Greedy Health Insurance Companies

Since the beginning of the healthcare debate, we have been hearing a lot about the insatiable greed of American health insurance companies. The Obama White House has gone to great lengths to convince the American public that the profits of this industry need to be brought into check, and that the best way to accomplish this is to create a government competitor to drive down premiums.

I have already detailed my thoughts on the healthcare debate in a previous entry and will not repeat myself. However, recent developments in the health reform process have motivated me to further address this specific issue.

Obama has asserted on several occasions that health insurers are generating “record profits” under the current system. Harry Reid, the Senate Majority Leader, has stated that “there is no business in America that makes more money than the insurance industry.” However, while the insurance industry as a whole might be quite profitable, it is problematic to make these statements in relation to health insurers.

In response to these accusations, the Associated Press conducted a recent fact check on the health insurance industry and summarized their findings as follows:

Health insurance profit margins typically run about 6 percent, give or take a point or two. That's anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.

For anyone who has ever worked with health insurance claims, this is not surprising. While it is true that insurance companies charge sizable premiums, they also have substantial expenses. Contrast this with the pharmaceutical industry, which spends nearly five billion dollars in advertising each year and still has a median profit margin of 17 percent (larger company such Pfizer often earn well-above 20 percent). Hence if one is looking to cut “fat” from the system in order to make healthcare more affordable, the insurance sector should not be the focal point of their efforts.

So why are Obama and his friends going to such great lengths to beat up health insurers, while protecting big pharmaceuticals companies from having to compete with generic drugs?

Because discrediting private health insurance and establishing the “public option” is the easiest way to put the country on the path to single-payer government healthcare. In the future, the pharmaceutical industry and other sectors will inevitably come under fire; however, at present, the principal objective of left-wing Democrats is to forge an opening for a new government insurance provider. This is my personal interpretation of the situation, but I believe the political realities of the past decade evidence the merits of my reasoning.

Meaningful health reform must aim to foster competition and reduce costs throughout the system—not just insurance premiums. Regardless of which system is best for the United States in the long term, it will be a grave disservice to struggling Americans if the overall effectiveness of this healthcare bill is compromised by the impatient desire of key Democrats to push the U.S. towards single-payer healthcare.

Healthcare from the Perspective of a Dual Citizen

I am a dual citizen of both the United States and Canada, who grew up on the Canadian side of the border. Between my mother who is a physical therapist, and members of my family who suffer from chronic illness, I have had much exposure to the Canadian healthcare system. In my early twenties, I moved down to the U.S. and had the opportunity to work in the U.S. healthcare system, specializing in matters pertaining to insurance coverage. While I am usually prepared to share my personal opinions on just about anything, I do feel as though I have a unique perspective on the issues currently being debated in the United States.

At present, no one can talk definitely about the “facts” and “myths” of healthcare reform—the bill is still being written. The current House and Senate versions of the bill are extremely different, and it is difficult to predict how these two pieces of legislation will be reconciled. Moreover, President Obama has been quite ambiguous about many of the details pertaining to his initiative. In the wake of this uncertainty, the popular debate surrounding healthcare reform has focused on the merits and disadvantages of public healthcare.

Although I acknowledge its shortcomings, I personally prefer the U.S. healthcare system to that of Canada. The U.S. system is state of the art, fast, service-oriented, and people have a lot of choice when choosing a provider. In Canada, wait times are significantly longer, there are far fewer providers, and visiting your local hospital can be like going to the DMV. That being said, the system has always sufficed for my friends and family, and most Canadians are happy with their care. In both systems, unique circumstances can lead to a denial of coverage for certain treatments. Similarly, in both systems, the individual can file an appeal and subsequently go to court if their appeal is rejected. In my experience, denial of coverage is far more common in the U.S. system than the Canadian—though most U.S. insurers will eventually pay after some coercion.

