Sunday, July 29, 2012

If You Are a True 'Small Government', 'Fiscally Responsible' Jeffersonian, Bowles-Simpson Is The First Step Back To Normalcy!

'What Are You People Doing To America?'
As opposed to two other fine-feathered friends:

1) The 'No Tax Hike', 'Big Government' Hamiltonian Federalists

2) The 'More Taxes', 'Huge Government Monolith' Hamiltonian Super-Federalists of Today

There really is not a 'small government', 'limited government', 'fiscally responsible' major political party in America today, is there?

Let's look at the video-tape of the past 12 years or so:

1)  The Republican 'Golden Chance' from 2001-2007

Republicans had their golden chance to lower federal spending and break the back of the upward parabolic arc of federal spending, mostly in Medicare and Medicaid, during their virtual total control of the White House, Congress and the US House of Representatives from 2001-2007.

They failed.

What did they do instead?

The GOP and President George W. Bush:
1) passed massive tax cuts....twice;
2) passed No Child Left Behind (federal mandates without funding mechanisms to pay for it);
3) eliminated PAYGO in the federal budget process (so they could pass their favored tax cuts);
4) passed Medicare Part D, the Medicare Prescription bill which now has $16 trillion in unfunded liability staring us in the face; and
5) engaged in two wars overseas in Afghanistan and Iraq at the same time without raising taxes to pay for it or cutting spending elsewhere in the budget to make them at least 'budget-neutral' to some degree.

Other than that, the GOP was 'great' on fiscal discipline and budget balancing, right?

Republican truculence against any spending cut or reduction deal that included any tax hikes or reductions in deductions,exemptions and loopholes has not stopped the growth of federal spending one iota has it?

The last 12 years has proved this 'starve the beast' strategy first advocated by Alan Greenspan and now Grover Norquist to be totally ineffective against higher spending, higher deficits and more national debt.

It simply has not worked, has it?  We will give you $16 trillion reasons, as in accumulated national debt, to agree or else, well:

'The definition of insanity is to keep doing the same thing over and over and expect different results'. 

(commonly attributed to Albert Einstein but he was too smart to say such a thing)

On top of that, President George Walker Bush 43 vetoed. only, two. appropriations. bills. during. his. entire. two. terms. as. President!!!

Only 1 when Speaker Nancy Pelosi and the Democrats took over control of the House from 2007-2009 for his last two years in office.

What happened?  Did the President and Karl Rove forget where the veto button was in the Oval Office for 8 straight years?

Water over the dam.  Can't cry over spilled milk. Or accumulated debt of about $5 trillion from 2001-2009. Right?

The Republicans lost their claim and title to being 'small government, balanced budget fiscal conservatives'  long about 2003-2004 (we saw it unfold with our very own eyes) just like Coca-Cola tried to boot away its brand image long ago when they came out with 'New Coke'...and it bombed.

Republicans have succeeded when it comes to 'no more tax hikes'.

Republicans have failed miserably when it comes to: balancing the budget; reducing debt; cutting spending; reforming entitlements, getting rid of wasteful spending; reducing the size and scope of the federal government.

And that is where the problem is.  Failure to control spending while cutting taxes opened the door to massive increases in the national debt under GOP rule.

America can not survive massive amounts of debt being piled up without cessation any more than Greece or Spain can.  It catches up to every nation in history who has ever tried it and when their debt-holders start making decisions for them in terms of policy and decision-making, that is when things turn ugly fast.

Republicans are still trying to put Humpty-Dumpty back together again which is why so many former Republicans have officially registered as Independents/Unaffiliateds.

'Lost Republicans' some call them. Like 'Lapsed Catholics', we suppose.

1.6 million registered Independents here in North Carolina and increasing at a 8% per annum rate.

Hence, the reason why current Republicans now in office are now officially the 'No Tax Hike/Spend More Money/Incur More Debt Hamiltonian Federalists' of today.

2) The Democrats 'Golden Chance' With 'Hope and Change' from 2009-2011

Democrats had their 'golden chance' to be fiscal budget heroes in 2008 when the American people elected now-President Barack Obama to lead them in the White House in a new age of 'transparency', 'cooperation', 'bipartisanship' and yes, believe it or not:

'I will cut the federal deficit in half in the next 4 years!'

Well, either President Obama is not very good at math or he just really never meant to cut the budget deficit in the first place, did he?

Washington is more divisive than ever.  The federal debt has been mushrooming under President Obama's leadership to where it has added on $5 trillion in JUST 4 YEARS!

So much for 'Hope and Change', huh?

If there were ever a gold medal for fiscal imprudence and mismanagement under a President, President Obama would get it. He has only vetoed 1 spending bill in his term.

The only reason why President Bush doesn't look so bad as a fiscal manager is because President Obama has come along and out-done him!

President Obama is the very same President who set up the Bowles-Simpson Commission in the first place!

When Messrs. Simpson and Bowles came out with their recommendations late in 2010, President Obama ran away from them 'like a scalded dog' as Mississippi Governor Haley Barbour is fond of saying.

