Saturday, June 30, 2012

Welfare IS Special Interest Driven

The establishment politicians have had a great time spending taxpayer money, but now that the money has run out, it's time to change the paymaster.

The question that remains is why have we waited so long? Why did so many vote on emotion rather then on substance? This November vote to get our country back from the people that think we are all stupid and need to be directed to better lives through bigger government.

It's Not a Welfare State, It's a Special Interest State
Source: James V. DeLong, "It's Not a Welfare State, It's a Special Interest State," American Enterprise Institute, June 14, 2012.

The problem with the welfare state is that the concept of "welfare" has become an open, bottomless vessel into which every desire can be poured: government takeover of the entire health and retirement systems; detailed regulation of employment; manipulation of money; subsidies for housing, education, energy, food; or anything else that strikes the fancy of some segment of the public, says author James V. DeLong.

This is evidenced by the rapid growth of government over the course of the last century. As the public's understanding of the role of government expands, so too does government action as it moves into more spheres of citizens' lives.

•In 1902, U.S. federal, state and local governments spent less than 7 percent of the gross national product (GNP).
•Most (3.5 percent) occurred at the local level, while states spent 0.76 percent and the federal government controlled 2.71 percent.
•Now, total federal, state and local government spending in the United States is about 42 percent of GNP.

This growth is a function of the actions of special interest groups, which learned long ago that handouts are easy to come by when they are at the expense of the taxpayer.

Furthermore, the growth of government contributes to compartmentalization and division of responsibilities. As a consequence, central oversight is neglected and the government bureaucracy is left even more vulnerable to future special interest efforts. These efforts usually manifest themselves in sweeping regulatory actions that should seem familiar to modern citizens.

•The Environmental Protection Agency's ambitious regulations, which is informed by a concentrated push from environmental special interest groups.
•The rapid expansions of Medicaid and Medicare have returned incredible profits to health care special groups.
•The finance reform passed by the Obama administration was 2,000-plus pages of complicated regulations and rules, each of which was urged by one interest or another.

ObamaCare Law (ACA) Cost 1.76 Tillion to Double/Triple

Sigh - it seems the insanity has no end. The progressive liberal left Democrats believe all this will have no effect on the bottom line of family and corporate expenses.

Interesting detail - who will pay for the increase of 25 to 45 million more people on the federal tit over the next 10 years? How does a thing like this work? Think about it, where will the money come from? Estimates are this will cost 1.76 trillion dollars over the next 10 years. When did any federal program ever met estimates?


Health Reform and the Impact of Extending Dependent Coverage to Age 26
Source: Drew Gonshorowski, "Health Reform and the Impact of Extending Dependent Coverage to Age 26," Heritage Foundation, June 21, 2012.

Advocates of the Affordable Care Act (ACA) proudly point out the millions of previously uninsured Americans who will be able to gain coverage with the law's implementation. However, recent research shows that in accomplishing this policy objective, the massive health care reform law may have a number of unintended consequences that could lead to higher premiums, says Drew Gonshorowski, a policy analyst with the Heritage Foundation.

In the case of insuring more young people, recent analysis shows that the ACA encourages young adults to enroll in dependent coverage and drop their own coverage, causes employers to stop offering coverage, and will likely increase premiums.

•By providing coverage for all young adults under the age of 26 through their respective parents' plans, the ACA implicitly encourages those adults to drop coverage they may have in their own name in favor of remaining a dependent of their parents.
•The Employee Benefit Research Institute (EBRI) found that 20 percent of individuals ages 19-25 had plans in their own names before the ACA, but after the regulation's implementation, this share dropped to 17.5 percent.
•The share of individuals with dependent coverage changed from 24.7 percent to 27.7 percent in the same period of time.

The case is similar for pregnant women and children, now covered by expansions of the Medicaid program. These individuals were incentivized to drop their private coverage in favor of enrolling in the program. The result, according to some studies, was a 50 percent increase in Medicaid coverage.

As health care consumers rationally respond to the incentive structure created by the ACA, the likely results will be higher premiums and fewer insurance options.

•The Obama administration had previously projected that premiums would increase by only 1 percent with the reform law's enactment.
•Given this shifting behavior as consumers drop private coverage in favor of public options, it seems that a more accurate estimate would be closer to 3 percent.
•Further, Survey of Income and Program Participation data shows that an additional 15 percent of young people were unable to receive health insurance through their employer, suggesting that they are now expected to obtain coverage thorough their parents.

Friday, June 29, 2012

Canadian HealthCare Wait Time Gets Worse?

How many times, in the past months, has one heard about how good the Canadian health care system is? If you have, take a moment and think about how any government health care system in our world that has a good track record.

The progressive will, of course, trot out the Cuban system where everyone is treated the same - it's called the 9mm system that works every time for those that require expensive drug treatment. Everyone else will have to take a number and hope Havana doesn't have any dirt on you that will prevent them from calling your number sometine in the next several years.

The Private Cost of Public Queues
Source: Nadeem Esmail, "The Private Cost of Public Queues," Fraser Institute, June 2012.

In December 2011, the Fraser Institute released its 21st annual measurement of waiting times for medically necessary treatments in Canada. This most recent measurement shows that the national median waiting time from specialist appointment to treatment increased from 9.3 weeks in 2010 to 9.5 weeks in 2011.

Nadeem Esmail of the Fraser Institute has since provided an informed measure of the economic disruption caused by this lost time. Pulling on data from the health sector and national wage data, he concludes that aggregate losses are valued in the billions of dollars.

•In 2011, an estimated 941,321 Canadians were waiting for care after an appointment with a specialist.
•Multiplied by the average 9.5 weeks spent waiting, this amounts to 11.8 million weeks spent waiting, which is substantially more than the 10.2 million weeks for 2010.
•Of course, not all time spent waiting is entirely wasted -- modern technologies have allowed many, even those suffering previously debilitating diseases, to continue to operate normally while awaiting a procedure.
•Thus, Esmail relies upon a 2005 finding by Statistics Canada that 11 percent of those awaiting non-emergency surgery were adversely affected.
•This means that of the 11.8 million weeks spent waiting, 1.3 million can be considered economically lost.
•Applying this figure to wage data for median earnings during standard work weeks, Esmail calculates that the economic cost in terms of forgone wages amounts to C$1.08 billion, or C$1,144 for each individual awaiting a procedure.
•Alternatively, assigning this cost only to the 11 percent who were adversely affected, the expense increases to C$10,399.

Importantly, this calculation leaves out a number of factors that may increase the aggregate cost of the time spent waiting within Canada's health system.

•It does not include time lost on the weekends due to adverse effects, essentially assigning no value to time lost if it would not otherwise have been paid time.
•It does not include time lost by relatives of those who are waiting for procedures, many of whom are unable to work normally because they are providing care.
•Finally, this calculation does not incorporate data for inherent risks of waiting, such as the risk of unnecessary mortality.

Bank of America Forced to Fund Green Energy?

It seems to be the new norm, especially now with the government take over of all spects of health care, a huge bank is told they have to invest in 'green energy'. Can this be true? 

The story isn't complete as we don't know what green energy compaines they will invest in and who runs them and what is their afillation with the progressive Democrats that have a history of taking over green energy compaines as a way to hide, launder, tax dollars for political purposes..

It seems an easy transition from believeing it's foolish to invest in something that is decades ahead of it's time and has a proven history where and when it was tried it's turned out a failure, to believe that some shadowy organization, the federal government, has taken control of the assets of the funding organization to further an isolated and perversive agenda.

Banking on Green Energy
Source: Matt Patterson, "Banking on Green Energy," Washington Times, June 20, 2012.

Bank of America (BOA) has exhibited all of the recent signs of a bank that is in trouble. It has attempted to implement shakedown policies only to backtrack due to customer outrage. Further, it is finding itself increasingly isolated in lending markets due to its apparent inability to make good on its financial commitments, says Matt Patterson, the Warren T. Brookes fellow at the Competitive Enterprise Institute.

•Bank of America received $45 billion in bailout money from the federal government at the height of the financial crisis.
•This payment was supplemented by further government support to shore up losses from the bank's takeover of Lehman Brothers.
•Then, last year, Bank of America suddenly announced it would charge customers a $5 fee for using their debit cards -- a fee that the bank eventually gave up on implementing.
•Despite this embarrassment, the Wall Street Journal reported in March that the bank was still considering requiring "many users of basic checking accounts to pay a monthly fee unless they agree to bank online, buy more products, or maintain certain balances."
•As if that weren't bad enough, earlier this year, mortgage giant Fannie Mae announced it was cutting off Bank of America from selling loans because the bank was failing to honor repurchase requests in a "timely" fashion.

Given this uneven history, it seems shocking that the apparently struggling banking giant would voluntarily take on another large liability. Nevertheless, BOA Chief Executive Brian T. Moynihan explained the company's new green energy initiative, which will include promoting renewable-energy platforms such as wind and solar, as a benefit to BOA customers.

•The bank is projecting that it will spend up to $50 billion on the initiative over the next 10 years.
•This is on top of a previous 10 year, $20 billion commitment to the Great Green Cause, which the bank says it is on track to complete ahead of schedule.
•That previous effort included $5 billion for renewable energy projects and an additional $1 billion for consumer financing of hybrid vehicles.

One would not be remiss to speculate that this generous environmental support is involuntarily. The current financial outlook for solar and wind energy is far from rosy, and so one must wonder what, if anything, besides a government mandate could encourage the company to invest heavily in these uncompetitive fields.