All factors considered, I DO NOT believe that a public system would be a “good fit” for the United States. Why? Right now 85% of Americans are insured and are receiving some of the best medical care in the world. Moreover, polls indicate that the vast majority of Americans are happy with the care they receive. Private healthcare is also a thriving industry in the U.S. (16% of the GDP) that provides thousands of Americans with good jobs. At present, Obama is not proposing a public single-payer healthcare system. However, many Americans—including myself—believe that the proposed “government competitor” is a thinly-veiled attempt to create an entity that could evolve into such a system. Many in the Democratic Party, including Obama himself, have declared their preference for single-payer healthcare.

At present, all indications suggest that the “public option” will not be able to pass the U.S. Senate. To this end, I believe it is time for Americans and their elected officials to “move on” and begin focusing their efforts on other aspects of healthcare reform. We should start by implemented some simple changes that will significantly drive costs down for everyone:

1. Increase competition within the pharmaceutical market by allowing the importation of generic prescription drugs from Canada and Europe.
   
2. Increase competition in the insurance industry by allowing insurance companies to operate across state lines, and allow small business to collectively bargain for the same insurance rates that large employers and unions receive.
   
3. Increase opportunities for individuals to purchase insurance by encouraging the formation of group policies through churches, local clubs, professional organizations, and co-ops.
   
4. Reform malpractice law to lower malpractice premiums and decrease the enormous amount of unnecessary testing that doctors perform to protect themselves from frivolous lawsuits.

Then create a targeted solution to help those in our country who still cannot afford insurance. There are several simple ways to do this:

1. We already have a program for those who cannot afford health insurance—it’s called Medicaid. However, many people who cannot afford private insurance earn too much to quality. One simple solution is to raise the income restriction on this program.
   
2. Subsidize the private insurance premiums of individuals based on their Adjusted Gross Income—the higher an individual’s AGI, the lower the subsidy and vice versa. This is my personal preference. Many uninsured individuals can afford to pay part, but not all the monthly premiums for the insurance plan offered by their employer. This approach would provide financial assistance based on need, discourage employees from quitting their job to receive Medicaid, and avoid the government having to assume full financial responsibility for the health care of these individuals.

Needless to say, all of the above suggestions would require careful legislation to ensure effectiveness and avoid abuse. However, I think they are good starting points that would receive broad bipartisan support and have a significant impact.

As a Republican libertarian who believes in free market principles, I would certainly prefer to not need forms of subsidization. Long term, I would very much like to see policy changes that would permit everyone working a full-time job to be able to purchase private insurance without any assistance. But this “correction” would undoubtedly take time, and in the here and now it is evident that there are hardworking Americans who cannot afford healthcare. Ultimately, there is a time and place for compassion to supersede the ideals of free market doctrine. However, the deficit is real and very dangerous to the future of our country. If Americans are committed to ensuring that all citizens have healthcare, they must make some hard choices about which government services are most important, and how much tax they are willing to pay to keep them.

Thawing Relations with Cuba

For nearly fifty years U.S.-Cuban relations have been “frigid” to say the least. But judging from the recent noises emanating from Washington and Havana, a new day of U.S. Cuban relations appears to be on the horizon.

While I am a firm believer in the necessity of hard-line foreign policy in many situations, I personally believe that it has long been time for the U.S. to develop a meaningful relationship with Cuba. In my opinion, the United State’s approach to Cuba has largely been dictated by past grudges and not the current state of affairs. While the U.S. has managed to forgive—or at least “move past”—Russia’s role in the Cuban Missile Crisis and other Cold War events, U.S. foreign policy towards Cuba has remained frozen in time. This, I assert, is largely due to the electoral significance of South Florida and the traditional political views of Hispanic voters. However, the fact that Obama was able to handily win this demographic despite his moderate stances on Cuban foreign policy, evidences a clear shift in American public opinion.

