The View From 1776

U.K. Telegraph reporter Nile Gardiner describes the European view of Obama’s high-handed governance.

Quote:

...I would wager that the author of L’Ancien Régime and Democracy in America would be less than impressed with the extravagance and arrogance on display among the White House elites that rule America as though they had been handed some divine right to govern with impunity.

It is the kind of impunity that has been highlighted on the world stage this week by Michelle Obama’s hugely costly trip to Spain, which has prompted a New York Post columnist Andrea Tantaros to dub the First Lady a contemporary Marie Antoinette. As The Telegraph reports, while the Obamas are covering their own vacation expenses such as accommodation, the trip may cost US taxpayers as much as $375,000 in terms of secret service security and flight costs on Air Force Two…

The First Lady’s ill-conceived trip to Marbella and the complete disregard for public opinion and concerns over excessive government spending is symbolic of a far wider problem with the Obama presidency – the overarching disdain for the principles of limited government, individual liberty and free enterprise that have built the United States over the course of nearly two and a half centuries into the most powerful and free nation on earth.

The following op-ed piece appears in the Wall Street Journal online.

AUGUST 9, 2010
Why I’m Not Hiring
By MICHAEL P. FLEISCHER

When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits.

With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it’s going to be later—much later. Here’s why.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides. And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare. That’s the small stuff. New Jersey takes $1,893 in income taxes. The federal government gets $3,661 for Social Security and another $6,250 for income tax withholding. The roughly $13,000 taken from her by various government entities means that some 22% of her gross pay goes to Washington or Trenton. She’s lucky she doesn’t live in New York City, where the toll would be even higher.

Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest—$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153. Altogether, company-paid benefits add $9,714 to the cost of employing Sally.

Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers’ comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally’s Medicare and $3,661 for her Social Security.

When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.

Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation. With government spending and deficits growing as fast as they have been, you know that more tax increases are coming—for my company, and even for Sally too.

Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare.

Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%.

To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales—something unlikely in this “summer of recovery.” We can’t pass the additional costs onto our customers, because the market is too tight and we’d lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.

And even if the economic outlook were more encouraging, increasing revenues is always uncertain and expensive. As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company’s vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.

A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government’s message is unmistakable: Creating a new job carries a punishing price.

Mr. Fleischer is president of Bogen Communications Inc. in Ramsey, N.J.

The following editorial appeared in the August 4, 2010, edition of the Wall Street Journal.

Show Me ObamaCare
Despite a voter rebuke, how an obscure mandate will reshape health care.

The political revolt against ObamaCare came to Missouri Tuesday, with voters casting ballots three to one against the plan in its first direct referendum. This is another resounding health-care rebuke to the White House and Democrats, not that overwhelming public opposition to this expansion of government power ever deterred them before.

Missouri’s Proposition C annulled the “individual mandate” within state lines, or the requirement that everyone buy insurance or else pay a tax. Liberals are trying to wave off this embarrassment, but that is hard to do when the split was 71.1% in favor in a state John McCain won by a mere 0.1% margin. The anti-ObamaCare measure carried every county save St. Louis and Kansas City with 668,000 votes, yet just 578,000 Republicans cast a ballot in the concurrent primaries.

If the practical effects of this conflict between state and federal law are likely to be limited, more importantly, Missouri’s vote revealed once again that the country is still aghast over President Obama’s health-care presumption. Earlier this week, the Congressional Research Service reported that the new bureaucracy the bill created is so complex and indiscriminate that its size is “currently unknowable.” Capitol Hill’s independent policy arm added that among “the dozens of new governmental organizations or advisory bodies,” it is “impossible to know how much influence they will ultimately have.”

No wonder Missourians rebelled, as with voters in Massachusetts, New Jersey and Virginia last year. There will be more such what-have-they-done ObamaCare moments. Wait until the public discovers the government is now literally determining what qualifies as “health care” in America.

That isn’t a typo. ObamaCare mandates that insurers spend a certain percentage of premium dollars on benefits, but Democrats never got around to writing the fine print of what counts as a benefit. So a handful of regulators are now choosing among the tens of thousands of services that doctors, hospitals and insurers offer. Few other government decisions will do more to shape tomorrow’s health market, or what’s left of it.

This command-and-control mechanism is the bill’s mandate for insurance “medical loss ratios” (MLR) of 85% for large employers and 80% for small businesses and individuals. The MLR is an accounting statistic that measures the share of premiums paid out in patient claims ("losses"). In the individual market, MLRs typically run between 65% and 75%, and Democrats like Jay Rockefeller and Al Franken think this is evidence of excessive profits, executive pay, marketing and other supposedly wasteful overhead.