President Obama has shown no signs of signing Bowles-Simpson when and if it passes Congress. Or even supporting it publicly.

We think Mitt Romney understands the severity of our intertwined budget and economic troubles enough to where he would sign it as the first step under his first term the White House.

Democrats somehow magically and mystically believe that 'more taxes will solve everything (...and the band played on)' as The Temptations sang about long ago.

It won't.  They could try to confiscate all the wealth of every rich person in America today, make them poor and destitute and put Warren Buffett and Bill Gates on welfare...and we would still have trillion-dollar deficits in the future due to Congress' over-spending addiction and imbalances.

Democrats have never seen a federal spending program they want to cut...unless it is in national defense for some reason.  Their idea of 'balancing the budget', apparently under the 'leadership' (sic) of Senator Harry Reid, is to never pass a budget in the first place!

After all, if you never pass a budget, how can anyone say 'you didn't balance the budget!'

'Mr. Majority Leader of the US Senate: You haven't done anything to arrest this exploding spending problem!'

Hence, the reason why President Barack Obama leads the modern-day 'Hamiltonian Monolithic Super-Federalist Party' in America today.

Thousands of former 'conservative democrats' have fled the modern Democrat Party and registered as Independents as well.  (see this link to see how many white Southern Democrats are still left in the US Congress.  From a high of 61 in 1983 to 15 today to perhaps less than 7 after this upcoming election)

Democratic registrations in North Carolina have been dropping at about a 5% clip along with the Republican registrations for years now.

Where do they go?  They sign up as Independents or Unaffiliateds.  25% of the official voter registration here in North Carolina but probably more like 30% of the effective registered voting population.

Just like you should do if you are fed up with the childish pranks and tactics of both sides now.

3) So what does this have to do with Simpson-Bowles or Bowles-Simpson, whatever you want to call it?


If you are an Independent because you are fed up with such dilatory tactics as we have seen over these past 12 years, and you want your federal tax dollars to be spent more effectively and efficiently, you should call or email your Representative in Congress or Senator and tell them you will not vote for them in November unless they promise to vote for Bowles-Simpson.

If you are an Independent who is sick and tired of the childish games these politicians play on a daily basis when they focus on someone's tax returns from 10 years ago or what someone did or did not do in college (who cares?), then you will call or email your Senator or Representative and tell them to vote for Simpson-Bowles or else you will not vote for them this November.


Because Simpson-Bowles is the only plausible option out there today that has ANY chance of:

1) reforming and rationalizing our income tax system any time soon;

2) reducing and reforming entitlements (which are swamping us as a nation like the tsunami that hit Japan last year) and 

3) is ready to be voted on and passed this year, not next year or the year after or when elephants fly and/or the roosters come home to roost 

Here is a very simple and short summary of the Bowles-Simpson plan.

Here are the six basic tenets of the plan:
  1. Serious cuts and reductions in domestic discretionary programs.
  2. Reduce personal income tax rates to 8%, 14%, and 23% and eliminate all deductions, exemptions and loopholes. (2 other options include deductions but have higher rates to compensate)
  3. Enhanced focus on the internal factors of medical care cost reform.
  4. Mandatory program spending cuts.
  5. Social Security reform; raise retirement age to 69 by 2075.
  6. Budget Process Reform
It ain't perfect. There are some things in there that you will disagree with.

We think the retirement age should rise to 69 by the year 2025 at the latest.  We think the PAYGO budget mechanism worked and worked well to force budget discipline and trade-offs and should be re-instated in perpetuity.

We disagree with the setting the cap on federal spending at 21% of GDP.  Congress will always spend to whatever cap is imposed. Set it at 20%, 19% is better.

But guess what?  There is no provision saying federal spending can't be 19% or 18% or even 15% of GDP even under a cap of 21%!

Fiscal conservatives just have to sell the virtues of smaller Jeffersonian government and more freedom better and get more of them elected so they can pass such spending reductions through Congress and then get a President to sign them into law.

Just like the Founders planned it.

Nothing in politics is 'perfect'. The Founders didn't want it that way either.  They felt, as did my former boss and mentor, former Congressman Alex McMillan, that the best legislation was one where everyone went home 'not happy about it in its entirety, had heartburn over certain aspects of it, but each got a major goal  accomplished' in the process.

There are enough things in Simpson-Bowles for EVERYONE to agree with today and get started on this road back to normalcy and confidence that America can actually solve its own problems unlike Greece or Spain.

Guess what?  There is nothing else out there right now that even comes close to being able to pass the House or the Senate and go to the White House where we hope President Obama will think enough about this nation instead of his political agenda and sign it into law.

NOTHING got done under 6 years of total Republican rule from 2001-2007 to reduce the rate of growth or size of government or the national debt.

NOTHING got done under the 2 years of divided rule under W and the Democrats from 2007-2009.

NOTHING has gotten done over the past 3.6 years under President Barack Obama's leadership, the Democratic Senate and the Republican House on the budget, spending, debt or even taxes.  (Watch out for the fiscal cliff of December 31, 2012 at midnight when everything turns back into pumpkins)

That is an accumulated 12 years of 'getting nothing done!' on the most pressing national issue we face: the exploding burgeoning federal budget, deficit and debt.

