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One of the most important things I have learned is that every choice we make in life has costs and benefits. If I use my only $5 to purchase a latte, I give up the ability to purchase something else with the $5. It’s an elementary principle, but somehow we forget it when we talk about big-picture things.

The Affordable Care Act is an example of this basic lesson. A simplified version of the argument for the ACA is that the President and his supporters wanted to ensure that everyone was covered by health insurance, and that being old or sick would not cause one’s putative insurance rates to be so high that he could not afford to purchase insurance. The ACA also redistributes money to the poor and lower middle class so that they can purchase health insurance for free or at a discounted rate.

By itself, this idea sounds great. No one, except the most partisan, could argue that it would be a good thing if, all else equal, all those who currently don’t have the opportunity to purchase affordable health insurance magically had the opportunity to purchase affordable coverage that they desired.

Unfortunately, it’s not that simple, because things cost money. To pay for the benefit of expanding coverage, which costs money, we have to find a source of revenue. The ACA’s proponents have claimed that this revenue will come from people buying into the health insurance system who otherwise would not have done so, and the money from those individuals being redistributed to benefit the poor, old, and sick. The ideal situation, according to the ACA’s proponents, is that lots of young, healthy individuals will buy in to the system. The unspoken logic is that such individuals will effectively pay the way for others have affordable healthcare coverage. The ACA’s proponents also believe that the new law will result in some limited efficiency gains, such as lowering dependence on emergency room visits by substituting preventative care, though no one seriously contends that these efficiency gains pay for the bulk of the cost (and it’s up for debate whether the law actually makes insurance less efficient). That’s why the ACA includes the individual mandate, which requires individuals to purchase insurance or pay a penalty. And that’s also why the ACA makes illegal insurance policies that provide “sufficient” coverage. The point is to require the young and healthy to buy in, and to pay not only for insurance coverage they think they’ll use, but intentionally to get them to pay for insurance coverage they almost certainly won’t use, so that this coverage will be cheaper for the law’s beneficiaries.

To put it another way, because the bulk of the cost must be paid for the young and healthy, they, as a group, are the “losers” of the ACA, whereas the old, poor, and sick are the “winners.” The cost that can’t be paid for by the young and healthy will be paid for through increased premiums, so to the extent one’s insurance premiums go up, one is also a “loser” whose costs are distributed to the law’s “winners.” (Additionally, to the extent the law leads to increased taxes, those paying the taxes are also “losers.”)

Moreover, for the reasons discussed above, no one can seriously contend that the ACA is “free.” That is, if we’re going to expand health insurance coverage, it’s going to cost a positive dollar amount. Given the number of uninsured and seniors (e.g. baby boomers) in this country, this will be a substantial dollar amount.

Therefore, in arguing over whether the ACA is good policy, the question is not simply whether you believe that it is good that everyone has health insurance, or whether you believe that we should spend less. This is not the question because for every story about a family who is able to buy health insurance at a lower rate, there is a story about a family that must cut back because they have to pay a higher rate. The question instead is whether the expansion is worth the cost and redistribution of wealth. For a number of reasons, I have my doubts that it is. For example:

  • Why are we redistributing even more wealth from the young to the old? The old in the US consume so many resources, have the benefit of social security (which may not be around for the young), and have passed the buck of the nation’s crippling debt onto the young. Moreover, a huge percentage of the old in the country have not saved for retirement and will likely need to be “bailed out” using the resources of the young.
  • Why won’t the ACA’s proponents frame the issue of the ACA as the trade off that I have labeled it here? They speak as if the law will cause no one to pay a single penny more. But as we’ve learned from the President’s embarrassing about-face instructing insurers that he won’t enforce the part of the ACA that required them to cancel plans that were not deemed sufficient by the law (which is plainly unconstitutional and practically a disaster), the law clearly is a trade off.
  • So far, we’ve heard far more about “losers” than “winners” in the news; that is, we haven’t heard many stories about people or families saving money, but we’ve heard lots about insurance rates going through the roof. Particularly embarrassing for the President was using an anecdote of a woman who thought she had saved money under the ACA, but then learned the rate that she was originally offered was a computer error and her true price was far higher.
  • Many of the uninsured who have pre-existing conditions today were once young and healthy, and chose not to purchase insurance when they were younger. They took the benefit of not buying insurance (saving money) when they were young, and bore the risk that they might be unable to purchase affordable coverage if they developed a health condition while uninsured. Under the ACA, however, they are bailed out of the consequences of their risk, on the backs of the present young and healthy who no longer get to make the same choice. This is simply a wealth transfer from young to old.

This doesn’t mean that the concept of expanding health insurance coverage is a bad thing. Perhaps to you, you believe that the concept of universal health insurance is so valuable that it is priceless, which justifies your belief that the benefit is worth the cost. (Though I would disagree that anything is “priceless,” and would ask why the burden should be on the young and healthy to fund your belief.)