Thursday, June 28, 2012

Green Energy Laundering Tax Dollars for Politics

If anyone thinks that the Obama administration invested tax dollars in green energy companies to help our country become independent from forgien sources should have their heads examined. 

The entire spending was designed to laundy tax dollars into the hands of bundlers that will return it to Democrat candadates to continue the decline of our country.

Solyndra Not the Only Questionable Obama Loan to "Green" Energy

Source: Veronique de Rugy, "Solyndra Not the Only Questionable Obama Loan to 'Green' Energy," U.S. News & World Report, June 19, 2012.

The very public failure of energy company Solyndra has focused a lot of attention on the Department of Energy's loan guarantee programs. Beyond Solyndra's failure, it's interesting to take a closer look at these programs in order to understand what economic benefits, if any, they have conferred upon the American jobs market, says Veronique de Rugy, a senior research fellow at the Mercatus Center.

The economic justification for any government-sponsored lending or loan guarantee program must rest on a well-established failure of the private sector to allocate loans efficiently, meaning that deserving recipients could not have obtained capital on their own. Absent such a private sector deficiency, the Department of Energy's activities would simply be wasteful at best and politically motivated at worst.

•Since 2009, the Department of Energy has guaranteed $34.7 billion in loans.
•Of these, 46 percent were made through the 1705 loan program, 30 percent through the 1703 program, and 14 percent through the Advanced Technology Vehicles Manufacturing loan program.

The 1705 program (under which Solyndra received funding) deserves particular attention. This program is a product of the economic stimulus bill of 2009, and follow-up data shows just how wasteful this investment truly was.

•Under the 1705 program, 26 projects were funded with guaranteed loans amounting to roughly $16 billion in total.
•Some 2,378 permanent jobs were claimed to be created under the program.
•This works out to a potential cost per job of $6.7 million.
•The single largest recipient, NRG Energy Inc., received $3.8 billion (23.7 percent of the overall amount guaranteed under the 1705).
•Four companies received 64 percent, or $10.3 billion, of the total amount guaranteed under the 1705 program.

Perhaps the most important conclusion to be drawn out of this data is the enormous expense of these green jobs, bought and paid for by the federal government.

A much more subtle implication is that much of this funding was allocated to companies needlessly, as they already had the resources necessary for their operations. Cogentrix, which received $90 million in loan guarantees under the program, is actually a subsidiary of Goldman Sachs. Presumably, the Fortune 500 Company could have funded this enterprise if it truly had good prospects.

Wednesday, June 27, 2012

Rich People Must be Stopped : The Progressive Agenda

Mr Obama's defination of rich has nothing to do with income or money itself, it's about the charge of some of us having more then others and it's "fundamentally" not right.

If one is looking for a defination of a 'socialist' now they have it. Income redistrubution and class warfare is the key here to dividing the people and then forcing them into perpetual dependency.  

Who Are the Rich and How Do We Know?
Source: Merrill Matthews, "Who Are the Rich and How Do We Know?" Institute for Policy Innovation, June 12, 2012

It is often a little difficult for rational economists and policy analysts to understand President Obama's near-obsession with certain arbitrary and self-imposed standards like his definition of the "rich." The basis for numerous policy stances and delineations, the president's classification between rich and non-rich is grossly misleading and myopic, says Merrill Matthews, a resident scholar at the Institute for Policy Innovation.

President Obama has repeatedly claimed that in the current economy, an individual is rich if they are making more than $200,000 a year (for families, the figure is $250,000). This grouping is incomprehensive and misleading.

•These classifications that are based entirely on incomes fail to take into account assets, which can tell us much more about the comfort in which one lives than incomes.
•One person, for example, may have $10 million in assets that offer an annual 1.5 percent return, thereby providing that person with $150,000 in income.
•The abovementioned individual is, by the president's standard, not rich, while a person with no savings, no house and no other real asset but with $200,000 in annual income is defined as rich.

The president's seemingly arbitrary distinction also fails to consider the relative expense of living in a given area. An income of $200,000 would amount to far less if the worker is in a place like New York or San Francisco, where it is not uncommon for a third of pretax income to be lost on rent.

But even if you accept that accounting for assets and cost of living are unnecessary, we are still left with the arbitrary choice of $200,000 as the bright line between rich and poor, when by all rights there are more appropriate delineations.

•The U.S. Census Bureau looks at income in quintiles, which makes for convenient analysis and a more comprehensive understanding of incomes in the United States than "rich" and "not rich."
•In 2010, the average pretax income in the lowest quintile was $9,906 -- clearly poor.
•But if everyone agrees that the lowest quintile is poor, then why isn't everyone in the highest quintile, with an average income of $157,369, considered rich?

This speaks to the arbitrariness of the president's income based policies.

Energy Literacy Lacking : Progressives Want it That Way

The attack on energy in this country is not about the environment but about limiting access to more energy as a way to control the population growth and it's ability to forge more prosperity for every individual.

The Obama administration wants to limit individual freedom and reduce this nation ability to remain the single super power. Mr Obama does not like America. He sees this country as the problem in the world and will do what ever he can to change the entire foundation of what this country was founded on over the past 236 years of it's existance.

Again, remember his statement, " I want to fundamentally change Ameria". He is doing that faster then anyone thought possible.

Energy Abundance vs. the Poverty of Energy Literacy
Source: Kenneth P. Green, "Energy Abundance vs. the Poverty of Energy Literacy," The American, June 12, 2012.

For many decades, Americans have had the good fortune and innumerable economic, health and lifestyle benefits of using highly affordable energy. While most Americans will remember periods where prices spiked, such price shocks have been relatively infrequent events, usually triggered by an outside cause, such as instability in the Middle East or unexpectedly rapid economic growth in China, says Kenneth P. Green, a resident scholar at the American Enterprise Institute.

This low-cost-energy blessing has not been an accident -- U.S. public policies have largely stayed out of the way, and shrewd American entrepreneurs have proven up to the task.

•Unlike many other countries, U.S. taxation on energy has been reasonably low.
•Further, while regulations have been significant, they have been offset by continued access to abundant and affordable energy.
•Finally, Americans have benefited from a highly efficient private energy sector that discovers, produces and brings energy (both in liquid form and as electricity) to meet consumer demand.

This ease-of-use is not the case for the rest of the world, however. Despite the relative age of basic energy technologies, hundreds of millions still lack access to electrical power, stripping them of substantial economic and health outcomes.

•An estimated 79 percent of the people in the Third World -- the 50 poorest nations -- have no access to electricity.
•The total number of individuals without electric power is put at about 1.5 billion, or a quarter of the world's population, concentrated mostly in Africa and southern Asia.
•The situation is particularly acute in sub-Saharan Africa: in 11 countries, more than 90 percent of people go without electricity.
•In six of these -- Burundi, Chad, Central African Republic, Liberia, Rwanda and Sierra Leone - only 3 to 5 percent of people can readily obtain electric power.

Highlighting this widespread lack of access should cause Americans to better appreciate their low-cost energy that is a crucial ingredient in so many facets of their lives. Additionally, this energy is cleaner and less harmful than ever before. This is true both in terms of human illnesses and in damage done to natural ecosystems.

Tuesday, June 26, 2012

Vaccines Delayed Causes Increase in Diseases

Is it any wonder that this study on why disease is on the rise due to delayed vaccinations was in Washington State, Oregon and California - bastions all of progressive liberals, that have little incentive to take any responsibility for their personal activities. The people rely on others to make decisions for them, and in these states, the rule is anything that anyone on a soap box on the corner of the street demands the pubic do rules the day.

Little wonder then when someone says that they believe a small snail found in a pond is an endangered species, thousands of people become unemployed because to save the snails the water must be shut off that sustains the population.

Conclusion - where ever progressive social liberalism is in force, disaster is sure to follow.

Big Jump Seen in Parents Delaying Vaccines
Source: Linda Carroll, "Big Jump Seen in Oregon Parents Delaying Vaccines,", June 18, 2012.

An increasing number of parents are choosing to delay certain vaccinations for their young children, a new study shows, even as cases of whooping cough continue to rise nationwide. Portland, Oregon, parents were the subject of the study, which found that they are increasingly following alternative vaccination schedules, says

Though the Centers for Disease Control (CDC) provides a schedule for vaccinations, the study finds that parents are going rogue because they fear that giving their children several vaccinations at once is dangerous.

•According to the CDC, there were 2,325 cases of pertussis in Washington state through June 9, 2012, compared to 171 during the same time period in 2011.
•A 2010 outbreak in California led to 9,143 cases -- including 10 infant deaths -- the most cases in that state since 1947.
•The study, which examined medical records for 97,711 Portland children, found an almost four-fold increase between 2006 and 2009 in the percentage of parents who delayed or skipped vaccinations, from 2.5 percent to 9.5 percent.
•A 2011 study published in Pediatrics found that 13 percent of parents nationwide were using alternative schedules.
•By 9 months, infants on an alternative vaccine schedule had fewer injections than those with parents following the government recommended schedule -- an average of 6.4 versus 10.4 shots -- and more doctors' visits for vaccinations.
•The vaccines most likely to be delayed by 9 months were for hepatitis B and pneumococcal disease (pneumonia).

The case of the pneumonia vaccine is particularly troubling because it is in the first year of a child's life that they are most susceptible to the disease. Furthermore, in addition to protecting children from pneumonia, the vaccine reduces the amount of bacteria they carry as a whole. Therefore, failing to vaccinate children increases the likelihood that they will infect someone else as well.

Finally, by following alternative vaccination schedules, parents usually have to take their child to the doctor's office more often. This action alone is dangerous, as visits to doctors' offices expose children to a number of communicable diseases. Were they to receive their vaccinations in mass, as the CDC recommends, this would not happen.