Our national debt is now over $15 trillion now heading to $16 trillion.  When are you going to get nervous enough about this to call your Senator and Congressperson?

If you are opposed to Bowles-Simpson, you are simply opting for the status quo, which is not great in case you haven't noticed.

You are, in essence, not the 'small limited government person' you think you are if you are a 'conservative'.
You are, in essence, not the 'fiscally responsible' person you think you were in the mold of Bill Clinton or something.

You are for: 'More spending.  More debt. More trouble down the road'.

Thanks, but no thanks.

Isn't it about time our elected leaders act like 'leaders' and 'statesmen' for a change instead of some Romper Room kids throwing Play-Doh at each other and holding their breath while having a temper tantrum?

If you don't like something in this bill, you can tell the next Senator or Congressman who represents you to repeal or reduce whatever part of Simpson-Bowles you don't like next year.

But it has to be passed first.

Before it is really too late.

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Wednesday, July 25, 2012

A Joe Namath Guarantee: CBO Says Obamacare Is Going To Cost A Lot More Than You Think!'

This sobering report is from Chuck Blahous, a good friend of ours who worked in Senator Alan Simpson's office, the 1994 Entitlement and Tax Reform Commission set up by President Bill Clinton, the Bush White House on Social Security and entitlement reform and is now a Trustee on the Social Security/Medicare Committee.

(We apologize for the number of articles we ave been sending lately but everyone seems to be figuring out that this Obamacare legislation is not turning out to be the 'deficit-cutting' machine President Obama and the Democrats said it was when passed in 2010)

Chuck Blahous is a 'big brain' and he has 'been there/done that' when so many casual observers and yappers on TV, quite honestly, 'haven't'.

That is just the plain truth.

He knows what he is talking about.

Would you rather hear some color commentator who never played quarterback in the NFL talk about the game....or have a beer or two with 'Broadway Joe' Willie Namath from the 1969 New York Jets talk about how he 'guaranteed victory' in the Super Bowl against the vastly favored Baltimore Colts...and won 16-7?

Chuck Blahous is 'Joe Willie Namath' when it comes to SS, Medicare and health care 'reform' (sic) and everyone else is Howard Cosell and Marv Albert...or worse.

See if you don't agree:

'This morning e21 published my piece analyzing CBO's re-score of the 2010 health care law.


The Congressional Budget Office (CBO) has just published, in two reports, its updated score of the 2010 health care law. The new score is bad news from almost any vantage point.

CBO’s fiscal evaluation of the law is worse than before, even though the number of people receiving health insurance coverage is now projected to be fewer.

CBO now finds that relative to the baseline the health law reduces deficits by $65 billion through 2021. This is barely half as good as the $123 billion anticipated last year. (See graphs at link). This scoring compares legislation with a hypothetical budget baseline scenario rather than to actual alternative law.

Relative to actual prior law, the 2010 law has caused a fiscal worsening. CBO’s latest update suggests that the worsening is still at least $340 billion through 2021, though a precise estimate cannot be made without additional detail on how the law’s Medicare savings would be allocated between its trust funds.

Some news reports say that the latest CBO score finds lower costs for the law as a whole.

That is not how I read CBO’s latest reports.

The press appears to be seizing on CBO’s having reduced the projected cost of one particular set of provisions of the law (the coverage provisions). But CBO’s assessment of the total cost of the law has gone up, in part because estimates of other provisions’ cost savings have been reduced.

Total outlays under the law are now projected to rise by $890 billion through 2022, or $771 billion through 2021. Last year the projection was $604 billion through 2021. Even after adjusting for the subsequent suspension of the CLASS program (narrowing the difference by $86 billion), this is a substantial increase in projected spending for the law as a whole.

Once again, this is simply the number resulting under the scorekeeping convention. In comparison with actual prior law, the cost increase is much higher. My study based on 2011 projections previously estimated that federal outlays would increase by over $1.15 trillion through 2021. CBO’s latest report suggests this should be increased to between $1.19 and $1.2 trillion.

One thing there is no disagreement about is that costs per covered individual under the law have gone up.

Compared with CBO’s 2011 projections for 2021, CBO now projects that 3 million fewer people will have coverage under the law. This is in large part because it now sees 11 million being covered under Medicaid (as opposed to the 18 million projected last year). Some but not all of this reduced Medicaid participation would be made up by greater participation in the exchanges. For the law to now be expected to cover fewer people while having a worsened financial impact is clearly bad news.

CBO takes pains to stress the uncertainty of these projections. Somewhat ominously, CBO recognizes a point that I previously made: “some states will probably seek to implement a partial expansion of Medicaid eligibility to 100 percent of the FPL, because, under the ACA, people below that threshold will not be eligible for subsidies in the insurance exchanges while people above that threshold will be. . .”

Quite so. If many or most states go that route, the fiscal worsening under the law may well be worse than the $340 billion over the next ten years that one derives from the CBO projections.

