According to Reuters, the current health care bill will still require that all Americans buy health insurance. The choice is gone. The American people will be dependent on the insurance companies for treatment, and when they opt not to pay, the suffering patients will be forced to file for bankruptcy. The option of health care independence, of the health savings account, is vanquished.

Worse, because the demand for insurance is inelastic, the price of insurance will drastically increase. Those that cannot afford insurance will either be fined into oblivion or scooped into Medicare, the failing program that will not cover many key treatments.

So who really wins if this reform passes?  The insurance companies will have an unlimited supply of customers. Obama has it backwards. The American people lose if this bill passes. The insurance companies are the victors.

The first purpose of the healthcare reform bill is to establish a public option. This has since been removed, but it is important to remember why. The public option would necessarily grant anyone that wanted it free healthcare from the government dole. The aim was to focus this on those that would not be able to buy healthcare insurance otherwise, but there was no way to do this without either prohibitively regulating it or creating so-called death panels to examine each case individually. The public option quickly failed both in popularity and practicality.

The second purpose was to cut wasteful government spending on healthcare and substantially cut subsidies on health insurance companies. This as a concept is a great thing, but in practicality, it is mixed in merit. For example, it forces drug companies to give a rebate to people with both medicare and medicaid (causing everyone else’s healthcare cost to go up). But there is some benefit. The medicare reform will cut down on fraud. It will also cut so-called over-billings and some bureaucratic inefficiencies, which improves this portion.

The third purpose is essentially a repeat of the second, a mere piece of rhetoric that exists because otherwise the description of the second purpose would be too long to flow conveniently.

The fourth purpose is the real reform, a regulatory mess sure to cripple the private health insurance industry. One of those chains will keep a company from “discriminating”, or charging a higher price to individuals that are more likely to induce costs. This equalizer will raise the healthcare costs of every American who does not have a pre-existing disposition. People will be penalized for living healthily.

Those were the original goals of healthcare reform, back in August. Since then, a new part has been added in the place of the public option: a mandate requiring all americans to purchase health insurance. Failure to buy health insurance means a quarter of a million dollars in fines and in some cases, jailtime. Economically, such a mandate will cause the demand curve for health insurance to become inelastic, meaning that the price can shoot through the roof without companies fearing market retribution. Health insurance costs would increase, and one’s choice to opt out of insurance would be lost. One could no longer be medically independent, and one would face dependence on either a private collective or a public collective to determine whether one should live or die.

On balance, the current bill is still a wreck. I have not even analyzed the trillion dollar spending, and already the headlights and horn of the freight train of Healthcare reform grow nearer, ready to crush us.

[1] http://energycommerce.house.gov/Press_111/health_care/hr3962_PAYINGFORREFORM.pdf

[2] http://www.democrats.org/a/2009/08/why_we_need_hea.php

The CEPR suggests a rule that would force banks to allow people to live in foreclosed homes as “renters”. Presumably, the way this would work is that the homeowners would have their houses foreclosed but they would have a right to continue living in the same house, and so the banks would not be able to auction off the real estate. Besides the fact that this would drive up home values due to a decreased supply of cheap foreclosed housing, such a regulation would limit a bank’s ability to pursue profit, and banks would experience more losses. And bank losses began the financial crisis.

Another suggested regulation on the financial industry was a cap on executive pay. Because such a cap would only apply to our country and because executives can afford to move, it is likely that this would cause the best of the executives to seek working in foreign markets. Because this regulation, as currently proposed, would only affect the financial sector, the best executives would leave the financial sector in search for higher pay elsewhere. The CEPR does not understand that there is a competitive market for effective executives, in the interest of company profit.

The CEPR also mistakenly asserts that bank executives decide their own pay. This is absurd. If the bank is a corporation, then a board of trustees decides executive pay. If the bank is owned by the executive, then executive pay is determined entirely by the profit of the bank. Else, the executive is an employee whose way is determined by his/her employer. The wages of an executive are not a drain on the company, but a necessary investment. to ensure the efficiency of a company.

The CEPR also mistakenly asserts that regulations are not interference with the market. Any regultion is an interference with the market if it has any effect at all.

The CEPR is correct in asserting that banks are not forced or pressured into making loans it would otherwise make, because such loans would constitute a loss. However, when we cross apply this premise to some of the policies they advocate, such as expansionary monetary policy, the contradiciton is certain. Expansionary monetary policy necessarily encourages banks to give out loans because the Federal Reserve interest rate decreases and more loans become profitable. The bubble is then formed which the CEPR next criticises as the cause of the recession. If this bubble was most certainly the cause of recession, and it was, and this bubble was caused by expansionary monetary policy, and it was, shouldn’t the CEPR change their advocacies?

The CEPR will not change their advocacies because they are dedicated neokeynesians who believe that individuals are incapable of effectively and efficiently controlling their own actions in the pursuit of their own welfare. This is absurd, for the only thing that keeps individuals from doing this is the hand of government.

This article refers to http://www.cepr.net/index.php/publications/testimony/the-failures-of-tarp/.