The Purpose for H.R. 3200 is Not Misdirected, sort-of

H.R. 3200 is such a hot debate, but what is interesting (at least in the D.C. area) would be that people are willing to talk about it. Only one month ago in my office people would be quick to make small talk about T.V. shows or movies or ideas for new T.V. shows or movies, but just this week things have changed. I have noticed that there are quite a few people who will just bring up a news tidbit about what is going on in Health Insurance Reform (that would be the “street name” for H.R. 3200) and ask each other questions or share what they have read about it.

This week in the news the Congressional Business Office decided to release a preliminary review of the cost estimates for the bill if it were set into motion. While I would love to discuss the social ramifications of H.R. 3200 on the average American, I will decline to do that right now. If you want to know how the bill would affect you where you live, then go read the 1,036 page bill at...

http://www.opencongress.org/bill/111-h3200/text

At the moment there is only one part of the bill I believe is worth reviewing for the sake of this blog: the charter statement at the beginning. It goes like this...

To provide affordable, quality health care for all Americans and reduce
the growth in health care spending, and for other purposes.

As a goal I think that people aren't going to say such a statement in a vacuum is a bad thing. I want people to experience affordable, quality health care for all Americans and reduced growth in health care spending. The last phrase bothers me a little, however. The phrase “and for other purposes” is a catch-all phrase which supports two relatively common abuses of extravagance in government: it allows for the funding and addition of special pork-barrel projects within the documentation and it hides the fact that the bill actually does much more in the last phrase than it does in the first two phrases. Allow me to demonstrate.

Nothing in life is free. We all know that. When the government spends money, it is always our money. If you are willing to say something like, “Well I make so little money I don't pay taxes, so it isn't my money,” then you are missing the point. It is someone's money and you are disrespecting that reality.

The first phrase in this declaration of purpose is “To provide affordable, quality health care for all Americans.” Well, let's quickly test the phrase affordable. At this point the CBO says that the government program will add $239 billion to the federal budget deficit over the next 10 years. beyond the first ten they are specifically not willing to estimate but have said that if there is any saving in the second ten years into the program, it is so small that it wouldn't be considered any economic advantage. And this is just the beginning of the estimates. This is if nothing changes in that healthcare program from day 1 to 20 years into it. It also does not include the cost of the Government administrating the plan. Again, if you are imagining health care cost savings, then you have to imagine revenue and there isn't enough of it built into the program. This means that while they are proposing paying for this by raising taxes (again there is the real cost bearing it's weight on Americans), after 10 years of deficit spending we would realize a real net deficit of around $65 billion added onto the national debt. Affordable as a term quickly becomes a meaningless selling point if there really is no savings.

Next let's look at the word “quality.” This last week I drove to work a couple of day. Typically I take the metro, but I was running late and driving gets me there quicker even if parking is a horrible problem (let's just say that I recently invested $40 to the City of Alexandria because a meeting ran long and I couldn't get outside to move my car fast enough.) On the drive home the classical music station I sometimes listen to was reporting news about the causes for the rising cost of health care. The top two items on their list: government regulations (for good or for bad, a necessary evil or a federal fundraiser, they are whatever they are, let's not debate that now) and the demand for improvements. You see, as people get smarter we create smarter ways of doing things. And some of those smarter things mean new cutting edge technology or retraining doctors. All of this adds cost.

A number of years ago I worked for an electronics manufacturing company that built everything from cell phones to medical devices. My job was to be sure that the statistical data that was generated as a result of testing the quality of devices being produced was accurate and easily reported in near-real-time for our clients. While the nature of testing electronics is mostly the same regardless of the product being produced, the regulations around electronics varies quite a bit. Take for example a cell phone versus a heart monitor. Nearly everyone has read that little sticker on devices that claim it was tested to not create radio interference. Now imagine the quality demanded out of medical devices! This is no cheap venture.

So how is the government going to increase the quality of care? Well, first they tell you in the bill that a committee will be the one to define that. You can begin to imagine a conflict of interest by it's nature on this one. If a car company were to claim “we make the safest cars” and then you found out that they are the group who gets to define what “safe” means, this word “safe” would become (again) a meaningless selling point.