Once again, the latest CBO update shows worsened finances for the 2010 health care law, despite the use of assumptions regarding state behavior that make the projections more fiscally optimistic.

Using the scoring convention that shined such a flattering light on the law at the time of its original passage, the law now looks less favorable.

Total costs for the law, despite the first day’s press reports, are now somewhat higher. 

These findings arise despite a decrease in the number of projected insured.

And we should still expect the legislation to add over $340 billion to deficits during the next ten years, and more beyond, relative to actual prior law.

All in all, CBO’s latest is another sobering report on the fiscal consequences of the health care law.'

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Tuesday, July 24, 2012

How Much Is The Obamacare Mandate Going To Cost You? by Grace-Marie Turner

We are going to keep looking for people far better qualified than us to help bring clarity and exposure to you about the convoluted Obamacare law and the regulations that are being written on a daily basis now to implement them for full rollout in 2014.

We have found Grace-Marie Turner of the Galen Institute in Alexandria, Virginia to be a straight-shooter when it comes to explaining health care issues in language most people can understand.

So we have taken the liberty of reprinting her op-ed below in the hopes that you learn more today about Obamacare than you knew yesterday.

Op-ed by Grace-Marie Turner, President of the Galen Institute published in Forbes on July 24, 2012.

'So just how much is that new ObamaCare tax going to cost you?

For some people, a lot more than you have been hearing.

The individual mandate section of the health overhaul law outlines the structure of the “taxes” that must be paid by those who don’t buy government-approved health insurance – starting at $95 a year the first year for individuals.

Many people are thinking it will be much cheaper to simply pay the tax than to buy policies that will cost thousands of dollars more.

Most news reports have emphasized that refusal to comply with the health insurance mandate subjects these “scofflaws” to a “modest fee.”

But some citizens could face much higher tax taxes — $12,000 a year or more — for failing to comply.

Revealing one of the many inconsistencies in the Supreme Court’s decision on ObamaCare, the syllabus of the decision says that “The payment is not so high that there is really no choice but to buy health insurance.”

But, in fact, the annual tax will eventually for many people equal the cost of an expensive health insurance policy. According to a research arm of Congress, the Congressional Research Service, over time, “families will both pay higher penalties and reach the cap at lower income amounts.”

This new ObamaCare tax will, like the Alternative Minimum Tax, hit more and more people over time as incomes rise. The new taxes are complex and escalate depending upon a person or family’s income.

They have basically three tiers:

Flat Fee: The first tier for lower-income taxpayers is fixed, starting at $95 for calendar year 2014 (the first year the mandate is effective), $325 in 2015, and $695 in 2016 and beyond. The total family penalty is capped at 300% of this flat dollar tax — $2,085 in 2016 – for those earning less than about $110,000, according to the CRS. 

Percentage of income:  The next tier is based upon a percentage of income: 1.0% in 2014, 2.0% in 2015, and 2.5% thereafter. 

Cost of a basic health plan:  However, as household income increases, eventually the percentage tax will rise to equal the cost of the national average premium for a “bronze-level health plan,” where it is capped. (The bronze plan is expected to be the least expensive plan in the line-up of policies that will be offered through the ObamaCare health insurance exchanges. The Congressional Budget Office estimates that in 2016 the cost of a bronze-level plan for a family would be between $12,000 and $12,500 a year.) 

Buying insurance or paying the tax is portrayed as a neutral choice by Chief Justice John Roberts who wrote in his majority opinion “…imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice'. 

Buy health insurance or pay a tax. Your choice. 

For example, a family earning $120,000 will face a tax of $3,000 a year if they don’t buy health insurance with the government’s stamp of approval. 

For some, it will make sense to pay the tax and take their chances since health insurance companies will be forced to sell them a policy when they need it at the same price as if they had been paying premiums all along. 

That will, of course, send the cost of health insurance soaring. Higher-income individuals face a much larger tax because, for them, the amount of the tax is determined by the cost of a government-approved bronze health plan. 

A family earning $500,000 a year pays 2.5% of its income in the tax and hits the cap at $12,500. 

The tax could be higher, of course, if the cost of this government-approved policy escalates. 

There are subsidies for some citizens through Medicaid and through new health insurance bureaucracies, plus exemptions for certain classes and categories, such as those qualifying for hardship or religious exemptions or whose incomes are less than the filing threshold for federal income taxes. 

Remember that the government will determine what health insurance policies meet its approval to satisfy the individual mandate. If citizens decide they prefer a different health plan, they would have to pay for that insurance as well as pay the new tax. 

There are significant new reporting requirements for individuals to prove to the IRS they have maintained qualified health insurance every month during the year, that any premium subsidies they are receiving are justified by their income and family size, and how much their employer paid for their coverage, for starters. 

The tax penalty will be collected by the IRS and extracted from any income tax refund due. 

The legislation, however, ties the IRS’ hands in using its normal collection tactics, such as liens, levies, and criminal penalties. Surely every family will be making its own calculations and cost-benefit analyses involving the health insurance mandate. 

