Thought of the Day: Stark Choices

A wag once said, with no disrespect meant to the beast, that a camel is a horse designed by a committee. That characterization almost perfectly describes most government prescriptions. Too often government committees combine corruption with inefficiency. Incompetence is thy middle name. Regardless, there is no question that regulatory bodies and agencies are needed. Society cannot operate in a vacuum, else anarchy would prevail. We all agree there are functions that are better performed by government – defense, infrastructure, police and fire departments, education and some social services are but a few. Some of these are best performed by state and local governments and others by the federal government. But there is, or there should be, a limit.

Our system of government and the society we enjoy have survived so long, in part, because the Constitution provided for a government equally balanced between the executive, legislative and judicial branches. The Founders had known first hand the dangers of an all-powerful central government. They did not want another George III. The Tenth Amendment specifically states that powers not specifically “delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Both the Declaration of Independence and the Constitution assumed a nation of responsible citizens who would succeed or fail according to their individual abilities and aspirations. We were created equals in the eyes of the law and of God, but not in our skills, intelligence, desires or work habits.

We are witnessing the responsible individual being replaced with an increasingly dependent one. It is true that the society in which we live is far more mobile than it once was and that family and/or voluntary groups cannot be presumed to fully provide for the needy in the fashion that communities once did. As a compassionate people, we see a need for government to play a supporting role. It is a concept that politicians understand; for it is professionally more rewarding to give than to deny. But it sets society on a slope that gets increasingly slippery. 

There are two ways governments can be overthrown – by revolution, or by stealth. The first is more common. We have seen it most recently in the Middle East, where dictatorial regimes have been replaced with governments purportedly more democratic in nature. The second is more insidious, but equally deadly, as the nature of government changes without the citizens fully realizing what is happening. It is the latter that has been happening in the United States over several decades, but with increasing intensity under President Obama.

These thoughts occurred as I read George Will’s op-ed in Investor’s Daily over the weekend: “Romney Completes a Trifecta, Then Introduces a New Issue.” The new issue is the role of the Independent Payment Advisory Board (IPAB.) IPAB was created as a provision of the Patient Protection and Affordable Care Act. Its explicit task is to achieve specified savings in Medicare “without affecting coverage or quality.” A fifteen-member appointed board becomes the decision maker. It will be endowed with dual responsibilities that almost certainly will result in conflict – to bring the net growth in Medicare spending in line with a predetermined level, but without negatively effecting coverage, modifying eligibility, or rationing care. Defenders of IPAB take comfort that the law bars the Board from affecting care through rationing. But does it?

It is well understood that, left untouched, Medicare will go bankrupt. Medicare spending, currently at about $500 billion, is forecast to grow at 6.3% between 2013 and 2020, as the number of baby-boomers who become eligible continues to expand and as costs escalate. Medicare’s unfunded liability has been estimated to be $50 trillion. The IPAB Board is required to dictate reductions in Medicare, if spending per capita is projected to exceed specific targets. From fiscal year 2015 through 2019, that target is based on inflation gauges. Beginning in 2020, the target is based on the growth of GDP plus one percentage point – a level Mr. Obama would like to reduce to 50 basis points. 

Congress cannot change what IPAB dictates, except with an amended proposal that includes similar cost reductions, and Congress cannot do so without approval from both chambers, with a three-fifths super majority from the Senate. Consequently, what IPAB proposes will become law with no passage of a Bill from Congress and no signature from the President. It is an enormous amount of power to place in the hands of fifteen unelected appointees. To achieve its mandate, IPAB will have to control spending to doctors and hospitals. If that is not rationing, I don’t know what is, no matter what the document may say.

Even more extreme, as Mr. Will writes: “By Obamacare’s terms, Congress can repeal IPAB only during a seven-month window in 2017, and then only by three-fifths majorities in both chambers. After that, the law precludes Congress from ever altering IPAB proposals.” It is a frightening usurpation of power and, my guess, not well understood.

There is no question that expenses in healthcare have been ballooning, but as much as anything it has been the absence of free markets and uncontrolled tort costs that are to blame. Employer-based healthcare has been part of our lives for sixty years. Individuals, unless they are self-employed, are not encouraged to seek out their own plans. If they do, they must pay for them with after-tax dollars; in contrast, employers pay with pre-tax dollars. Additionally, insurance companies are not free to operate across state borders, limiting competition and opportunities for individuals. 

Frivolous class action lawsuits have made the practice of medicine unaffordable for many physicians and have raised the cost of hospital care, again raising costs and limiting competition. They have caused expensive drugs to be prescribed and unnecessary tests to be conducted, as a cover-one’s-behind strategy. Yet nothing in Obamacare was done to address either the lack of competition or tort reform. Time and again, the market place has proven to be the most effective means of setting a price. There are certainly ways in which market forces can combine the need to take care of those with preconditions and those without insurance, but it requires empowering individuals, and putting reasonable limits on unreasonable demands from trial lawyers.

Obamacare and IPAB specifically are indicative of the trend toward Socialism or, what Governor Mitch Daniels refers to, “shock and awe Statism.” It is the Left’s prescription for improving society, but with the unfortunate consequence of increasing dependency and lessening individual freedoms.

We are at a crossroads of sorts. There are stark choices in this election. Polarization has created extremes, which can be represented by Ayn Rand’s John Galt at one end, and H.G. Wells’ Eloi at the other. Galt represents the libertarian’s libertarian, a society without God and minimum government. There is little risk of a resurrected John Galt, despite the prominence of the Tea Party. For many years, under Republicans and Democrats, the country has listed toward Socialism. While the Eloi will not be our future, it is the directional drift that matters. Mobility has reduced the role family once played and wealth has allowed the nation to become institutionally compassionate. But we need a better balance in our lives. 

The direction we are on is unaffordable. The degree of the slope has tilted dangerously under Mr. Obama, and the consequence has been an increase in debt and deficits. One has only to view the dozen slides that were put together by the Obama-Biden re-election committee entitled “The Life of Julia” to understand the direction Mr. Obama wants to take the country. It is a dystopian utopian world. We have already made promises that we will not be able to afford, as cities from Alabama to California to Rhode Island can attest. It seems irresponsible to add to the burden – the benefits may accrue to us, but the costs will be borne by our grandchildren.


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