Summer Jobs - No Jobs - Progressive Socialism

Just what this country needs is more people doing nothing - remember the progressive socialist Democrats in many states that decided it was time to raise the minimum wage to something that looked like it would sustain a family of four, what nonsense, but the only result was employers not hiring teens and anyone else to new or old jobs.

What can we do now to bring back jobs, vote out the insanity for progressivism!!

More than 7 in 10 U.S. Teens Jobless This Summer

Source: Hope Yen, "More than 7 in 10 U.S. Teens Jobless in Summer," Sacramento Bee, June 12, 2012.

A silent victim of the last two recessions, teen unemployment has hit record levels since 2001. This trend is especially noticeable during the summer months, which are a traditional time of the year when teens head to work in droves, enabled by freedom from school and openings in seasonal employment. Recent labor statistics, however, suggest that this pattern has been largely disrupted, says the Sacramento Bee.

Older workers, immigrants and debt-laden college graduates are taking away lower-skill work as they struggle to find their own jobs in the weak economy. Add to this that the economic recovery is still fragile, and it is no surprise that a substantial majority of teens are jobless.

•In 1978, the share of 16- to 19-year-olds with summer employment reached a peak of nearly 60 percent before waves of immigration brought in new low-skill workers.
•Teen employment remained generally above 50 percent until 2001, dropping sharply to fresh lows after each of the past two recessions.
•During the most recent recession, this figure fell dramatically: last summer, only 29.6 percentof that same age group was employed.
•Overall, more than 44 percent of teens who want summer jobs don't get them or work fewer hours than they prefer.

Certainly, there is something to be said for losses in work motivation among teenagers. John A. Challenger, CEO of the national job-placement firm Challenger, Gray & Christmas, argues that parents no longer push their children to seek jobs as they did in previous generations. However, surveys show that millions of teenagers languished in the job market during recent years.

•Out of more than 3.5 million underutilized teens who remained in limbo in the job market last summer, 1.7 million were unemployed.
•Another 700,000 worked fewer hours than desired, and 1.1 million wanted jobs but had given up looking.
•These figures amount to a teen underutilization rate of 44 percent, up from roughly 25 percent in 2000.

European Union : Bad to Worse

Is the European Union headed for collapse? There doesn't seem to be any doubt that with the people of so many countries electing socialists to govern them, even with the failed system that they are living in, they have opted to continue into oblivion.

Remember the lemmings heading off the cliff, well this is the fate for most of Europe. The stupid following the ignorant over the economic cliff.

Jeff Carter - June 25, 2012
The election of France ’s socialist government will doom the EU. Why should Germany foot the bill for the largesse of the communists and socialists in Europe ? Spain today asked to recapitalize it’s banks. Does anyone think that Greece isn’t going to need money? Just because an election gave everyone a sigh of relief doesn’t mean they are actually going to reform anything. They want to go slower. How about Italy ? Portugal ? Any better off?

Now with France electing to join the stupidity, the Euro is doomed.

The French are going to make it extremely hard to fire anyone. The are going to increase the costs. What does that mean? It means no one will get hired. French GDP is going to take a nose dive. Established companies are heading for the exits to go to lower tax countries. England is a beneficiary of the French stupidity.

However, even entrepreneurs are leaving. Typically taxes don’t affect start ups since they don’t make any money. However, regulation does, and the new French regulations penalize all business severely.

If I am the Germans I feel like the weightlifter on the bench press that just had a couple of manhole covers added to the bar. How can you have a European Union, when only one country in Europe is productive? Socialism is like that. They direct and regulate, you produce.

California , Illinois , New York , Rhode Island are the PIIGS equivalent in the United States . Obama and his administration epitomize the EU socialists in the US . As the world macro economy takes another downturn, it will be interesting to see how they whether the storm.

Monday, June 25, 2012

State Revenues Rise BUT Feds Cut Support

Who Knew? The Obama administration dumped the trillions of dollars into the states to secure the unions and friendly state governments as a way to secure the votes they will need to stay in power.

As we all know it didn't work for the votes and it didn't work to stimulate the economy. All it did was grease the palms of the true believers, progressive liberal bundlers for Obama, but left the states to fix the problems left behind now that the money has run out.

It never was about fixing the problem - it was about keeping power 'by any means necessary'.

Revenues Recover but States Still Tight-Fisted

Source: Lisa Lambert, "Revenues Recover but States Still Tight-Fisted," Chicago Tribune, June 11, 2012.

Despite persistent unemployment, a stalling recovery and turmoil in Europe, state government revenues have surged in recent months and are expected to continue to do so for fiscal year 2013 (which starts on July 1). However, states remain tight-fisted as they continue to implement spending cuts due to uncertainty regarding future output, says the Chicago Tribune.

Especially because almost all states must maintain balanced budgets each fiscal year (the lone exception is Vermont), governors must be cautious.

•For the upcoming 2013 fiscal year, total U.S. state revenues will increase by $27.4 billion, or 4.1 percent, to reach $690.3 billion.
•General fund spending, however, will rise by only $14.6 billion, or 2.2 percent.
•Tax collections, the largest source of revenue, will likely rise 4.8 percent to $556.6 billion.
•Altogether, 39 states are pushing up spending in fiscal 2013, although 25 will likely spend less than before the recession.
•Total state spending will be 0.7 percent below the $687.3 billion of expenditures in fiscal 2008 -- the last fiscal year before revenues were affected by the housing downturn and financial crisis.

One of the primary drivers for continued state cuts has to do with their relationship with the federal government. By cutting support for states and state-run programs, the federal government is implicitly placing an additional budgetary burden upon state governments that they will have to cover.

•Congress has scheduled cuts of up to $1.2 trillion affecting states as part of last summer's deficit deal.
•Also, federal lawmakers often find savings by cutting grants sent to states, says Dan Crippen, executive director of the National Governors Association.
•Furthermore, as part of the 2009 economic stimulus plan, the federal government pitched in extra funding for Medicaid, which the states operate with partial reimbursements from the federal government.
•This increased support, however, is now being drained away.
•State spending on Medicaid rose 20.4 percent in fiscal 2012, and federal spending dropped 8.2 percent.

As the federal government slowly eases away support for states, the 50 governors and legislatures will have to cover the difference.

China Growth Slows : More Stimulus?

If China wants to solve their financial problem, why don't just watch what we do to solve our economic problems and then do just the opposite?

Understanding the China Slowdown

EuropSource: Dexter Roberts, "Understanding the China Slowdown," BusinessWeek, June 4, 2012.

Europe is being ravaged by its debt crisis and the United States is plagued by a fragile recovery. Now, it seems that the Chinese economy, the bull of the global market place that has been a solid engine of growth, is on the brink of a serious slowdown, says BusinessWeek.

Though aggregate numbers remain strong relative to other nations, troubling signs within signaling industries lend credence to fears of slower-than-expected growth.

•Steel inventory of five major steel products is up 39 percent since January, leaving major mills with first-quarter losses of more than 1 billion yuan.
•Pirated movies, which adapt quickly to market demand, have dropped from a price of 10 yuan a year ago to 7 yuan currently.
•Real estate in tourism-heavy provinces is taking a substantial hit -- 80 percent of new residential buildings in the tourist destinations of Haikou and Sanya are vacant.
•Mobile phone sales in China are down 13 percent from a year ago, according to industry consultant Gartner.
•Wine prices have also dropped markedly to the point that they may only recover with a successful national stimulus program.
•Total vehicle sales fell 1.3 percent in January through April -- the worst decline since 1998.

Credit Suisse now expects China to grow at 7 percent or less this quarter, and this slowdown could be further exacerbated by a crumbling situation in Europe. Local investment bank China International Capital warned on May 23 that if Greece leaves the Euro, mainland Chinese growth could fall as low as 6.4 percent.

The national government, it seems, will respond with another round of stimulus, following the previous episode of spending from three years ago.

•The latest stimulus could cost 2 trillion yuan ($315 billion), estimates Credit Suisse.
•A portion of the stimulus will be dedicated to subsidizing consumer purchases of energy-efficient energy appliances.
•Further development efforts will be concentrated on infrastructure, with expansions of airport projects in the provinces of Xinjiang, Chongqing and Sichuan.

Stimulus efforts will have to proceed with caution, however: the previous spending spree led to widespread overbuilding and waste.

Sunday, June 24, 2012

Education Depends on Ability to Teach NOT More Money

Little wonder public schools are failing, the whole agenda of the system is not to educate the student but to support the teacher's union and it's power to control outcomes in the class room as well as election locally and nationally.

With such a strangle hold on the purse strings and educational material used in the class room, students will find little help gaining a useful education. And what little the student is able to get from many school systems run by the local and national unions, mostly dominated by progressive liberal socialists, serves to lessen the students ability to find rational answers in the work place and their personal lives.

If you want a good example of how this can be changed, look no further then Wisconsin where the money stopped coming into the union forced everyone to decide maybe the old system of education was not the best way after all.

When the lights come on, darkness fades.

Better Schools, Fewer Dollars

Source: Marcus A. Winters, "Better Schools, Fewer Dollars," City Journal, Spring 2012.

To attain the economic growth that it desperately needs, the United States must improve its schools and train a workforce capable of competing in the global economy. To this end, superior educational outcomes are a necessity. The question facing lawmakers, then, is how to improve America's education system when most state governments are strapped for cash, says Marcus A. Winters, a senior fellow at the Manhattan Institute.

Economists tell us that the answer is not to throw more money at schools. While a common complaint is that public schools are underfunded, research indicates that more per-pupil funding does little to improve outcomes.