McKinsey & Company has reported that as many as 30 to 40 million Americans could forgo health insurance, with some figuring they can purchase a policy whenever they are facing expensive medical bills. 

The individual mandate tax is only the newest in a long list of new Obamacare taxes, including a new 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint) plus a new Obamacare 3.8% surtax on “investment income” for those in the same income categories. 

This added tax affects dividends, interest, rent, capital gains, annuities, home sales, partnerships, etc. Over time, these new ObamaCare taxes will hit more and more middle income families. 

Recall that the Alternative Minimum Tax targeted only 155 taxpayers when the first version passed in 1969, but today it hits millions of people. 

Now that the American people see that the Supreme Court didn’t rescue them from Obamacare, there is renewed focus on the details of the law. 

The individual mandate is only one of dozens of provisions that will slam into our economy, hitting American families like a freight train in 2014.'

Read online at Forbes

You can contact Grace-Marie Turner at The Galen Institute at the following address if you want to learn more or help support her efforts to 'reform' health care reform:

Galen Institute
P.O. Box 320010
Alexandria, VA 22320

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Sunday, July 22, 2012

The High Cost Impact of More Regulation and Admin/Executive Staff on Health Care Inflation

You have heard a lot about 'health care inflation' over the past 40 years or so.

You would think that much of the 'inflated' cost of health care would have to do with paying a massive skyrocketing number of highly-skilled physicians, surgeons and specialists, right?

After all, these doctors are THE most important part of any medical procedure when it comes to figuring out what is wrong with your body, isn't it?

We have had several surgical procedures over the course of our lifetime.  The two most important people I wanted to talk to before the surgery were 1) the surgeon but most especially, 2) the anesthesiologist.

To surgeon: 'Surgeon, can you perform this procedure really well?'
Surgeon: 'I have done more thymectomies that any person who has ever lived in Planet Earth.  I have done so many of them I could do this one stoned, blindfolded and half-crocked!'
'Ok, then.  You are my man!'

To anesthesiologist: 'Will I wake up after the surgery?'
Anesthesiologist: 'Yes, sir, you will!'
'That is all I need to know.  When do we start?'

(unabashed plug for Duke University Medical Center surgeons and anesthesiologists...they were awesome...and right)

If you thought most of the increased costs in health care were going to the physicians and surgeons and specialists, you would be most definitely wrong.

Take a close look at the chart above.  The number of doctors in America has roughly has doubled or so, perhaps a little more.  Perhaps 125% growth. The population of the US has increased about the same amount over the same period of time.

But take a good look at the number of administrators that have been added to the US health care scene in these past 40 years! Over 3000%!

When something, ANYTHING, increases by 3000%, that means the number has increased exponentially, not linearly or even geometrically.

125% growth over 40 years is about a doubling in number.  3000% growth means 'it has grown in magnificent leaps and bounds'!

If there were 10 doctors in your hometown in 1970, there would be roughly 25 doctors working there today to take care of everyone.

If there were 25 administrators in the medical field in your town in 1970, there would be over 750 health care administrators in your town today.

Where do you think the increased costs in health care have occurred over that time frame, in doctor's salaries or what is more commonly referred to as 'G&A' expenses ('General Administrative')?

The federal government has made it clear that they think the problem is in doctors' fees since they have repeatedly been lowering the 'Medicare/Medicaid reimbursement rates' for the past 2 decades at least.

But they don't control the salaries of the CEOs and the administrative staff of these large hospitals and medical practices so they can't 'lower' the reimbursement rates to them directly, at least as they can with the doctors.

Are there more or less support staff nowadays than way back when?

Think about the elementary school, junior high school, high school you attended perhaps as far back as the Dark Ages of the 1960's (Triassic Period) or the 1970's (Jurassic Period).

Do you remember tons of 'other people' working there other than the great teachers you had and perhaps a principal, assistant principal, some office support staff, coaches and 2-3 driver's ed teachers?

According to a recent Texas education report, every public school had roughly as many support staff and administrators in it as the number of full-time teachers and educators.

In every school. In 2009.

That is a 1-to-1 ratio for those of you keeping score at home.

So it is not just health care where the number of administrative staff has exploded over the past 35 years, is it?  Public education suffers from the same sclerotic bureaucratic diseases as modern American medicine today.

What is driving this surge in administrative staff in the medical world and public education?

You guessed right.  More regulation and laws from Washington, the state capitals and the local governments. (see 'Regulations')

We have had doctors tell us they spend 50% of their waking, working-day time filling out paperwork, complying with regulations and overall, making darned sure they do not get sued by anyone.

50% of their precious time.  Even with all those staff support people.

Weren't doctors trained to 'fix' people and help cure them of what ails them?  Why do we tolerate such a clear waste of time and talent when so many people are sick and need their help?

That would be like paying LeBron James $100 million ostensibly to play basketball for the Miami Heat and win championships....'but, oh, by the way, fill out all these attendance and concession forms in triplicate before, during and after the game and make sure you have them on my desk by 9:30 pm every night, win or lose!'