The Castro brothers are not my favorite people, and there are many serious issues that need to be addressed over the course of diplomatic negotiations—such as the welfare of Cuba’s many political prisoners. I am aware that many Americans have strong feelings on this issue, and would prefer to leave Cuban relations in their present state. But in the grand scheme of foreign relations, U.S. conflicts with countries like Cuba and Venezuela are but quibbles compared to the very serious and foreign policy issues concerning country such as Iran and North Korea. Moreover, totally apart any ethical or philosophical impetus for unity, I believe that it is of upmost importance that the United States develop strong relationship with the whole of the Western Hemisphere given rise of economic and military power that is presently occurring in the Far East.

I would love to write more about Cuba, and the larger history of U.S.-Cuban relations which I believe to be largely misunderstood by many Americans. However, it is a very busy time of year and I will have to leave things here for now.

In the meantime, I will watch with great interest as the situation unfolds…

FOX’s Red Eye and the Canadian Armed Forces

There has been no shortage of chatter from my Canadian friends on Facebook concerning Greg Gutfeld’s comments concerning the Canadian military, which were made during the TV show Red Eye—the FOX News equivalent of The Daily Show.

Gutfeld’s comments were careless and disrespectful. While I believe it is certainly within his rights to criticize the policies of the Canadian Government, poking fun at Canadian soldiers by suggesting they are taking a year off for spa treatment is not appropriate while a steady stream of caskets are continually being flown home from Afghanistan.

That being said, there is one aspect of this kafuffle that I find confusing…

While I understand why Canadians are upset with Gutfeld, I am baffled as to why few Canadians have taken issue with the fact that their military forces will essentially be OFFLINE for all of 2011. Doesn’t this bother anyone? I do not mean to suggest that Canada should amass a large military or adopt American foreign policy; Canada is a distinct nation with its own views and priorities. However, Americans would very much like to feel as though they are not alone in paying for the defence of the North American continent. While the Canadian Armed Forces are full of excellent men and women who are making great sacrifices on behalf of both countries, the present size and budget of the Canadian Military is pathetic. Consider the following facts (gracious provided by The Toronto Star):

NATO's target for member countries' defence spending is 2 per cent of GDP. Even Pierre Trudeau spent 2 per cent. Canada's current defence spending totals just 1.2 per cent of GDP, and will drop to 0.87 per cent under the current 20-year government strategy.

Canada, the Netherlands and Australia have similar world interests. Canada spends $558 per capita on defence; the Netherlands $669; Australia $808.

In mid-April the Senate Committee on National Security and Defence received the Canadian army's 2008-09 strategic needs report. In it, Lt.-Gen. Andrew Leslie revealed that the army's size has actually declined in soldiers since 2005. "The army is now stretched almost to the breaking point."

The navy's report was just as gloomy. It said the strength of the navy's fleet will be soon halved and that Canada will not be able to play a meaningful role with our allies on the high seas for five years between 2013 and 2018.

The air force report warned that, without significant new funding, up to 15 CF-18s will have to be grounded, plus four Hercules transports, four Aurora patrol aircraft and six Sea King helicopters.

The government announced in 2006 that it would increase the Regular Forces by 13,000 to 75,000 by 2010-11, and that the Reserves would be increased by 10,000 to 35,000. Then in 2007 it quietly delayed its plan for a full year and "reprofiled" it, halving the increase in regulars to 6,500 and chopping the increase in reserves from 10,000 to 1,000. The Senate Committee on National Security and Defence, based on the operational tempo of the Canadian Forces over the past 10 years, estimates that 90,000 regulars are needed at a minimum.

Under its "Canada First" policy, the government promised that the Canadian Forces would increase its focus on defending Canadian territory, and that the Forces would be quick to respond to domestic man-made or natural disasters. Territorial battalions would be created at 12 centres across the country. That hasn't happened.

None of this is new. In fact, back in 2002, Canadian soldiers reported for duty in Afghanistan's desert wearing green jungle-camouflage fatigues, since the military didn't have money for both desert and jungle uniforms. The U.S. offered to provide desertwear, but Ottawa declined and instead issued its soldiers brown blankets, which were then taped over the green uniforms.

