Fixing health care

Now that the legal issues surrounding the constitutionality of the Affordable Care Act, also known as Obamacare, have been resolved by the creation of a constitutional extra-constitution ability to tax nothing, we can now move on to fixing our countries health care issues.

As I have mentioned previously, the first step in resolving an issue is to determine what the true problem is. If we try to solve a problem with a band-aid, we will likely just make the problem worse. What is the true problem with our healthcare system? Obamacare was designed to force people to purchase insurance and prohibit denying coverage on the basis of preexisting conditions.

Is the problem in healthcare that everyone does not have insurance? Why do people need insurance? People need insurance because the costs of getting healthcare are rising. The reasons for rising costs are hotly debated.

One reason costs are rising is our dependence on third party payments. Since the government or insurance covers the majority of healthcare costs, there is no incentive for consumer to show around. Demand becomes incredibly price inelastic.

A recent letter to the editor in the Reno Gazette-Journal made this point very clear. The gentleman who wrote in informed us that his wife had a CAT scan that was billed to her insurance for $4500. Since he did not have insurance, he shopped around and was able to get a CAT scan for $500. This kind of price disparity could not exist if the consumers where responsible for the full cost.

Eliminating our dependance on third party payments will for the market to behave in a more efficient manner. Health insurance should continue to exist for the purpose of cover insurable events, but should be eliminated for non-insurable evens. An insurable even is one that the insured cannot control. This pretty much leaves us with health insurance that covers only catastrophic events like cancer, heart attacks, accidents not covered by other insurance, etc.

One could argue that chronic conditions are insurable against beforehand. However, I do not think that insurance as currently constructed is the best way to pay for these. There exists discount plans under our current system that help patients get prescription drug and other medical devices at discounted rates. These could be utilized for those who have chronic conditions.

Another option is Health Saving Accounts (HSAs). As currently envisioned, HSAs as intended to be used with high deductible health insurance to help cover the costs of the deductible. They are tax deferred and unlike Flexible Spending Accounts, money rolls over at the end of the year and continues to accumulate.

Few people think that Obamacare is the ideal solution to our health care crisis. I do not intend this list of ideas to be comprehensive no do I assume that any particular proposal is the ideal solution. However, critics of Obamacare rarely talk about alternatives. We need serious reform but few people are talking about it. The Libertarian candidate that I support, Gary Johnson, does not mention his plans for health care at all. Mitt Romney has a plan, though like most campaign promises it will likely never be implemented. And Obama is more interested in promoting the plan he implemented then working on a real solution.

There are more issues that need to be tackled and I hope to address some of those in the future.

Supreme Court ruling

Today, June 28th, 2012 is a historic day. The Supreme Court has upheld the Affordable Care Act, affectionately known as Obamacare, as constitutional. The basis for constitutionality is not the commerce clause, as the Obama administration argued, but the taxing authority. Rather than extending the reach of congresses ability to regulate to allow compelling actions in the name of regulating commerce, the Supreme Court has stated that congress has the authority to compel action through taxation. This means inaction is now a taxable activity.

What does this mean for those of us advocating for limited government? This is a huge set back and a massive expansion of government power. This ruling officially marks the end of any constitutional limits on federal power. However the government wants to remake society, they are authorized to compel compliance through a fee and call it a tax.

A Reason.tv interview claimed there was a silver lining. However, everything that congress could have done to abuse the commerce clause if the mandate were upheld on that basis, they can still do through the new taxing power.

Given that Obamacare is widely unpopular, this is a huge victory for Mitt Romney. Though he would never denounce Obamacare by pointing to how Romneycare has decimated health insurance in Massachusetts, he can gain support by promising to repeal Obamacare. Since Republicans will need to hold the House and win the Senate in order to gain enough support for repeal, we may see a sweeping change in the balance of power.

Unfortunately, the failure of the Supreme Court to uphold the limited and enumerated powers nor the clear intent of the tax laws cannot simply be repealed by government action. And why would we expect congress to want to repeal their new powers? The only way we can ever expect to get back to limited constitutional government is if we make our voices heard.