Making our well-trained medical personnel to fill out forms for half the time they are at work is like asking Secretariat to run in The Kentucky Derby with 5000 pounds of weight on his broad back.

We want them to do their jobs which is to heal people and help them get well.  Just like we should all want great teachers to 'just teach our kids well' and not be over-worked secretaries, truant officers, psychologists and crowd control police.

We recently read of a large medical center where 42 administrative personnel were making well in excess of $1 million per year in salary.  Apiece.  Per head.  Per capita.  Generous benefits on top of those generous salaries.  The two top executives were pulling down $6.2 million and $4.3 million in annual salary.

That is a lotta tongue depressors and MRIs that have to be sold to pay for those high salaries, doesn't it?  Medicare and Medicaid only covers some of those costs so where does the medical industry turn to get the money to pay for these high salaries and other costs of what are typically hundreds of millions, if not billions, of dollar enterprises?

You.  If you pay 100% of your health care.  Which you probably don't.  In which case, it comes out of your insurance company's pocket.  In which case your health care premium goes up 16% per year as does the cost to your employer.

Before Obamacare kicks in full force in 2014, that is.

Want to take a dizzying look at the number of regulations now underway for Obamacare and 'being promulgated' (we love that word for some reason) as we speak and have been for the past 2 years?

Take a look at this CMMS link NOT on a full stomach and see if you understand a darned thing about what is going to be happening as of January 1, 2014 if Obamacare is not repealed, rolled back or significantly amended and improved (streamlined)

Here's just one footnote from the Federal Register of just one of these hundreds of new regulations:
7 This language underscores and is not inconsistent with the scope of the disclosure requirement under the existing Department of Labor claims procedure regulation. That is, the Department of Labor interprets 29 USC 1133 and the DOL claims procedure regulation as already requiring that plans provide claimants with new or additional evidence or rationales upon request and an opportunity to respond in certain circumstances. See Brief of amicus curiae Secretary of the United States Department of Labor, Midgett v. Washington Group International Long Term Disability Plan, 561 F.3d 887 (8th Cir. 2009) (No.08–2523) (expressing disagreement with cases holding that there is no such requirement).

You wanna bet that every hospital and medical facility in America is going to have to hire tons of new administrative people, lawyers and Executive VPs for Compliance in the next several years?

Where do you think health care costs are heading in America then?

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Thursday, July 19, 2012

Yikes! As A Matter of Fact, You DID Build (Those Roads and Bridges!)

President Obama sure stirred up the hornet's nest last week when he told a small business group in Roanoke, Virginia:

'If you've got a business, you didn't build that!' 

What would you think he was talking about if you had nothing other than those 9 words to read?

The statement came across to many as further evidence that the President is hostile to the private sector, profits and the whole free enterprise system. 

That one single statement, coupled with his stated incessant desire over the past 3.6 years to 'raise taxes on the wealthy'; 'make them pay their 'fair share' (whatever that is...someone please give us an exact number or percentage of income that can truly be considered 'fair') and his propensity to regulate everything under the sun in America sure seems like 'proof' to any reasonable observer, doesn't it?

To be fair about it, here is the exact transcript of what he said in its entirety:
"There are a lot of wealthy, successful Americans who agree with me (one person exactly, Warren Buffett, our insert)-- because they want to give something back. They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own.
You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there. "If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges.
If you’ve got a business -- you didn’t build that. Somebody else made that happen.
The Internet didn’t get invented on its own. (We thought Al Gore invented the Internet- our insert again) Government research created the Internet so that all the companies could make money off the Internet. 
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires. "So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together. That’s how we funded the G.I. Bill. That’s how we created the middle class. That’s how we built the Golden Gate Bridge or the Hoover Dam.
That’s how we invented the Internet. That’s how we sent a man to the moon. We rise or fall together as one nation and as one people, and that’s the reason I’m running for President -- because I still believe in that idea. You’re not on your own, we’re in this together."
We can see where he 'said':  'If you have got a business, you didn't build that'.  It is right there in the transcript for all the world to see.

Either President Obama's teleprompter went out-of-whack and he went off on a bad tangent ad-libbing or he has a very bad and probably now-fired speechwriter.

But to be entirely charitable, even though the fun thing to do would be to pile on in this political season, we will at least acknowledge that the President might have been referring to the fact that each individual business person did not build all the roads and bridges and the Internet on their own.

Which is sorta true.  But not entirely.

We think The President has bungled his own 19th century robber-baron populist attack on the job creators with this line of attack.  And he probably should stop it and cease and desist unless he wants to make a total mockery of himself in the business community at least.

The people who paid for the roads, the bridges, the internet and DARPA with their hard-earned money through taxes paid to the government ARE THE VERY SAME PEOPLE WHO TAKE RISKS AND PAY THE MAJORITY OF TAXES IN THE FIRST PLACE! 

Holy cow! Do we want these same people to do everything in this nation?

Let's look at the facts:

The top 1% of the income-earners in America pay 37% of all the federal income taxes.  That includes LeBron James, Tiger Woods, Michael Jordan...and you if you are making around $200,000 per year.