Canadians are very good at giving lip service to their “sovereign identity”; but when it comes to national defence and border enforcement, Canada very much acts like an unwanted 51st state. (Canada, by the way, only recently began equipping their border guards with firearms, after a few incidents in which border guards stationed at remote crossings in Western provinces fled their posts to avoid confrontations with armed convicts).

Despite the above facts, I am sure there are still some Canadians who remain unconvinced of the need to increase funding to Canada’s military. Besides who would possibly threaten Canadian sovereignty? This question is perhaps best answered with a photo:


The above picture was taken four kilometres below sea level in Canada’s arctic territory. But as you can see, the titanium flag being planted does not sport the illustrious maple leaf. It is a Russian flag, which is being planted by the robotic arm of a miniature MIR-1 submarine. Defence Minister Peter McKay dismissed the act as “just a show”; however, anyone who has been paying attention to the noise coming from Moscow knows that there is an awful lot of intent and determination behind this gesture. With the ice shelves continuing to melt in the arctic, it is seemingly inevitable that the Northwest Passage will eventually open and create a seaway linking the Pacific and Atlantic Oceans. More importantly, beneath the arctic shelf lay vast oil and natural gas reserves. As the above picture evidences, Russia is determined to stake claim to both these lucrative resources. Several other countries, including Iceland, Denmark, and even the United States have also disputed Canadian claim to the Northwest Passage. These disputes will ultimately be settled by diplomatic means, but Canada will have very little leverage at the bargaining table if it has no means to enforce its sovereignty in the North. Moreover, there is little doubt in my mind that Russia will passively annex portions of Canada's Arctic territory if given the chance.

Contrary to the beliefs of some Canadians, being a sovereign country unfortunately requires slightly more than having a nifty charter and setting off fireworks on a given day each year. As a member of NATO and an advocate of peacekeeping, Canada has legal and moral obligations that require it to have a functional and effective military. Moreover, the men and women of the Canadian Armed Forces who are risking their lives deserve the best equipment available to help ensure their safe return home. To this end, after Canadians are finished stringing up Greg Gutfeld, they should subsequently direct their wrath towards those in their government who are failing to properly fund the Canadian Armed Forces.

Making a Mountain out of the AIG Mole Hill

Over the course of the past week, the front pages of major newspapers across the United States have been saturated with coverage of the $165 million in bonuses that AIG is paying to its executives after having received hundreds of billions of dollars in government assistance. It is certainly a rich story, and has thus far served as an ideal corporate punching bag for the economic frustrations of the American people. Politicians of both parties have attempted to capitalize upon opportunities offered by the situation, with many Republican working to seize upon first issue to negatively impact Obama’s approval ratings, and many Democrats seeking to demonstrate their willingness to beat up on Wall Street fat cats.

The AIG bonuses are certainly an outrage, and the Government should certainly pursue all available legal options to prevent the payout. But right now, AIG’s distribution of bonuses is the LEAST of the issues facing our country…

While media personalities and politicians “huffed and puffed” over $165 MILLION dollars, the non-partisan Congressional Budget Office released a report this week projecting that the present budget proposed by President Obama would produce $9.3 TRILLION in deficits over the next decade—more than four times the deficits of George W. Bush's presidency. Should the CBO’s predictions hold true, by 2019 the national debt would $20.3 TRILLION with every American man, woman, and child owing approx. $66,529 each. Other non-news this week included an announcement that the Federal Reserve would take the highly unusual step of buying up to $300 billion worth of long-term Treasury bonds. This move sent the U.S. dollar into a freefall against other currencies this week and, combined with our country’s present 0-0.25% interest rate, will certainly hasten the inevitable onset of a long-term struggle with inflation. Another possible story for the front page—had the fabulous AIG barn burner not surfaced—would have been a follow-up on the $787 BILLION stimulus bill that passed with virtually no representative in either the U.S. House or Senate receiving the opportunity to read the bill in its entirety. How are the provisions of one of the most hastily written and expensive bills in the history of the United States being implemented? How is Vice President Biden’s “oversight” committee going to work? Why does the government have to pay union wages for stimulus-related construction labor? Alternatively, had they been really desperate, the new media might have even devoted a little bit of discussion as to why last week’s $410 BILLION omnibus spending bill was packed with $8 BILLION worth of earmarks, despite President Obama’s campaign promise to end the practice.