Corporate Personhood

Are corporations people?
The answer to this question depends on the meaning. I won't get bogged down in the metaphysical definition of person. There are 2 different possible meanings to this question and we need to address which meaning we intend to convey.
The first meaning is that a corporation is a person separate from all human people and created at the time of incorporation. When people on the left say that corporations are not people, they are I hope referring to this meaning. Legally, a corporation is a person in this sense.
There is a second sense in which a corporation is people. A corporation is a group of people coming together for a common goal. Some corporations produce goods, others services. The corporation is made of managers, workers and shareholders.
When I say corporations are people, I mean it in this second sense. The issue of corporate personhood comes up in several contexts. Corporate taxes are not paid by some soulless nonperson but by the individuals who make up the corporation or by the people who buy the goods and services made by the corporation.
In the same sense, when the corporation says something, it is not a personless entity making unprotected speech, it is a collaborative effort by the people within the corporation exercising their right to free speech in a collective manner.

Fixing problems

When ever a problem arises, the first step in solving the problem is to determine the cause of the problem. If the new problem is a symptom of some other underlying issue, attempting to address the problem directly is merely treating the symptom. There are many instances where politicians are proposing solutions to problems while ignoring the underlying causes.

While this same issue is relevant to other problems in our daily lives, since government policy effects every person in the country, I would like to focus on those issues. There are problems in health care, education, the economy, etc. and I hope to deal with each one in turn. For now, I would just like to emphasize the importance of not just trying to deal with the apparent issue but rather seek the underlying cause and address it.

Laws as violence

Few people think about what it means to pass a law. All laws are threats of violence. If you do A or fail to do B, the government will enact violence upon you perhaps by forcibly detaining you or taking your property.
Violence is an appropriate response in defense against violent acts. That is why no one disputes laws against murder, rape, theft, etc. These laws threaten violence when violence is committed.
However, responding to non-violent acts with threats of violence is wrong. Something to consider when you voice support for a law against a non-violent act.

Model of charity

In order to examine charitable giving, we must start with a model for charity. The model will have to be simple to start with. James Andreoni in "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, Vol. 97, No. 6 (Dec., 1989), pp. 1447-1458, develops such a model.

Charity is considered a public good in this model. Under a model of pure altruism, every dollar taxed to fund the private good results in a dollar decrease in private charity. This is known as crowding out. However, empirical results seem to conclude that there is very little crowding out of private giving due to the government funding of charity.

Andreoni's model of impure altruism can help to account for that. Under pure altruism, we gain utility from just the presence of charity not from the act of giving itself. This is because altruism is giving for givings sake. With impure altruism, we actually get satisfaction just for giving.

Under impure altruism, even if taxes were raised to fully fund charity to its socially optimal level, since people get satisfaction from the act of giving, charitable contributions will continue.

There are problems with this model. I people believe that government funding of charity will not be done in the best manner people may, for purely altruistic reasons, give to charities that they feel will be more efficient.

The effectiveness of charity

For my Public Finance class, I have chosen to write a paper on the effectiveness of private charity versus the government antipoverty programs. My starting point is a working paper titled "Faith-based charity and crowd out during the great depression" available through NBER working paper series. The first assignment is to do a write a review of a working paper related to the topic we have chosen for our final paper. This working paper discusses how New Deal programs effected the existing faith-based charity with an emphasis on crowding out effects, i.e. how government spending on charity reduces private charity contributions.

The are two aspects to government antipoverty programs, often misreferred to as government charity. There are the in-kind transfer payments such as welfare and food stamps and there is public financing of private charity organizations.  The question becomes, what is more successful? Or does government programs create new problems that make both options inferior to private charity donations?

Direct payments to needy individuals can only be effective if there is an incentive to leave the program. Can bureaucrats be as effective as private charities in creating incentives for impoverished individuals to improve their lot? Does the rent seeking of faith-based charities due to government funding reduce their efficiency below that of privately funded charities? Can privately funded charities obtain enough funds to meet the needs of all the needy without some kind of subsidy?

In my paper I hope to be able to answer some or all of these questions. Ultimately, I would like to use this paper as part of my dissertation in which I would like to address each of these questions in far more detail. I am looking for resources that I could use that examine the question. I need papers, books or data sets that I can use for my analysis. Any suggestions that can be provided by my readers would be greatly appreciated.