What is to be done about this? I don’t agree with the tactics of the Tea Party to threaten the apocalypse if the ACA is not repealed. But I do think that the President needs to be more flexible in discussing substantial modifications to the ACA. The law is not a panacea, and should never have been marketed that way. I would be interested in seeing amendments that, for example, place heavier burdens on well-to-do seniors, or focus more heavily on actual efficiency improvements as opposed to wealth redistribution.


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Since Barack Obama’s election, a whisper became a roar.  The whisper started during the presidential campaign.  The NRA, like it does in most high profile elections, started attacking Obama because he did not support gun rights as much as the other candidate, John McCain.  For instance, they created this website, which includes lots of doctored pictures of Obama looking like an evil villain, and phrases like “if you vote for Obama, you lose your rights.”

Now, that whisper has become a roar, with gun sales soaring since Obama’s election and buyers claiming that they want to buy guns now in fear that they can’t in the future.

Virginia gun owner Kyle Lewandowski said he was buying a .45-caliber pistol to “hedge my bets.”

“Every election year, you have to worry about your rights being eroded a little bit at a time,” he said. “I also knew, because of the Democrat majority and because of the election, everybody would have the same reaction I did,” he added

Notwithstanding the fear-mongering tactics of the NRA (which, in my opinion, are just as bad as the animal rights and anti-hunting groups on the other side of the spectrum), are people really this gullible?  When I hear people talking about “Obama is going to take away our guns,” I cannot help but wonder if these people are joking or serious.  I sincerely doubt that Barack Obama will attempt to use his influence to alter gun rights in the US.

It is preposterous that anyone thinks that increasing or restricting gun rights is a priority for the US right now.  The country is deeply involved in military conflict.  The economy is tanking.  The national debt is climbing closer and closer to an unhealthy level.  Do you really think that Obama is going to get into office and say: “OK, Congress, let’s destroy all the political capital I have right now and try to do something radical about gun rights.”  That is not going to happen.  Obama needs all the political capital he can get right now to attack all of the serious problems in the United States and the world.  If he decides to waste it dealing with a pet issue, he is a moron.

Moreover, the evidence that Obama wants to “ban gunsis just not there.  Obama himself stated:

The bottom line is this. If you’ve got a rifle, you’ve got a shotgun, you’ve got a gun in your house, I’m not taking it away. Alright? So they can keep on talking about it but this is just not true. And by the way, here’s another thing you’ve got to understand. Even if I wanted to take it away, I couldn’t get it done. I don’t have the votes in Congress.

The fact that Americans can be tricked this easily is exactly what is wrong with the political process today.

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Why Some People Shouldn’t Vote

I stumbled across this old article that Greg Mankiw wrote in 2000 (reposted on his blog).  He writes:

Voting is a civic responsibility, they tell us, because democracy works best when everyone participates . . .
. . . The problem is, this isn’t true. Sometimes the most responsible thing a person can do on election day is stay at home . . .
. . . By not voting, they are doing themselves and everyone else a favor. If the ill-informed were all induced to vote, they would merely add random noise to the outcome . . .

So, therefore, if you voted because of “change” or “experience,” but did not understand either of the candidates’ policies, perhaps it would have been nicer for the rest of us who made an informed decision if you had just stayed home.  For the record, Starbucks did not check to see if I had an “I Voted” sticker on when they gave me my free coffee.

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Presidential Debate #1

Here’s my question: What % of rhetoric of “change v. experience” will we hear as opposed to real cost-benefit issue debate?  I predict 95% change v. experience rhetoric, 5% issues.  Although that could be different, considering the bailout plan is on everyone’s minds.  Hopefully I can catch some of the debate… I have a big legal writing project due tomorrow.

I also predict that Obama has been itching to debate McCain for a while now.  Whether one or the other is a better candidate for president, there is no question that Obama is the better orator.  I would be surprised if anyone dubbed McCain the “winner” of a debate with Obama… he’s going to need to win through other means if he will win…

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Apparently, one of Barack Obama’s largest political liabilities is that 15% of voters think he is a Muslim, and do not feel comfortable voting for a Muslim (AP-Yahoo Poll Conducted April 2-14) (some polls say 10%).  Notwithstanding that it is a bit crazy to think someone who just publicly dealt with his connections to a crazy Christian pastor is Muslim, it disturbs me that 15% of the country would not vote for a candidate because he is a Muslim.  Isn’t it racist to not vote for someone because he practices a particular religion?  I do not see any other way to describe these attitudes.  Isn’t the Jim Crow era over?  Haven’t we moved on?  Apparently not, for 15% of the country.

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