But who really cares about all of the above? Those AIG bastards took our money! $165 MILLION of it!

Wake up America! These are pivotal times that will ultimately determine the fate of the United States’ status as an economic superpower. Whether you love President Obama, or are petrified by his policies, the important economic issues at hand need to be reported, scrutinized, and discussed. If you only paid as much attention to our crumbling economy as you did steroids in major league baseball, the Obama family’s search for a dog, and Michael Phelps smoking marijuana, then perhaps the leaders we send to Washington would be more responsible with our money.

Tongue Tied Elephants

Over the course of the past month, I have grown increasingly frustrated with the lack of GOP leadership in Washington. The Republican Party's inability to effectively represent itself during the stimulus debate, Gov. Jindal's poorly written response to Obama's congressional address, and the recent feuding amongst party factions clearly evidence a lack of cohesion, organization, and vision.

The GOP is unquestionably in a period of transition, and such birth pangs are to be expected along the way. However, given the present situation, the Republican Party is not endowed with the luxury of having spare time to reorganize itself. In Congress, important decisions that will have long term impacts on the welfare of the country are being made, and the GOP needs strong leaders with good communication skills NOW.

I am supporter of the new RNC Chairman Michael Steele, and am still hopeful that he will bring some much-needed change to the GOP. But the past few weeks have certainly been a rough start to Mr. Steele's tenure. At present, the GOP has received its most effective representation from the promising new cohort of Republican Governors, such as Charley Crist (FL), Tim Pawlenty (MN), and—despite his poor performance a week ago—Bobby Jindal (LA). But these individuals cannot continue to serve as the voice of the GOP on national issues; this role must be fulfilled by Republican leaders in Congress.

The Republicans have virtually no power in House of Representatives. To this end, John Boehner (the present House Minority leader) receives very little attention from the media. However, Senate Republicans retain the power to filibuster legislation and consequently wield more influence than their counterparts in the lower house.

This leads me to the individual whom I believe to be at the crux of the GOP's present deficit in representation: Mitch McConnell (KY).

McConnell assumed the role of ranking Republican in the Senate following the 2008 election. McConnell is a skilled and experienced political strategist, but as Dick Morris remarked, he "runs from microphones." McConnell seldom makes media appearances, and often gives a dry and mundane performance during interviews and speeches. I mean no disrespect to Mr. McConnell, and am very thankful to have him in the Senate. However, communication and advocacy are not his strength, and I personally believe the GOP should consider appointing a new figurehead who can effectively advocate the Republican viewpoint to the public.

President Obama is, without question, one of the most effective communicators to ever hold the office of President. Overcoming his power of persuasion will be difficult. But while it will be almost impossible to match the eloquence of his rhetoric, I believe that the GOP can find meaningful representation by selecting a spokesperson who is intelligent yet simply spoken, respectful, genuine, and down to earth—a Mike Huckabee if you will. In my opinion, the contrast provided by such an individual would problematize Obama's style of exposition, making it seem contrived, insincere, and even elitist.

As has been demonstrated throughout the history of U.S. politics, Americans have a strong affinity for straight talk. The GOP simply has to find leaders who can provide it.