The top 5% paid 57% of total federal income taxes.  The top 10% paid a whopping 70%.  And the top 25% of all income-earners paid 87% of all federal income taxes last year.

On top of that, corporations paid roughly 6% of all federal tax revenues last year. Before they distributed interest and dividend payments where they were taxed again at the individual level.

Thomas Jefferson wrote about how the 'fairest' tax system would tax income derived from individual hard work and risk-taking investment only once and one time and one time only.  Which is why the consumption tax as a replacement to every tax in this nation seems to us to be the most American of tax regimens to implement.

Soon.  As in the next Congress under a new President.  President Obama would never go for it.

For the most part, these upper-income people are the very same 'company-creators' who also hire the vast majority of the 'rest of us' to work for them.  They pay us a weekly or monthly salary and our benefits such as health care, pensions or match your contributions to your 401(k) plan.

The same people President Obama was talking to in Roanoke last week.

So, in essence, the President and his handlers might have outsmarted themselves with this class warfare attack angle they are trying to use to divert attention from the abysmal economic record of this Administration, the worst coming out of a recession in modern American history.

The fact is:  'If you are a business owner, and are in the top 25% of income-earners in America today, yes, in fact, you DID pay for these roads and bridges and the Internet to be built with your hard-earned tax dollars you have sent over the years to Washington. DC!

Someone 'else' didn't do it.  You did.

If you didn't pay any federal income tax over the past 20 years, you did not pay one dime to support, well, anything we all take for granted in a free society such as ours.  Nothing for the common defense, nothing for education, welfare, agriculture programs, environmental protection, roads, bridges or the Internet.

The people who paid all of the federal income taxes did all these things for us.  Gas taxes stopped fully funding road projects years ago.  General taxpayer funds have been used to fill that gap to close to 50% of the expense today, perhaps more in this recession.

 Higher-income taxpayers pay for our infrastructure for the most part, plus the kind and benevolent (and somewhat crazy, we have to believe) Chinese government who lent us roughly 30 cents on every dollar we spent on such things as infrastructure plus Social Security and Medicare (money is fungible) over the last 2 decades.

Our suggestion to the President and his handlers is to drop this silly attack on the American free enterprise system and the 'stars' of that show, the American entrepreneur and businessmen and women.

When he attacks the job creators and the business people on which our entire economy stands, he misses the mark and appears childish and out-of-touch.  In this case, he is simply wrong.

Tuesday, July 17, 2012

Here's A Shocking Stat: Americans Produce More Regulatory Compliance Paperwork Than Manufactured Goods

Yes ma'am.  You heard that 'torectly as they say (sometimes) in the South.

Americans spent enough time and effort complying with government regulations to total $1.8 trillion of our roughly $15 trillion national GDP. (Source: Small Business Administration)

During the same year, the entire American manufacturing industry made $1.7 trillion worth of: airplanes, cars, furniture, clothes, upholstery, widgets, gadgets, wingnuts and Sidewinder missiles. Source: U.S. Bureau of Economic Analysis, Industry Economic Accounts (2009)

This is why this current 'debate' (mid-slinging) by the Obama Administration over 'out-sourcing' and 'Bain Capital' is so maddening, mind-numbing and quite honestly, 'dishonest'.

If you have ever wondered why so many US corporations have fled to set up shop overseas over these past 30 years, look no further than this astounding fact:

$1.8 trillion in regulatory costs > the entire $1.7 trillion in total manufactured goods 
produced in America today

We have become #1 in the World in passing more regulations and legislation!

Wonder if there is an Olympic Gold Medal in London for 'Shooting Your Nose Off to Spite Your Face'?

The United States of America will lead the gold medal count hands-down.

Once American businessmen and women figured out that they could make products overseas and ship them back here for far less than it costs to make them domestically, the scene was set for a massive exportation of jobs overseas in the 1990's and early 21st century.

The National Association of Manufacturers (NAM) estimates that, totally aside from lower wage differentials overseas vis-a-vis the US, the excessive cost of regulation and government intervention in American free enterprise amounts to about 20% in extra costs.

20% is the difference between many American businesses shutting down their overseas operations and moving operations back to the States, even with a lower wage advantage in some Asian and South American countries.

Wouldn't you like to see business and jobs return to the US, particularly in the hard-hit Textile Belt where 250,000 textile jobs have just simply vanished over the past 15 years from North Carolina, South Carolina and Georgia?

Here's just one small regulatory issue on particulate matter that has driven cotton ginners and manufacturers particularly batty over the past decade as they are attempting to rebuild the textile industry in the South.

Do you understand all the math in this study?  Imagine you are a cotton farmer or ginner and all you want to do is grow great Southern cotton again here in the States and you have to deal with these sorts of regulations that really govern how much 'dust' can be expelled from the cotton gin factory.

They could shoot a beachball-sized load of cotton dust high into the air in these rural counties and the dust wouldn't fall on anything but the rabbits and chipmunks who live around their fields.