The same mentality prevails in the Administration, so it may well adopt a narrow definition of medical expenses when it issues final regulations by early fall. The insurance industry is lobbying for a less rigid standard: It will be easier to run a business and turn a profit if more of the costs are considered truly medical in nature.

More notable is that people partial to ObamaCare but largely outside of politics are coming to understand the mess Congress has created. To wit, much of health care’s intellectual energy is moving toward a concept called the “accountable care organization,” which would replace today’s fragmented delivery system of mostly solo practitioners with teams of doctors and hospitals working together. These integrated groups would manage and coordinate care, use more information technology and try to improve treatment quality for chronic disease and complex conditions.

Yet “it isn’t easy to draw a bright line, or even a fuzzy line, between traditional health services and some of the more innovative coordinated models,” says Mark McClellan of the Brookings Institution and a leading accountable care proponent. The new model would rely on many tools that aren’t strictly medical, like, say, a checkup or a CT scan.

For example, how to classify a program to double-check doctors orders to avoid one of the unnecessary surgeries that kill some 12,000 people every year? Or counseling, calls, emails and other types of case management to make sure patients comply with their diabetes regimen? Or investments in electronic medical records? Obviously these programs aren’t the same as an O.R. visit, but they still cost money, often a lot of it, and many insurance programs pay or are starting to pay for them.

The possibility that these will be written out of the MLR definition is feeding a growing unease about politics shaping medicine more than it already does. The California Association of Physician Groups, the largest U.S. accountable care trade group, recently protested that a narrow MLR ruling “would create a disincentive for plans to contract with our members and undercut the coordinated care model.”

Health Integrated, a respected medical consulting firm, urged regulators “to avoid discouraging or inadvertently extinguishing the successful innovation that (so frequently) arises only from a plan’s ability to try new ideas.” Even North Dakota’s Democratic Rep. Earl Pomeroy, who voted for the bill, argues that tight MLR regulation “could have a chilling effect on future innovative programs.”

“The real question is the overall philosophical thrust, which will determine the long-term direction of health care,” Mr. McClellan says of the coming definition. The regulatory debate is dominated by Senator Rockefeller and others on the left who are still angry they never got a public option and are trying to use MLR as a proxy for controlling the insurance industry. The irony is that the new health models they claim to favor may be collateral damage, even as insurers take the fall for the problems Congress created.

Another danger concerns the individual market, where a wave of destruction could be imminent. If the MLR definition is so arbitrary that health plans can’t cover their claims and expenses, they’ll simply withdraw that book of business. Mila Kofman, Maine’s insurance superintendent and an ObamaCare supporter, warned that “the federal standard may disrupt our individual health insurance market” and is seeking an exemption. Her protest is all the more notable given that Maine’s health regulations closely resemble those that are about to be imposed nationwide.

Ms. Kofman and others are right to worry. In the 1990s, an MLR crackdown in Washington state caused the individual market to collapse in 36 of 39 counties. Too bad for the people with coverage today who were promised they could keep it if they liked it.

This fight over medical loss ratios is an early taste of how a “government takeover” operates in practice. The state insurance commissioners advising the federal government—and who know something about the business—have already missed several deadlines because writing a uniform definition of medicine is “time consuming,” while a wrong move would “destabilize the marketplace and significantly limit consumer choices.”

We predicted that under ObamaCare politicians and technocrats would dominate medicine, and here they come. Without more Missouri-style revolts—or perhaps in spite of them—the rest of us will soon learn how competent they really are.

In that, he is not unique.  Ivy League graduates since the 1960s have been steeped in doctrine of the American, liberal-progressive sect of the religion of secular socialism.  An essential aspect of that doctrine is the belief that material circumstances, not spiritual values, individual consciences or individual experience, are the factors that determine human social behavior.  In the Marxian version of that doctrine, human nature can be remolded by government regulations that inflict pain or give pleasure, in order to channel our behavior.  Hence the heavy emphasis of liberal-progressivism upon central planning and social engineering.

Such is Obamacare, which inflicts the pain of huge increases in taxes, fees, and ultimate costs of service, along with rationing of medical care.  President Obama and House Speaker Nancy Pelosi, however, are confident in their supposed superior understanding of history and sociology.  Their confidence leads them to declare that Obamacare, detested by the majority of the nation’s population, will be welcomed once we non-intellectuals understand all the benefits conferred by their socialization of the nation’s healthcare system.

Bottom line: they know, better than you or I, what is best for us.

Thomas Sowell sheds further light on the left-wing pretension to omniscience.