•According to the Department of Education, public schools spent, on average, $12,922 per pupil in 2008, the most recent year for which data are available.
•Adjusting for inflation, this figure is more than double the $6,402 per student that public schools spent in 1975.
•Despite that doubling of funds, just about every measure of educational outcomes has remained stagnant since 1975.
•Scores on the National Assessment of Educational Progress -- the only consistently observed measure over the period -- have remained relatively flat since the mid-1970s.
•High school graduation rates haven't budged much over the last 40 years, either.

The conclusion to be drawn from this historical data is that schools do not need more funding, but need to learn to be more efficient with the funding they already have. This entails freeing schools from oppressive regulatory environments and/or transitioning more students to charter schools and voucher programs.

•Schools themselves have little discretion over how to use their financial resources, confined instead to top-down mandates for spending.
•Crucially, individual schools have little flexibility in teacher pay (which constitutes 54 percent of expenditures on average); schools are limited to considering factors such as years of experience and number of advanced degrees that are only marginally good predictors of teacher quality.
•In most districts, public schools aren't even allowed to decide which teachers to employ, since tenure ensures that principals can't remove the least effective teachers.
•Voucher programs to help students attend private schools and government-run charter schools avoid many of these pitfalls.
•Furthermore, near-uniform research has found that students participating in these programs achieve the much-sought after educational gains.

Saturday, June 23, 2012

California Bullet Train for 68 Billion Plus Billions in Regulations

And the insanity goes on in California - if one every needed to find a state that was completely out of control, it's California. They have no money and yet they consider a 68 billion dollar train?

Just the cost alone of deciding where to put it, and all of the regulations needed to get by the idiot environmentalists in this state, would bankrupt most other states.

Environmental Objections in Path of Bullet Train
Source: Ralph Vartabedian, "Environmental Objections in Path of Bullet Train," Los Angeles Times, June 11, 2012.

The California bullet train is promoted as an important environmental investment for the future, but over the next decade the heavy construction project would potentially harm air quality, aquatic life and endangered species across the Central Valley. Consequently, rail advocates find themselves at odds with the local environmental lobby and a number of local and federal regulators, says the Los Angeles Times.

Air quality issues already plague the region and thus make air quality a crucial problem.

•Air quality is regulated across eight counties by the San Joaquin Valley Air Pollution Control District.
•The district worries that the construction project would exacerbate already problematic levels of nitrogen oxides, particulates and volatile compounds.
•The district already bears an annual $29 million federal fine for violating the Clean Air Act.
•In the Fresno Unified School District, 10,045 students (one out of every seven) have been diagnosed with asthma, according to data provided by the school district, and many experts believe poor air quality acts as a trigger.
•Hospitalizations, lost workdays and premature deaths, among other effects, cost $5.7 billion annually, a 2008 Cal State Fullerton study found.
•For these reasons, those concerned with the area's air quality are especially anxious about diesel burning construction equipment that will produce further emissions.

The second issue pits supporters of the $68 billion bullet train (the largest infrastructure project in the nation) against the U.S. Fish and Wildlife Service.

•So far, the service has identified six animals and five plant species listed as endangered or threatened that would be affected by the Merced-to-Fresno section of the rail project.
•It has yet to determine whether the project would harm those species or could jeopardize their survival or have effects that could be mitigated.
•The Sierra Club has taken particularly interest in this issue, noting that a great deal of money has been invested in keeping these species alive.

Finally, the rail's interaction with large bodies of water warrants intervention from the Army Corps of Engineers. The train will cross up to 100 bodies of water, and its impact on each waterway must be assessed and approved. This could also result in additional fees for "compensatory mitigation."

Health Care Payments with Food Stamps? Good Idea?

A good idea? Anything that helps bring down the cost of medical care is a good idea so not give it a try? Well, the best of ideas always have to be evaluated to see how the people that are thinking this up can benefit by it's implementation.

The old adage that 'there is no good idea that can't be wrecked by a politican' will find a use here.

National Center for Political Anaylsis
There are currently 60 million participants in the Food Stamp program (SNAP), all low-income shoppers who can enter any supermarket in America and buy almost anything the facility has to offer. They do so by either trading their government vouchers for a limited amount of low-cost, essential goods or by supplementing their own cash with the vouchers to buy higher-cost goods. Every good is bought at market price, ensuring that supermarkets cover the costs necessary to stay in business.

Unfortunately, we don't allow Medicaid enrollees the same privilege. Basic health services provided by MinuteClinics cost more than twice as much as Medicaid pays. Because Medicaid alone would not cover health costs, most MinuteClinics refuse to accept Medicaid. Low-income families who want to receive basic health services must pay full price instead - a price most of them can't afford (they are on Medicaid after all). If low-income families were allowed to supplement Medicaid with $30-$50 of their own money, MinuteClinics would happily accept both Medicaid and cash to cover the costs of providing health services. In one fell swoop we could make high-quality care available to millions of people.

Friday, June 22, 2012

Senate Sits On 30 Bills : Reid Refuses Floor Vote

A bill to help the economy grow is stalled in the Senate - Who Knew?  I wonder who controls the Senate? Oh wait, I know, liberal Democrats.

Is it significant that there are more then 30 bills in the Senate now that will help bring jobs and prosperity to this country that Harry Reid refuses to bring to the floor for a vote?

Are the progressive liberal Democrats only interested in getting and keeping power then doing what's best for the country? If you can't figure this one out, you need to get out more.

Washington's Ten Thousand Commandments
Source: Ryan Young and Wayne Crews, "Washington's Ten Thousand Commandments," American Spectator, June 5, 2012.

Deficits, taxes and spending are the defining issues of the 2012 campaign, but regulation deserves a seat at the table, too. The current regulatory environment places an enormous burden on the American economy by crushing small businesses with nonsensical rules and making the United States a toxic country in which to locate a business, say Ryan Young and Wayne Crews of the Competitive Enterprise Institute.

Of course, efforts have been made to check this growing problem. The Obama administration recently targeted five regulations for elimination that will save $6 billion over the next five years. However, $1.2 billion per year is a drop in a bucket compared to the overall impact of these regulations.

•According to the Small Business Administration (SBA), the annual cost of complying with federal regulations has exceeded $1 trillion since around 2005.
•Last year alone, 3,807 new final rules were published in the Federal Register -- more than 10 per day.
•During that same period, Congress passed only 81 new laws.
•Furthermore, of the new rules, 212 are classified as "economically significant," which means they cost more than $100 million per year.

These regulations have a grossly distortionary impact on private markets. For example, their aggregate impact favors large businesses over small ones, undermining politicians' claims that they care greatly for the needs of undersized operations.

•Big businesses with more than 500 employees pay about $7,755 per employee to comply with federal rules each year, according to the SBA.
•But small businesses with fewer than 20 employees pay $10,585 per employee per year -- that's a built-in competitive advantage for big business of nearly $3,000 per employee.
•Consequently, a recent Kauffman survey of 6,000 small businesses found that "small businesses care almost twice as much about licensing regulations as they do about tax rates when rating the business-friendliness of their state or local government."

There is now a bill, however, that would do much to address this problem. By requiring Congress to vote on all economically significant rules, the Regulations from the Executive in Need of Scrutiny (REINS) Act would lighten the regulatory burden. It has passed the House, but is stalled in the Senate.

Money Policy With Obama Historical : New Spending Records

Just what can Mr. Obama say that we can believe? The question now has he ever told us the truth?

Obama's Real Spending Record
Source: Arthur B. Laffer and Stephen Moore, "Obama's Real Spending Record," Wall Street Journal, June 12, 2012.

President Obama recently claimed that during his tenure as president federal spending had risen at the lowest pace in nearly 60 years. In reality, spending skyrocketed under both Presidents Bush and Obama, say economists Arthur Laffer and Stephen Moore.

Sadly for fiscal conservatives, the biggest surge in government spending came during the last two years of President George W. Bush's eight years in office. A weakened Republican president dealing with a strident Democratic Congress, led by then-House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, saw federal expenditures rise dramatically.

•Large Bush expenses include the $700 billion Troubled Asset Relief Program (TARP), the bailout of insurance giant AIG and government-sponsored lenders Fannie Mae and Freddie Mac, and the ill-advised 2008 $600-per-person tax rebate.
•From the second quarter of 2007 to the second quarter of 2009 when President Obama assumed office, government spending skyrocketed to 27.3 percent of gross domestic product (GDP) from 21.4 percent of GDP.
•This amounts to the fastest peacetime growth in government spending in history.

This glut of spending continued under President Bush's successor. President Obama has continued spending enormous amounts on bloated government policies while taking advantage of accounting techniques afforded by the repayment of TARP loans.

•After taking office in 2009 with already record-setting deficits, President Obama proceeded to pass his own $830 billion stimulus, auto bailouts, mortgage relief plans, the Dodd-Frank financial reforms and the $1.7 trillion ObamaCare entitlement.
•While spending did come down in 2010, it wasn't the result of spending cuts but rather because TARP loans began to be repaid, and that cash was counted against spending.
•In 2011 and 2012, the pace of spending was slowed when a new emboldened breed of Republicans took back the House promising to end the binge.
•The House Budget Committee, for example, has identified about $150 billion of new spending Mr. Obama wanted in 2011 and 2012 that Republicans would not approve.

Recognized in this light, the president's claim of low spending and responsible government seems strikingly disingenuous.

Thursday, June 21, 2012

Health Care Market Place in Chaos

Every time the government gets involved, or trail lawyers, cost sky rocket. Along with ignorance of the health care market place, little wonder the entire system is a mess.

