"Knowledge will forever govern ignorance"

--James Madison--

"The real division is not between conservatives and revolutionaries, but between authoritarians and libertarians"

--George Orwell--

2nd Letter To Senator Obama

First posted at The Smirking Chimp, August 12, 2008.

I meant to write this earlier, but I seem to keep using my blogging time for arguing with certain people about subjects like how many Pelosis can dance on a pinhead, etc.
My, how things have changed! The Obama lovefest that was going on in June, when I wrote the original letter, is now officially over. Many of those who were rabidly defending him 2 months ago are now declaring Senator Obama to be the second coming of Satan, Bill Clinton, or both!

Dear Senator Obama:
The last letter I wrote to you (in June) addressed my concerns about the economy. I find it odd that you didn't even reply with a form letter. Even Wayne Allard responds to my letters with a nice form letter printed on Senate stationery.
Today, I write to you about my concerns with health care in this country. As you yourself have said, the system of private insurance in this country is sorely lacking. What I want to know is exactly how you propose to change that.
You talk of achieving "universal coverage" by offering a national health plan that would be less expensive than current private plans. That would be a good step. But it ignores a basic tenet of insurance--risk pool management.
Insurance works by spreading risk among all policyholders--the "risk pool". Private companies manage the risk by exclusion, which is really the only way that they can. They do everything possible to keep people with health problems from buying insurance. That is a very effective way for them to manage their risk. Denying claims also helps, but it is even better if you can keep the unhealthy out in the first place.
But a public plan has the advantage of being able to manage risk by inclusion. If EVERYBODY is in the same pool, then the risk will be no greater than that in the general population as a whole. This is how most other developed countries manage their health plans.
In other words, participation must be mandatory in order for a public plan to work. Otherwise, the young and healthy will simply keep themselves out of the risk pool until they have a health condition that makes buying insurance cost-effective for them. This will heighten the risk for the public plan, and drive up costs for everyone.
There is nothing wrong with requiring participation. Social Security and Medicare are the most successful social programs in this country's history. Not coincidentally, participation in both is mandatory.
People must be mandated to participate. This could take the form of a single-payer plan financed by a payroll tax. I realize that this idea probably won't get through Congress, as the Republicans have been touting the evils of "socialized medicine" ever since president Theodore Roosevelt first proposed it in 1906.
More realistically, it could be a mandate to buy insurance, with the choice of provider up to the participant. This would be similar to the systems in Germany and the Netherlands. Not surprisingly, almost everyone in those two countries opts for the national plan.
The premiums in the national plan must be kept artificially low by subsidy. This would, of course, necessitate a tax increase, but it must be done. If this is not done, then the existing insurance companies will have no incentive to lower their own premiums, and control their own administrative costs.
It is OK to allow people to keep their existing coverage, but the reality is this--under this sort of plan, most employers will drop their employee coverage altogether, and most individuals will opt for the national plan (except, of course, for the young and healthy, who will opt to spend their money on a big screen TV instead, which is why they MUST be REQUIRED to participate!). This means that the national plan will need to be able to quickly enroll about 300 million people. It would be difficult, but certainly not impossible.
All of this only touches on a few highlights. Many, many more details need to be ironed out. Good luck herding the cats when all of this hits Congress!
Of course, all of this is academic if you are not elected President in November. Your opponent wants to give people tax credits to buy insurance with, which won't help a damn thing. That is why I am supporting your candidacy, and am trying to ensure that as many of my acquaintances as possible pull the lever for you in November.
I understand that whatever legislation may end up passing Congress will likely bear little resemblance to whatever you propose. But I strongly urge you to push for mandatory participation.
Respectfully yours,
PS--If you are elected in November, you will need to fire Douglas Shulman, the current Commissioner of the IRS. He is an investment industry insider with little knowledge of tax law or administration. I am far more qualified, and would consider the position if it were offered to me. I am also available for the position of Secretary of the Treasury. Thank you.