Now let's look at the phrase “for all Americans.” At this point if you are like me then you've been hearing the number 40 million a lot lately. Congress tells us that this is a number of Americans who don't have health insurance. Then you find out where that number comes from. 40 million is the number of any American who was without health insurance at some point during the last year. This is a very flexible number, in other words. In an alternate universe called “reality” something like 8 million are currently without health insurance rather than this very unspecific and knowingly inaccurate 40 million (which implies we currently have 400 million Americans walking around right now without insurance of any kind.) When all of the more realistic math is cut and calculated the number of uninsured comes down to about 2% of the U.S. population. What does that mean then? Well, it should mean that with such a huge program generating such an amazing deficit we really ought to be able to help out those 2% of U.S. citizens right? Well, sadly this is not true either. The fact is that there are Americans who aren't poor enough to qualify for certain benefits outlined in H.R. 3200 while at the same time don't make enough money to purchase private health insurance. H.R. 3200 doesn't bring a remedy to these people either. So the phrase “for all Americans” is also meaningless since the plan actually doesn't serve all Americans.

Finally, let's look at the phrase “reduce the growth in health care spending.” How will they do this? Can Congress put a “cap” on health care spending? Will they “cap and trade” our benefits and we pay a penalty if we use too many? Are they going to control the salaries of doctors or overrule medical law suites to contain costs? Will they approve less medical procedures, reducing demand hence reducing costs? Are they going to hand out coupons for “half off an appendectomy?” The fact is that we don't know and they don't know. In only a few industries has the government jumped in and controlled a pricing structure. More importantly, if the government does force prices down, then those services will get cut in another way to offset the artificially low cost. That is the nature of economics. In fact I believe this item in the list is nearly meaningless simply because it completes with the other items in the list. Now, from time to time an industry will innovate and create ways of reducing product or service costs. That innovation sometimes means more revenue and it sometimes means more people are able to more cheaply gain access to those products or services. That is a result of traditional Capitalism. But at the same time the government of the U.S. to-date has NEVER INNOVATED IN A MANNER SO AS TO CONTAIN COSTS. Zero times, people. If the U.S. Government wants more, then they KNOW they have to spend more. They don't have the “technology” to pull off this goals and history proves that I am correct on this point (though, please prove me wrong if you can come up with stories that validate how the U.S. Government innovated and generated lower costs that resulted in more people gaining cheaper but better benefits.)

Base on these issues alone I don't see how this plan will be able to achieve it's own dream. It is dead on arrival. In the spirit of fixing Wall Street and using their lingo, this entrepreneurial effort is a poor investment because it will not meet it's own goals set forth by it's charter. If Congress where a health care company, and H.R. 3200 was it's business plan, I would deny it's request for start-up-capital investments.

To end, I want to share a small insight I gained from having swapped a couple emails with the U.S. Senator representing northern Virginia. This last week I wrote the man a letter and he wrote me back. There is nothing he said in that letter which shed any new light on either H.R. 3200 or that gave me confidence that he even understood H.R. 3200. In fact the content of his letter defied the information coming out of the CBO. This is no surprise because even the White House is now reinventing history telling us that H.R. 3200 isn't about “cost savings” even though, as you can see here, they claim it is. I am convinced that Congress is doing a whole lot of posturing around the content of a Bill they they haven't even read.

So, to the Senator representing northern Virginia. If you would spend as much time reading H.R. 3200 as you do crafting opinion papers that defy the facts rather than represent them, I think America could benefit from any true insight you can bring to the situation. As well, please remember that you represent us, and that this is not a monarchy. We send you as much to vote on our behalf as we send you to be our voice and not your own. Please be a leader and not a follower.

And to my reading friends. Write your senators. Tell them your story and how you feel. If you believe that we should help the uninsured then write them and request they your Senate regains focus and drafts a Bill that simply does that and avoids clauses like “and for other purposes.” Tell them that you support helping others but that this Bill does more harm than help simply because it has already been proven to not accomplish it's charter objectives. And if you feel that it is not the job of the government to provide health care, then let them know that they are extending their own power without the approval of the citizens. Tell them that they draft their authority from you and not the other way around. Remind them that this government is “by the people” and that they are only your employees at the end of the day.