The Role of Prices in Health Care
Source: John C. Goodman, Priceless: Curing the Healthcare Crisis, Independent Institute, June 2012.
The price of a knee replacement for a dog -- involving the same technology and the same medical skills that are needed for humans -- is less than one-sixth the price a typical health insurance company pays for human operations, and less than one-third of what hospitals tell Medicare their cost of doing the procedure is, says NCPA President and CEO John C. Goodman in his new book, Priceless: Curing the Healthcare Crisis.

To be fair, let's say you spend two nights in a hospital room, with hotel-like luxuries. Fido recovers in a cage, which presumably costs much less. But even with meals, two nights in a hotel should come in under $1,000. The price difference we are trying to explain is many times that amount.

Then, there is the difference in surgeons' skills.

•Presumably, the surgeons who operate on humans are more talented and therefore more valuable.
•But an orthopedic surgeon in Dallas typically gets paid an amount equal to about 10 percent of the $32,500 an insurer pays to the hospital.

As a patient, you would get more attention than Fido from nurses and support staff for the one or two days of recovery. Guess how much a nurse gets paid in Dallas? It's about $30 per hour. That is nowhere near the explana­tion we are searching for.

Let's take the actual cost hospitals tell Medicare they incur for this proce­dure.

•It's about $15,000, not including surgeon's fees.
•But if veterinarians can do it for a third of that amount, it's hard to see why the human hospital cost isn't at least half of what it actually is.

The explanations for why human knees cost so much more are (1) government regulations, (2) malpractice liability and (3) the inefficiencies created by the third-party payment system. It looks like these three factors are doubling the cost of U.S. health care.

In his new book, Priceless: Curing the Healthcare Crisis, Goodman explores these factors and tries to explain why a procedure such as knee surgery cannot only cost exponentially more for a human being than for a dog, but can cost much more for an American than a Canadian.

He concludes that this is due, in part, to the fact that in the entire medical marketplace, there is no natural evolu­tion to uniform, market-clearing prices, the way markets work in other sectors of the economy. Even MRI scans vary by over 650 percent in a single town. Furthermore, most providers don't even know how to price their services because they don't know what their costs are.

Medicare Can Use Food Stamps? Proposal?

Interesting take on the health care system and the food stamp agenda - both are a administration nightmare but according to Goodman, one can be beneficial to the other.

Given the chaos in any federal program, trying to make this change would be a huge task.

Lessons from the Food Stamp Program for Health Care
Source: John C. Goodman, Priceless: Curing the Healthcare Crisis, Independent Institute, June 2012.
The Food Stamp program (SNAP) appears to work much better than health assistance programs for low-income seniors, says NCPA President and CEO John C. Goodman in his new book, Priceless: Curing the Healthcare Crisis.

Currently three Medicare savings programs are designed to make Medicare more affordable for poor and near-poor beneficiaries by paying premiums and eliminating out-of-pocket cost sharing:

•The Qualified Medicare Beneficiary Program pays all Medicare premi­ums and out-of-pocket cost sharing for beneficiaries who have incomes at or below 100 percent of the federal poverty level and who are ineligible for full Medicaid coverage.
•The Specified Low-Income Medicare Beneficiary Program pays Part B premiums for Medicare beneficiaries with incomes of 101 percent to 120 percent of the federal poverty level.
•The Qualified Individual Program pays Part B premiums for beneficiaries with incomes of 121 percent to 135 percent of the federal poverty level. Yet amazingly, fewer than one-third of eligible Medicare beneficiaries enroll in these programs.

Contrast what we do in health care with SNAP, which has about 60 million participants (most of whom are probably also Medicaid enrollees).

•Low-income shoppers can enter any supermarket in America and buy almost anything the facility has to offer by adding cash to the "voucher" the government gives them.
•They can buy anything you and I can buy because they pay the same price you and I pay.
•But we forbid them to do the same thing in the medical marketplace.

Like food, health is gen­erally considered a necessity. So why not treat it the same way we treat food? This would make certain that the poor have the wherewithal to pay for their health care not by forcing them to wait or take poorer quality, but with health care dollars. These health care dollars would be full dollars to providers, ensuring that the poor can complete for resources with all other buyers of care.

Wednesday, June 20, 2012

ObamaCare : Collective Catastrophe

The consequences of deciding for collective health care will be devastating. All those that decide to give up their individual freedom for the collective will have to live with it. Screaming and demanding service will do no good as there won't be anyone to hear you as those that are deciding your fate are in Washington, not in your local hospital.

This November, you have the choice that will determine your own destiny. If you make the wrong choice, don't blame Barack, look in the mirror. 

Impact of Concierge Doctors
Source: John C. Goodman, Priceless: Curing the Healthcare Crisis, Independent Institute, June 2012.
Some innovative physicians are rebundling and repricing medical services in ways that are not possible under third-party insurance. For a fixed monthly fee, they offer flexible appointments, help in scheduling diag­nostic tests and appointments with specialists, help in negotiating prices and fees, and other services. Many will meet their patients at the emergency room to ensure prompt service, says NCPA President and CEO John C. Goodman in his new book, Priceless: Curing the Healthcare Crisis.

•Most concierge doctors promise same-day or next-day appointments.
•Some diagnostic testing services make the test results available to patients online within 24 to 48 hours.

Concierge physicians tend to relate to their patients in much the same way lawyers, accountants, engineers and other professionals interact with their clients -- including phone calls, e-mail consultations and convenient Web-based services.

As demand for health care increases with the implementation of the Affordable Care Act and there is no corresponding change in supply, there will be increased waiting for care almost everywhere. One place patients will turn is con­cierge doctors.

•In return for an annual fee, patients receive increased access and additional services.
•Whereas a doctor in a regular practice typically has about 2,500 patients, a concierge practice usually has only about 500 patients.
•The more doctors that opt out of conventional care for concierge care, the greater the rationing problem becomes for everyone left behind.
•This could result in a two-tiered system in which those with more financial resources have concierge care, and everyone else is subjected to rationing by waiting.

ObamaCare Socialists Versus Free Market Solutions

Here again, the free market survives the fist of government - Americans will find away to make it work, little wonder then why so many abroad sill see us as a good place to invest even though we have this huge debt.

The problem is even America has it's limits and we are approach the end of the rope that keeps from going over the cliff of insolvency. When that happens all bets are off as to whether we can come back. November will be the turning point in our future for saving our country.

Medical Tourism
Source: John C. Goodman, Priceless: Curing the Healthcare Crisis, Independent Institute, June 2012.
Increasingly, cash-paying patients are traveling outside the United States for surgery offering package prices that are one-fifth to one-third the cost in the United States. Moreover, a new company, Colorado-based BridgeHealth Medical, offers U.S. employer plans a specialty network with flat fees for surgeries paid in advance that are 15 percent to 50 percent less than a typical network, says NCPA President and CEO John C. Goodman in his new book, Priceless: Curing the Healthcare Crisis.

•Since the international medical tourism market is a real market where pro­viders routinely compete for patients based on price and quality, government-run programs such as Medicare should take advantage of it.
•Further, if a patient saves money for Medicare by traveling, the patient should share in the savings.
•As in the case of doctors, patients should be encouraged to make money by saving Medicare money.

You don't actually have to go off shore to participate in the market for medical tourism. There is an emerging market for it on shore.

•Canadians routinely come to the United States for surgical procedures and they usually face a package price for all services agreed to in advance.
•North American Surgery, Inc., has negotiated deep discounts with 22 surgery centers, hospitals and clinics across the United States as an alternative to foreign travel for low-cost surgeries.
•Seniors too could be in this market and they would be if Medicare allowed the senior to share in the savings created by traveling to a higher-quality, lower-cost facility.

ObamaCare : Social Collectivism?

What this author is saying is, you have a choice, take responsibility for your own life or leave it to others to decide what is best for you. The problem here is if you decide that a collective life is best, don't complain when others decide you aren't first in line for treatment.

Remember, your decisions have consequences. This November it's up to  you to decide whether you chose individual freedom or social collectivism.

Process versus Results
Source: John C. Goodman, Priceless: Curing the Healthcare Crisis, Independent Institute, June 2012.

There have been many debates through the years about whether the Canadian health care system is better than the American system. The reason: there are a lot of people who advocate single-payer health insurance, by which they mean a system in which government pays all the medical bills. There are basically only three genuine single-payer systems in the world: Canada, Cuba and North Korea, says NCPA President and CEO John C. Goodman in his new book, Priceless: Curing the Healthcare Crisis.

There are multiple responses to counter those who advocate single-payer:

•The U.S. system is more egalitarian than the Canadian system (and more egalitarian than the health systems of most other developed countries as well).
•Uninsured Americans get as much as or more preventive care than insured Canadians (as many or more mammograms, PSA tests, colonoscopies, etc.).
•Low-income whites in the United States are in better health than low-income whites in Canada.
•Although minorities do less well in both countries, we treat our minority populations better than the Canadians do.
•Even though thousands of people in both countries go to hospital emergency rooms for care they can't get anywhere else, people in our emergency rooms get treated more quickly and with better results than people in Canadian emergency rooms.

In Canada, what care you receive, where you receive it, and how you receive it is not determined by individual choice and the marketplace. It is determined collectively. For some people, that's an end in itself, says Goodman.

Tuesday, June 19, 2012

EPA's MACT Rule on Mercury : Ideology Nightmare

As I have stated in the past, the EPA is by far the most dangerous and powerful agency in the country, and worse, it is headed by an unelected individual. If for no other reason to vote out the Democrats this November, it will be the right thing to do to stop the destruction of our energy system and our way of life.

