted group.

But there’s one more step. While Reid’s plan calls for taxes starting in 2010, the “benefits don’t actually begin until 3 years later in 2014. So the cost of the Reid plan is actually amortized over 7 years, not 10 years. That means the cost of insuring the “uninsured” rises to $14,952 for each of our hypothetical families in the so called “30 million uninsured.” That’s an overrun of $8,624 per year, or 136%, above the average cost of private health insurance.

(Disclaimer, I do not advocate forcing taxpayers buy insurance for 30 million people, many who don’t have insurance by choice. I merely make the statement for the sake of the argument.)

No one who has observed Washington politics for any length of time believes the costing of Congressional legislation. There has never been a bill come out of Congress that cost what the legislation originally stated and never has it cost less. But let's give them the benefit of the doubt and say their cost projections are spot on.

Here’s where it get’s interesting. If, for the sake of argument, the taxpayer footed the private insurance bill for the 30 million “uninsured” to the tune of $60.46 billion, and Reid achieved his claim of $500 billion is savings from Medicare, et al, there would be no need for heaping $518 billion in new taxes on the American people.

In addition to letting Americans keep that $518 billion in their pockets to invest and spend in this economy, with the savings realized from his plan, Reid could cut taxes by $439 billion. That would be a huge shot in the arm for the economy and would serve to fuel economic growth and investment, creating jobs and reviving growth in all areas, including the struggling housing market.

On the other hand, if Reid followed true to his nature and didn’t trust the taxpayers with their own money, he could use the surplus to pay down the national debt. Now the following assumes that Congress will grab its collective self by the “neck” and make hard decisions, do away with waste, pork, gratuitous entitlements and unconstitutional programs that are better run by local and state governments. I know, that’s a huge assumption but let’s enjoy the fantasy for a moment.

For the sake of argument, let’s say they do it. They balance the federal budget, then take the $439 billion saved after buying private insurance for the “uninsured” and begin paying down the national debt, you know, that $12 Trillion behemoth that hangs over the head of every American like a guillotine and threatens our national security.

If they could bring themselves to do it, that is, pay down debt instead of creating more, after 13 years it would be cut nearly in half. By the time my young nephews and nieces were getting close to retirement 28 years from now the national debt would be history and they could enjoy a retirement free of the worry of a government that would tax away their savings and compete for the investment and interest earnings they should be receiving on their hard earned money.

As a further benefit, my family, along with the progeny of all Americans would be able to live in a world where their country and by extension themselves, could not be held hostage by the political aspirations of a foreign nation, i.e. China, Japan, OPEC, that is bent on threatening to collapse the US economy by demanding immediate repayment of debt held, or simply refuse to buy more.

That alternative reality, paying down the national debt, the US becoming a creditor rather than a debtor nation, would allow them to enjoy a prosperous and peaceful retirement in their “golden years.”

In either case, the “savings” that Reid claims to find would filter through to the rest of the health care system, resulting in decreased costs which in turn would mean insurance companies, with decreased exposure could lower the cost of health care premiums. That in turn would decrease the cost to taxpayer for both their own insurance plans and those of the formerly “uninsured.”

Taking those newly found dollars, individual Americans would begin investing them in the economy through direct investment or through spending for goods and service. That in turn would add even more fuel to the engine of economic growth.

So I stand by my original conclusion, there is a better way to accomplish providing health care insurance for Harry Reid’s target group. Again, I don’t agree with his premise, but using his premise and tools, there is a better way that would strengthen and grow the economy. Not become an anchor around our necks and drag us into a deep, dark abyss.

"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson

Health Care For Less?

So, the Harry Reid health insurance bill going through the Senate will increase taxes by $518 billion initially. I refer to it as the “Harry Reid” bill because it has no resemblance to the bills that came out of the Senate committees and was concocted under the cover of darkness over this past weekend.

Anyway, it will increase taxes by a reported $518 billion for the purpose of insuring the “30 million uninsured.” That comes to $17,266 per individual to insure all of these allegedly uninsured. Or, with the average family consisting of 3.14 persons according to the US Census Bureau, $54,217 per family.

So, I wondered, how does that compare to the average health insurance premium in the United States. Just how much do these “unaffordable” health insurance premiums the Democrats have so vilified as “too expensive” for the average family actually cost?

According to an article on About.com:

In a report (Individual Health Insurance 2009: A Comprehensive Survey of Premiums,Availability, and Benefits) made public in October 2009, America's Health Insurance Plans (a trade group representing health insurance companies) presented some interesting information that gives a sense of what health insurance policies cost when purchased by an individual.

Across the country, the annual premium was $2,985 for a single person and $6,328 for a family.

The annual premium was very different from state to state. For example, the premium for a family health plan in New York was $13,296, while a similar plan in Iowa was $5609.

The annual premiums for health plans were also very different depending if the annual deductible was high or low. For example, family plans with no deductible had an average premium of $12686 each year, while plans with an annual deductible of $10,000 had an average premium of $5380 each year.

So while the premiums obviously vary widely according to the options a family selects, the average family health insurance premium costs $6,328 per year. Those “outrageous” private health insurance premiums actually cost $47,889 per year less than the “affordable” health insurance plan that Harry Reid has concocted when prorated over his target audience of an allegedly 30 million uninsured.

It seems that the Democrat plan to “lower the cost” of health care is actually going to cost eight and one half times more than what those nasty private insurance companies charge. Perhaps the citizens need to be investigating the excesses and illegal practices of Congress. It appears that the health insurance industry is actually doing a good job holding down the cost of health insurance.

If Reid had thought to simply buy insurance from the private companies for the alleged “uninsured” it would have only cost the taxpayers $60.46 billion. So it makes you wonder, what is this really all about? Is it about insuring the “uninsured” or is it about giving more power to Washington and socializing our national economy? The data would suggest it certainly isn’t about “cutting the cost of health care” as these bozos in Washington continually repeat.

Anybody ready for a tea party?

"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson

Like A Thief in the Night

The Senate, led by Harry Reid, is planning a preliminary vote on Reid's "health care" legislation at 0100, that's 1AM on Monday morning, December 21.

A vote in the middle of the night is very indicative of the nefarious nature of those trying to push this bill through. If it was good for the nation and had the support of the American people this vote would take place in the light of day, in full view on C-Span and in time to make the next day newspaper headlines.

That the Democrat leadership is sneaking around in the middle of the night like cockroaches speaks volumes.

Among other things, to get this bill this far Reid and his cronies has had to tighten rules against funding abortion, rules that will no doubt be stripped in conference. He also, apparently in a nod to his Hollywood supporters, stripped a tax on cosmetic surgery while throwing the youth who supported Obama under the bus by adding a 10% tax on tanning bed services.

This bill will add an additional $1 Trillion to the federal budget and while it is supposedly budget neutral, that is because the collection of new taxes will begin immediately, in some cases retroactively, while "benefits" won't start until 2014.

So while on paper the bill is "neutral" for the first 10 years, no one, at least on the Democrat side, is talking about what happens after that. Anyone with a 5th grade education can see that after 10 years, this bill will produce at minimum 30% annual deficits. That's before the inevitable excess costs inherit to every spending bill that has come out of Congress begins producing massive deficits.

If this bill passes, our government will have set in place the tool of its fiscal destruction and the collapse of the American economy. It may not be 5 or 10 or even 15 years away, but with this kind of reckless spending, no individual, business or, yes, even government can even hope to keep its financial head above water.

"We are all in the same boat on a stormy sea and
we owe each other a terrible loyalty." - G. K. Chesterson