Obama's "Bipartisan" Stimulus

There seems to be a lot of confusion around the meaning of “economic stimulus.” This is not surprising, given the fact that President Obama seems more concerned with convincing the American people that the stimulus bill should be passed according to his timetable, than explaining HOW and WHY the bill will actually work. On February 5th, President Obama remarked in a speech:

Well then you get the argument "this is not a stimulus bill, this is a spending bill." [PAUSE] WHAT DO YOU THINK A STIMULUS IS? [LAUGHTER]

Obama is certainly correct that Keynesian economic stimulus involves the Government spending money, but a “stimulus bill” is not supposed to be just any oversized spending bill. Under the Keynesian model for economic stimulus, the Government spends money to create jobs, reinvigorate commerce, and expand new areas of the economy. While any form of government spending can arguably produce the above results, certain types of spending accomplish these objectives better than others. Infrastructure is a classic example of GOOD economic stimulus. The Government makes the initial investment necessary to build a highway to an undeveloped area outside a major city, which ideally will encourage contractors to build houses in the area, prompt businesses to open in the new neighbourhood, require telecommunication to be built, and so on. In this scenario, a onetime investment has “stimulated” the creation of an abundance of long-term jobs and commerce. This is broadly known in macroeconomics as the “multiplier effect.” Now contrast this with the present stimulus bill’s $600 million provision to buy hybrid cars for the Federal Government. This expenditure will give a onetime boost to the automotive industry which will trickle down to suppliers and others, but it does not have the same potential to stimulate exponential economic growth.

Obama’s stimulus bill is full of provisions that do not embrace this “multiplier” effect, and will arguably do little to perpetuate long-term economic growth. Some of these provisions might be worth-while expenditures, but they are NOT good stimulus in the eyes of many.

The aforementioned joke is among the many comments that Obama has made to discredit and belittle those who oppose the present stimulus bill. He has consistently characterized the opposition to his bill as “phony arguments” and “petty politics,” and even had the nerve to tell a group of senior Republicans that they “…can't just listen to Rush Limbaugh and get things done.” Needless to say, these comments are very insulting to GOP Members of Congress, the voters they represent, the 43% of Americans who DO NOT support this bill (Rasmussen), and everyone else who believes the Government should take care when spending almost a TRILLION dollars of taxpayer money.

At present, only three of the 219 Republicans in the House and Senate are supporting Obama's stimulus bill. Some Republicans simply do not believe it is possible for government spending to fix the economy. These individuals, cannot support the stimulus bill as a matter of principle. Indeed, while historians often romanticise F.D.R.’s New Deal—down the hall in the Economics Dept—surveys have shown that approximately 50% of economists believe that the program actually prolonged and worsened the Great Depression. Many other Republicans are willing to accept the spending in this bill, but have valid concerns about its ability to produce timely and targeted results. Even the Congressional Budget office has raised serious concerns about the time required for the bill to take effect, the number of jobs it will create, and the long-term impact on the GDP of the economy. To this end, while politics are inescapable in Washington, Obama’s comments are efforts to illegitimatize the very legitimate concerns and beliefs of Republican and Democratic dissenters in the House and Senate.

In my opinion, Barack Obama has lacked leadership in the handling of this bill and has failed to acted in a bipartisan manner. To his credit, a large portion of the present bill does consist of Republican-friendly tax cuts, and he did personally ask Speaker Pelosi to remove some of the highly contention provisions from the House Bill (for example the 200 million for birth control). But his rhetoric has failed to demonstrate respect for those who hold opinions that differ from his own—either you agree with Obama or are an “old Washington” petty partisan. Despite claims during his campaign, Obama really has little to no experience bringing about bipartisan cooperation, and this deficit has been apparent over the past few weeks. Whether or not he is serious about developing such skills will become evident as time passes. Either way, he should probably refrain from suggesting that the Republican Party gets its policy platform from Rush Limbaugh.

The last couple of weeks have undoubtedly been a learning curve for President Obama and his staff. Furthermore, I recognize that this stimulus bill would not be an easy “first feat” for any new administration. But Obama needs to quit “talking at” citizens and Members of Congress who disagree with him and start engaging in dialogue that meaningfully addresses their concerns—even if the result is a respectful agreement to disagree.