EPA does not have our best interest at heart - look what has happened with ObamaCare. They are driven by ideology, not common sense, to change America "fundamentally", Obama's very words.

All Pain and No Gain

Source: Marlo Lewis, William Yeatman and David Bier, "All Pain and No Gain," Competitive Enterprise Institute, June 8, 2012.

The U.S. Environmental Protection Agency's (EPA) Utility MACT Rule establishes the first-ever maximum achievable control technology (MACT) standards for emissions of hazardous air pollutants (HAPs) from coal- and oil-fired power plants. The principal goal of targeting HAPs is the reduction of mercury, which can settle into water supplies and ostensibly cause birth defects when consumed by pregnant women, say Marlo Lewis, William Yeatman and David Bier of the Competitive Enterprise Institute.

The EPA has justified this regulation on the grounds that, despite enormous compliance costs in the energy sector, the public health benefits will be even larger. This is far from the truth.

•The EPA's December 2000 determination that triggered the rule assumed that 7 percent of pregnant women in the United States have blood mercury concentrations exceeding the agency's reference dose.
•In reality, only 0.4 percent (one in every 250 pregnant women) had blood mercury levels exceeding the reference dose.
•Furthermore, the EPA's reference dose is overly cautious: the EPA's reference dose is 1/15th the lowest exposure level associated with mild, subclinical effects in epidemiological studies.
•Finally, the EPA produces no evidence of mercury exposure at these levels having any effect on unborn children.
•EPA estimates that each year 240,000 pregnant women in subsistence fishing households eat enough self-caught fish to endanger their children's cognitive or neurological health, yet the agency has yet to identify a single woman who fits this description.

Nevertheless, the EPA boasts $80 billion in annual net benefits. However, this projection relies upon supposed side-benefits of reductions in fine particulate matter in the air (not mercury). The regulation would seek to reduce this particulate matter below previously regulated levels and far below levels commonly recognized as safe. The dubiousness of the justification for this rule is especially important because of the harms it will certainly have for consumers.

•Many potential investors are now wary of new coal-fired power plants for fear that they will be found not to be in compliance with the new rules.
•Not only will the rule prevent the creation of new electricity-generating facilities, but also will result in the retirement of 10,000 megawatts of electricity production.
•The Federal Energy Regulatory Commission projects that 81,000 megawatts -- almost eight times the EPA's estimate -- are likely to retire.

ObamaCare Exchanges Crush Small States

Who Knew?  Well no one knew what was in this monstrosity, not even Nancy Pelosi as she said 'we have pass this thing to find out what's in it'. For a sitting member of the government to say such a thing can only mean she is insane, but then this doesn't come as a surprise to anyone that has paid attention.

Some States Too Small to Succeed with Health Exchanges

Source: Jason Millman, "Some States Too Small to Succeed with Health Exchanges," Politico, June 10, 2012.

A lot of states will find out later this year if they're going to have to depend on the Department of Health and Human Services to start up their health insurance exchange. That's partly because setting up exchanges is technically complex and partly because many states have moved slowly, if they've moved at all, because of the political and legal uncertainties surrounding President Barack Obama's health law, says Politico.

A small group of states are facing an entirely unique issue: exchanges simply are not financially feasible because the states are too small.

•States affected by this problem include Delaware, Hawaii, Montana, New Hampshire, North Dakota, Rhode Island and Vermont, as well as Washington, D.C.
•The decision facing them is whether they will continue to attempt to create state-run exchanges (despite the financial pitfalls) or if they will run partnership exchanges with the federal government.
•Three of the states and the District have all approved exchange legislation indicating their intention to have a state-based exchange.
•Others remain mired in uncertainty as to which option they will select.

Delaware's situation is illustrative of the problem: because so few people live in the state, there would not be enough enrollees in a state program in order to recoup administrative costs.

•In Delaware, no more than 50,000 to 60,000 people, mostly in the individual market, would be enrolled in the exchange by 2019.
•The state projected only 35,000 covered lives for the 2014 launch, according to a consultant's report.
•Crystal English, Delaware's health insurance exchange project director, explains that having so few enrollees to share administrative costs would likely result in higher premiums, which admittedly is not the goal of the exchanges.
•In response to this issue, Delaware will run a partnership exchange with the federal government in which responsibilities and expenses are split between the two levels of government.

This difficulty for smaller states was recently confirmed by a top Health and Human Services official, who acknowledged that it doesn't make sense for some of the small states to build an exchange entirely on their own.

Monday, June 18, 2012

Corporate Subsides Corrupt the System

What do you expect when you reward someone for doing nothing? This what is known as the 'politics of reward' - those that have control of the purse strings finds ways to get rewards for themselves which corrupts the system.

Much like the unions and their political friends, the corporate rewards go out but come back to the politicians in the form of campaign contributions.

Corporate Welfare Spending vs. the Entrepreneurial Economy
Source: Chris Edwards and Tad DeHaven, "Corporate Welfare Spending vs. the Entrepreneurial Economy," Cato Institute, June 1, 2012.

Rising spending and huge deficits are pushing the nation toward an economic crisis. There is general agreement that policymakers need to terminate wasteful and damaging programs in the federal budget. One good place to find savings is spending on corporate welfare, say Chris Edwards, the director of tax policy studies, and Tad DeHaven, a budget analyst on federal and state budget issues, at the Cato Institute.

Some people claim that business subsidies are needed to help fix market failures in the economy. But corporate welfare is just as likely to create failures by misallocating resources and inducing businesses to spend time on lobbying rather than on making better products. Importantly, corporate welfare is rampant in the spending of the federal government.

•A forthcoming Cato Institute study finds that federal business subsidies total almost $100 billion annually.
•Farm income stabilization payments have fluctuated between about $13 billion and $33 billion annually, and they are often paid to households with above-average income.
•Sugar subsidies offer artificially-created profits to sugar producers, protecting them from international competition, while increasing input costs for other, less influential businesses.
•Various economic development programs also offer funding to businesses in numerous sectors, from energy to alcohol, in the hopes of spurring job creation.

The American public broadly opposes this government intervention into the economy, in which winners and losers are decided not based on merit but by political insiders.
Even if policymakers wish to ignore the preferences of the American people, the logical problems with corporate welfare persist.

•Firms that receive subsidies become spendthrift, failing to check costs as they otherwise might.
•Subsidies aren't driven by actual market demands, but instead are compelled by often arbitrary political desires.
•Subsidies often drive firms to make financial decisions that are uncompetitive in the long run (they may, for example, locate too many operations in the United States).
•Subsidies are only necessary to fund projects passed over by private investors, which were presumably passed over for a reason.

Sunday, June 17, 2012

ObamaCare Drives Down Quality & Up Costs

Who, in their right mind, would ever believe that adding millions of new participants to the health care rolls would lower expenses?

 In what situation, that any of us will participate in our life time, will show costs go down for an item where the availability of that item goes down and demand goes up as, especially when the federal government is involved? Less money to spend on the item, less people to dispense the item and more demanding the item.

How does this work? What about quality? Who doesn't get the item when they want or need it? Who decides who gets what and when? We all better hope the Supreme Court decides in the right direction in the next few weeks or all of us will have a chance to see who survives and who doesn't. 

Steep Rise in Health Costs Projected
Source: Louise Radnofsky, "Steep Rise in Health Costs Projected," Wall Street Journal, June 12, 2012. Sean P. Keehan et al., "National Health Expenditure Projections: Modest Annual Growth until Coverage Expands and Economic Growth Accelerates," Health Affairs, June 2012.

Defying historical trends, health spending in the United States has slowed dramatically since the recession began. As individual consumers have seen a reduction in their disposable income, they have been forced to cut back on typical expenditure categories. As a result, elective health care spending has been delayed or forgone, causing the slowdown, says the Wall Street Journal.

•National health care spending growth was 3.8 percent in 2009, the smallest increase on record, and was followed by a similar 3.9 percent in 2010.
•In a new report published by Health Affairs, economists project similar rises averaging 4 percent annually for 2011, 2012 and 2013. (Actual 2011 spending hasn't yet been calculated.)
•These increases are roughly on track with growth in the economy as a whole, meaning that health spending as a portion of gross domestic product (GDP) has remained relatively constant.

Some economists have analyzed these figures and suggested that they may portend lower health spending for the foreseeable future. However, the Health Affairs study debunks this, stating that the full implementation of the health care reform law and an aging population will result in a significant increase in spending.

•According to the study, spending will jump 7.4 percent in 2014 when the health care law is scheduled to be fully implemented.
•This is partially due to the aging of the baby boomer population, which will result in greater consumption of expensive health care services and products.
•Also, the health care reform law will allow millions of Americans to gain coverage through subsidized insurance plans purchased through government-run exchanges, augmenting consumption.
•This increased growth rate will have longevity: the report projects that it will average 6.2 percent annual growth from 2015 to 2021.
•Though only 0.1 percent of this increased growth is attributable to the reform law, this amounts to $478 billion by 2021.

By 2021, health care spending is projected to be 19.6 percent of GDP, up from 17.9 percent in 2010. The government share of the spending also would be greater, at nearly 50 percent, up from 46 percent, mostly because of the anticipated growth in Medicare enrollment.

Saturday, June 16, 2012

Patient Protection Act (ACA) : Tyranny of the Few

This is just one more example of 'tyranny of the few' at the top - the for-profit companies that do not contribute to the coffers of the right politicians will see the hammer of Washington come down on their bottom line.

The entire ACA is designed to bring the population under the control of a few elites sitting in Washington that believes they are smartest people in the room. Private insurance companies will collapse as rates go up to pay the increasing "fees" imposed, while health care itself will degenerate into our worst nightmare.

This is just what this country needs now is another mandate that dwarfs anything that we have seen in our history. With more then 30 million people being dumped into health exchanges that will cost trillions of dollars we don't have, it doesn't take a genius to see where the road ahead is leading.

We, out here in the wilderness, should be glade that we have such smart and well meaning people in Washington to take care of us.

Tax Policy Meets the Affordable Care Act: The Case of the Premium Tax
Source: Douglas Holtz-Eakin, "Tax Policy Meets the Affordable Care Act: The Case of the Premium Tax," American Action Forum, May 2012.

The Patient Protection and Affordable Care Act (ACA) is comprised of myriad policy provisions with important implications: mandates to purchase health insurance; new state-based insurance exchanges; large new subsidies for insurance purchases; the creation of an alphabet soup of new agencies, bureaus and panels; Medicaid expansions, and so on, says Douglas Holtz-Eakin, president of the American Action Forum.

To help pay for this massive expansion of spending, the law also implements a new "fee" on health insurance companies. Better described as a premium tax, the new source of revenue is substantial in size, despite receiving little attention in media analysis of the health care law.

•The aggregate annual fee for all U.S. health insurance providers begins at $8 billion in 2014 and rises thereafter.
•All told, it is expected to raise $80 billion in its first five years.
•The tax is levied on insurance companies' collected premiums beyond a certain threshold.

The first problem with the "fee" is that it unfairly targets health insurance companies by failing to allow them to consider the fee to be a business expense for tax purposes. While many similar expenses are classified this way, the fee was precluded from this option and therefore will not be allowed to count as a deduction against the corporate income tax.

Additionally, the fee unfairly targets some insurance companies over others, allowing Washington to pick winners and losers.

•The issue of tax deductiblity is only an issue for for-profit insurers -- this means that not-for-profit insurers will be unduly advantaged in future competition.
•Additionally, special exemption is given to non-profit companies that receive 80 percent of their revenue by servicing government programs for the low-income, elderly or disabled.
•This tax exemption includes preferential treatment for income from operations that do not fall within this 80-percent category.
•Furthermore, for-profit companies that service these same populations are excluded from the tax exemption.

This enormous tax burden will greatly affect the operations of insurers, especially those that did not receive special tax exemptions from Washington. This will have a significant impact on consumers, resulting in higher premiums and a disruption to regular health care relationships.

Cigarette Taxes' Increasing Decrease : Who Knew?

Besides being regressive in nature, cigarette taxes that continue to increase find that the increase is a decreasing revenue flow the higher they go with Less people smoking. So the only people that do are poor.

How many times do you hear politicians say they only want to raise taxes on smokers to help others? Once the revenue runs out due to smokers that stop, the only way to sustain the programs that the politico's started is to find new taxes or raise the taxes on other programs. As we all know, taxes never ever go down or go away.

State Tax Trend No. 10: Cigarette Tax Increases Tapering Off
While a common recourse for revenue is to raise targeted taxes on unpopular groups, such as smokers, drinkers, gamblers and eaters, recent trends indicate an increasing dissatisfaction with such revenue-shifting, says Joseph Henchman, an attorney and policy analyst at the Tax Foundation.

Looking to cigarette taxes over the last few years, they continue to be increased throughout the states. However, in-depth analysis indicates that these increases are slowing down, suggesting that taxpayers may have reached a limit on how high of taxes they are willing to impose.

•As of January 1, 2012, the average state cigarette tax was $1.46 per pack.
•This is substantially higher than average tax levels in the past: this figure was $1.18 just three years ago, and the current tax rate is roughly 10 times what it was in 1983.
•Since 2002, 47 states and the District of Columbia have raised cigarette taxes a total of 105 times.
•However, this trend has slowed down dramatically in recent years: only six states increased the tax rate in 2010, and only three states did so in 2011.

The gradual tapering off in tax increases on cigarettes is certainly not due to a lack of need: state governments are currently hungry for revenues to fill budget gaps. Rather, it is almost certainly a function of general voter dissatisfaction with higher cigarette taxes -- a sentiment informed by numerous arguments against this form of taxation.

•By imposing a tax on out-of-state citizens, cigarette taxes lower the cost of government for residents, artificially encouraging greater support for an increased size of government.
•Cigarette taxes are one of the most regressive ways to fund government programs because low-income earners are much more likely to be smokers.
•Higher cigarette taxes also mean more smuggling, both between states and from international sources where prices are much lower.

Cigarette tax increases are often justified as a way of compensating society for costs imposed by smokers. A series of studies, however, argue that nearly all the costs of smoking -- health care, higher insurance premiums, lower productivity at work -- are borne by smokers themselves.

Friday, June 15, 2012

EPA's "Zero Tolerance" Drives America Into Economic Failure

If no other reason to elect Mitt it will be to stop the EPA from destroying our country.

The EPA's Flawed Zero Tolerance Policy
Source: Kathleen Hartnett White, "The EPA's Flawed Zero Tolerance Policy," Daily Caller, June 4, 2012.

For the last three years, the Environmental Protection Agency (EPA) has justified new air quality regulations -- unprecedented in stringency and cost -- on the assumption that even trace levels of particulate matter can cause early death. The EPA's guiding principle in this effort has been that there is no price too high to preempt further particulate reduction, says Kathleen Hartnett White, a senior fellow at the Texas Public Policy Foundation.

The EPA has gone so far in this endeavor as to claim that its rules will save 230,000 lives by 2020. However, such rhetoric is built on implausible assumptions, biased models, statistical manipulations and cherry-picked studies.

•The EPA emphasizes the killing potential of airborne particulate matter, yet physicians and toxicologists have found little evidence of this drastic conclusion.
•The EPA's zero-tolerance principle for health risks compels it to herculean regulatory ends, including reducing particular matter below levels found in nature.
•Natural background levels of 1 microgram of fine particulate matter per cubic meter will logically become the next target for the EPA.

The EPA's claimed mandate places it on a losing path; particulate matter realistically cannot be reduced below certain ambient levels. Nevertheless, its rules will impose enormous cost on the economy in an ill-advised effort to accomplish exactly this.

•Indoor levels of fine particulates are far higher than outside levels.
•Simple tasks such as cleaning a closet and cooking expose individuals to high levels of particulate matter that cannot be reduced by regulation.
•Nevertheless, the EPA will continue to make a show of targeting particulates under the guise of fulfilling the directives of the Clean Air Act.

Interestingly, the national standard for acceptable particulate matter concentration remains at 15 micrograms per cubic meter. Were the EPA truly so convinced of the rightness of its conclusions, one would think it would be quick to revise this standard. The fact that it hasn't suggests that EPA regulators are well aware of the fallibility of their claims.

Obama Is Like A "Post Turtle"?

This is interesting in that the
illustration is profound.

While suturing a cut on the hand of a 75 year old rancher, whose hand was caught in the squeeze gate while working cattle, the doctor struck up a conversation with the old man.

Eventually the topic got around to Obama and his role as our president.

The old rancher said, 'Well, ya know, Obama is a 'Post Turtle''.
Not being familiar with the term, the doctor asked him, what a 'post turtle' was.

The old rancher said, 'When you're driving down a country road and you come across a fence post with a turtle balanced on top, that's a 'post turtle'.

The old rancher saw the puzzled look on the doctor's face so he continued to explain. "You know he didn't get up there by himself, he doesn't belong up there, he doesn't know what to do while he's up there, he's elevated beyond his ability to function, and you just Wonder what kind of dumb ass put him up there to begin with."

Best explanation I've heard yet.

Thursday, June 14, 2012

Public Sector Pensions Largely Unfunded

Finally we are waking up to reality and taking steps to correct the problem. Wisconsin is a good example with Scott Walkers budget, Act 10, that drove down the deficit to zero and has a projected surplus next year by forcing everyone to take notice of the inequality between the public sector unions and the taxpayers.

The Real Cost of Public Pensions
Source: Jason Richwine, "The Real Cost of Public Pensions," Heritage Foundation, May 31, 2012.

The generosity of public-sector pension benefits has come under increased scrutiny in recent years as state and local governments search for ways to close their budget deficits. Lawmakers are eager to understand how public-sector pensions compare to their counterparts in the private sector, thus determining if cuts are warranted, says Jason Richwine, a senior policy analyst at the Heritage Foundation.

The problem, however, is that assigning a cost to public-pension compensation is difficult, involving complex analysis of accounting methods and investment behavior.

•Their cost cannot simply be measured by how much governments spend on them annually because governments often pay less than their advisers tell them to (in effect writing IOUs).
•Additionally, actuaries struggle to estimate what eventual expenses will be, as these are determined by a worker's number of years worked, average salary and longevity of life.
•Also, government payments into pension plans are determined in part by their selected discount rate -- the level of performance that they attribute to their investment portfolio that will eventually pay for a worker's plan.
•These discount rates are often set inappropriately high, thereby encouraging governments to set aside far too little into their pension plans.

The difficulty with discount rates is especially acute, as it is crucial in disguising the true cost of public-sector pension plans and will likely result in chronic underfunding.

•Many public-sector pension plans assume an 8 percent discount rate; that is to say, they assume their invested funds will generate an 8 percent annual return.
•While this is a feasible outcome, it must be recognized that performance at that level carries substantial risk.
•The pension plans' outlays, on the other hand, are virtually guaranteed to have to pay out to workers when they retire.
•This mismatch between the risk of revenues and expenditures is inappropriate and violates sound accounting principles -- if there is no real risk of the plan escaping its obligations to workers, there should be no real risk in its investment portfolio.
•Therefore, pension plans should be discounted at the risk-free investment rate (likely government bonds at around 2 to 3 percent) instead of the convenient 8 percent.

When plan actuaries adjust projections and assessments to this appropriate discount rate, the cost of public-sector plans soars beyond their counterparts in the private sector.

Green Energy in Europe : Economic Disaster

What this article says about people in general should shock us all into some kind of awaking. When an entire continent of hundreds of millions of people are forced into doing things that they know are harmful to prosperity and to them personally by a tiny group of elites, is criminal. 

How does a thing like this happen? Is it something that was put into the drinking water that forces common sense to flee? Or is it just plain stupidity taking over?

Europe's Green Energy Suicide
Source: Rael Jean Isaac, "Europe's Green Energy Suicide," Wall Street Journal, June 5, 2012.

As austerity bites into European living standards, sparking revolt at the polls, "growth" has become the politician's mantra. But to be competitive, European countries require a secure, plentiful and competitively priced energy supply. Unless Europe radically rethinks its obsession with carbon dioxide emissions and the anti-fossil fuel energy policies that flow from it, growth is likely to remain elusive, says author Rael Jean Isaac in the Wall Street Journal.

Lawmakers across the continent would do well to take to heart the conclusion of the European Commission Energy Department's Energy Roadmap for 2050, which stated frankly that "there is a trade-off between climate change policies and competitiveness."

•European Union law mandates that the 27 member countries on average cut their carbon dioxide emissions 20 percent by 2020, compared to 1990 levels.
•The goal after that is to cut emissions by between 80 percent and 95 percent by 2050.
•In May 2010, a study by the European Commission's energy department estimated the 20 percent cut would cost 48 billion euros ($66.3 billion) a year.

Individual nations' energy policies are pushing for further cuts in emissions, wreaking havoc on the economies that once dominated the continent.

•In the United Kingdom, a generous system of subsidies for renewable energy was found to have cost 10,000 jobs between 2009 and 2010 alone, and is estimated to raise the energy cost of vital industries (steel making, ceramics, paper, etc.) by 141 percent by 2020.
•Spain's experience with subsidizing renewables has been painful, with a 2009 study at Universidad Rey Juan Carlos finding that the subsidies had led to a loss of 110,500 jobs.
•Italy's subsidy system, which sets the price floor for wind energy at three times the market level, was found to sacrifice 6.9 industry jobs for every green job it created, according to a study at Italy's Instituto Bruno Leoni.
•Germany's Renewable Energy Feed-in Act of 2000 requires electric utilities to buy renewables from all producers at fixed, exorbitant rates and feed it into the power grid for 20 years, raising rates and undermining industrial competitiveness.
•Even France, which has remained relatively immune to energy problems because of its enormous nuclear energy capacity, is beginning to move away from that clean energy source that has served it so well.

Wednesday, June 13, 2012

Liberalsim Drives Wealth Down 39% in 3 Years

Here is a real good reason to vote for more liberalism, drive the American economy completly into the dumpster where are homes and saving accounts will be worthless. COOL!

Families' Wealth Dives 39 Percent in 3 Years

Source: Tim Mullaney, "Families' Wealth Dives 39 Percent in 3 Years," USA Today, June 12, 2012. Jesse Bricker et al., "Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances," Federal Reserve, June 2012.

The median U.S. household lost nearly 39 percent of its wealth from 2007 to 2010, according to a Federal Reserve report released Monday, emphasizing anew the impact of the financial crisis and the recession on ordinary Americans, says USA Today.

Middle-class families took the biggest hit to their net worth during the crunch because much of their wealth was in their homes, whose values plunged during the recession and in its aftermath, the Fed report says. Wealthier families saw a smaller drop in their incomes, but nowhere near as much impact on their net worth.

The impact a given family felt varied depending on where they live, how much they earn and what kind of investments they had, says Scott Hoyt, an economist at Moody's Analytics.

•Overall, median household net worth slid to 1992 levels after adjusting for inflation, wiping out the gains of the late-1990s Internet boom and the post-2000 housing surge, says the Fed.
•The median family's net worth dropped to $77,300 from $126,400 in 2007.
•The wealthiest 10 percent of families saw their median net worth rise 1.9 percent to $1.17 million.
•Household net worth peaked at $66 trillion before the recession hit in December 2007 and fell to $54 trillion in 2008, according to the Fed.
•It was $63 trillion in the first quarter this year, but that doesn't reflect the stock market's fall since.
•The Fed estimates Americans lost $7 trillion in home equity due to a housing bust that followed a surge in mortgage defaults after 2006.

Movements in the housing and stock markets suggest that middle-class households probably have not regained much of their lost ground since 2010.

•The Standard & Poor's 500-stock index is up 4.1 percent since the end of that year.
•Housing prices have kept declining, falling 1.9 percent in the 12 months ended in March, according to the S&P/Case-Shiller composite index.

Incomes improved in late 2011 but have begun sliding again this year, say Gordon Green, cofounder of Sentier Research.

European Euro Falling to Ruin : Scoialism?

If this can happen to the Euro, why not the dollar? Can the United States be that far behind? 

Sure, the European Euro hasn't been  around that long, but even so if the very philosophy of the people is one with their collective hands out for something free, the new French government, and the power that controls the purse strings is in the hands of a few progressive socialists in a far away place, disaster can't be that far behind.

Beginning of the End for the Euro?
Source: Jagadeesh Gokhale, "Beginning of the End for the Euro?" Cato Institute, June 6, 2012.

Rising debt in southern European countries threatens the euro's dissolution just 13 years after it was introduced. Opinion is now divided about whether the euro can survive Greece's exit, or "Grexit," as some have dubbed it. The outcome hinges on upcoming elections in Greece, says Jagadeesh Gokhale, a senior fellow at the Cato Institute.

There may be some hope if Greek voters decisively restore power to pro-bailout parties, but none if they strengthen extremist anti-bailout parties, or if the election result remains inconclusive. Under the latter two scenarios, Greece will run out of time and money too quickly to prevent institutional chaos in the short term. This leaves the Greek people with three distinct policy paths:

•Remain a member of the euro zone and accept the severe austerity measures that have been offered, allowing for the near-certain economic contraction that would follow.
•Petition Germany for a more relaxed austerity schedule that would ideally allow Greece to recover budgetary solvency while avoiding a severe economic contraction.
•Leave the euro zone and return to the drachma, thereby regaining economic competitiveness over time but only after undergoing a large devaluation, inflation and significant austerity for current generations.

The first and last options bring with them significant economic uncertainty and hardship. The resulting austerity would be substantial and painful for the Greek people.

Consequently, the second policy option remains attractive: Staying in the euro zone while lessening the pain of doing so would be a win-win for the current Greek administration. However, this policy options cannot be decided unilaterally, but instead relies upon the largesse of Germany.

•Offering better bailout terms to Greece makes sense if it would effectively end the recession and restore economic stability, if not kindle positive growth.
•One of the inherent difficulties in such a move, however, is the signal that such a change of policy would send to the Italians, French and Spanish, each of which are looking more and more Greek every day.
•If Germany relaxes requirements for Greece, it seems likely that these other debt-laden countries would also sue for a better deal.
•This becomes difficult because the money necessary to rescue economies as large as there just isn't there.

Tuesday, June 12, 2012

Insurance High Deductible Plans Work

 It make sense that if one has to pay more for services they will take better care of themselves and when they have to go to have service, they will pay much closer attention to what their doctors are doing.

It's called taking responsibility for one actions. It's also called common sense.

How High Deductible Plans Lead to Low Health Care Spending
Source: Sally Pipes, "How High Deductible Plans Lead To Low Healthcare Spending," Forbes, May 28, 2012.

The Centers for Medicare and Medicaid Services (CMS) just released their latest estimates of national health care spending over the past few years, and they seem to provide some rare good news. Researchers determined that total U.S. health costs are increasing at a slower rate than any time in recent history, says Sally Pipes, president of the Pacific Research Institute.

The Obama camp is quick to emphasize that the relative savings are the direct result of the policies of the health care reform law. However, this is far from the truth.

•Health care costs started to plateau well before Obama's health reform plan began taking effect, cooling off since 2002.
•Rather, the trend closely tracked the spread of consumer-directed health plans: high-deductible coverage options that give people control over their health care dollars and provide a direct financial incentive to conserve care and spend responsibly.
•The year 2002 was also the year that employers started embracing high-deductible health insurance plans for their workforces, which subsequently took off in the mid-2000s.
•Between 2006 and 2011, the share of American workers enrolled in one more than quadrupled, from 3 percent to 13 percent.
•As of January 2011, 11.4 million Americans were enrolled in consumer-directed health coverage -- a 14 percent increase over the 2010 total.

The plans are coupled with Health Savings Accounts (HSAs), which allow people to save pretax income to be spent exclusively on health care. The insurance policies kick in once the annual deductible is reached, to protect patients against health catastrophes. Together, high-deductible plans and HSAs give patients the incentive to use some common sense when shopping for health care.

Unfortunately, HSAs and consumer-directed health plans are unlikely to survive the implementation of the health care law.

•The law's minimum "medical loss ratio" requires that insurers devote no more than 20 percent of premium income in the individual and small-group markets toward administration.
•It also requires insurers to meet minimum "actuarial value" standards, whereby they must cover a certain percentage of a beneficiary's health expenses -- at least 60 percent, in most cases.
•Because of the nature of their premiums and deductibles, HSAs are unlikely to be able to meet these blanket requirements.