Millions of jobs aren't going to come back from overseas if President Obama has his way as he continues to issue executive order after executive order and continues to load up the private sector with more taxes and regulations.

Plus his unbridled disdain for the American entrepreneur and business owner and operator is frustrating the very people who want to expand their business and hire more people.  What is so difficult to understand about that connection between the desire to make a profit and reasonable return on investment and job creation and growth?

We simply have become convinced over these past 3.6 years, sadly, that President Obama 'just doesn't get it' when it comes to economics, business, job creation and prosperity.

We think Mitt Romney does, mainly because of his extensive business experience prior to his public service as Governor of Massachusetts.

Here's another 'mind-blowing' stat for those of you who do not think America has enough 'rules' or 'laws' or 'regulations':

'Tort costs amount to 2 percent of US GDP'. SourceMAPI/Pacific Research Group (Page 18)

This is double the amount of tort claims in any other industrialized society on Planet Earth.

To the uninitiated or squeamish, 'tort' just means this:  'lawsuits'.  As in 'someone did something that caused injury to me and I want some financial recompense for their meanness/stupidity!'

Sometimes it is justified as when someone is physically harmed by a product or service through negligence or intent on the part of the perpetrator.

Sometimes it is not as when someone files a nuisance lawsuit with the full intention beforehand of not ever going to trial but rather to force 'some corporation with deep pockets' into settling prior to trial because the costs of settling would be far less than the extended costs of a trial and possible adverse outcome.

But when you add up the tort charges to the regulatory compliance charges on American free enterprise, it is kind of amazing that any business does well nowadays, isn't it?

Imagine just how 'well' American businesses could do if the yoke of the 20% excessive regulatory costs were thrown off each business and the cost of tort claims could be cut in half to 'only' 1% of GDP.  (That would still be $150 billion per year but that is better than $300 billion per year, right?)

You might even get re-hired at the same level of income and benefits you enjoyed before everything blew apart in 2008-09.  Perhaps.

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Saturday, July 14, 2012

Let's Get Down to the Brass Tacks of What Obamacare Really Means to You

The Hubcap Lady
As in 'your pocketbook, wallet, checkbook, automatic debit from your checking account'...however you choose to make your everyday purchases and health care payments and, yes, your taxes.

We have been assiduously trying to find out 'exactly' what this means for you, primarily since even then-Speaker Nancy Pelosi said in 2010: "We have to pass this bill to find out what is in it'.

Now in 2012, after 2 years and a Supreme Court ruling last month, all of the details are coming to the forefront and to the light of day where some of it might turn out ok if everything falls precisely into line as the proponents of the bill say they will.

However, a lot of it might not turn out all that ok if their predictions and presumptions about human behavior are askew by even 5% or 10%.

Case in point:  We already know pretty much for a fact that many to most of the large companies and corporations with over 50 employees are going to dump all of their employees into the state exchanges, when and if they are ever set up that is.

Simply because a simple cost/benefit analysis shows that each employer stands to gain between $3000 and $10,000 per employee per year to their bottom-line by paying the $2000 tax instead of continuing to provide full comprehensive health benefits.

How do we know this?

Because every single business person we have talked with lately has said they are going to be 'forced' into doing this because their competitors will be doing the same thing.

Part of this is a 'good thing', as Martha Stewart would say. Finally health care coverage will be decoupled from the corporate workplace.  It is a vestige of the wage-and-price controls of World War II and America just never reverted to pre-World War II practices.

The employers who do continue to provide comprehensive health care coverage for their employees will be saluted for their loyalty and intent to maintain a 'family-feel' to their employment practices.

President Obama, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid all 'promised' that you could stay on your current health care plan 'if you wanted to do so'.

But seriously, just how long do you think any firm with 2500, or 25,000 employees will continue to spend roughly $17 million to $175 million more per year on providing health care to their employees when they can just dump them into the exchanges and pay the $2000 tax/head and be done with all those hassles and headaches?

We give them each about 6 months before they come to their senses and do this very same thing.  Pay the tax, save between $3000/year for every single employee, depending on age, of course, and about $10,000/year for every married employee with a family of four.

Don't count on your employer being Mother Teresa when it comes to saving $175 million, $17.5 million, $1.75 million, $175,000, $17,500, $1750 or even $175 per year when it comes to their bottom-line.  They are in business primarily to make products and sell services that will make money for their shareholders, not to provide health insurance coverage to the nation.

Second case in point: Did you know that even though an individual or corporation might pay this 'tax' in lieu of having insurance coverage, this does NOT guarantee that every person for whom the tax is paid will be covered by an actual health insurance policy soon thereafter?

Neither did we until like yesterday.

We guess there was a presumption that once this tax was paid by the individual or the corporation,  the person for whom the tax was paid would automatically be enrolled in a health care plan and perhaps this tax would be allocated in some fashion as the first couple of payments for that plan.

Nothing could be further from the case.

The Obamacare tax will be paid ('confiscated' out of your pocket) on April 15, just like any other tax to which you are subject during the year that you have to reconcile on April 15 such as income, payroll, estate or corporate taxes.

$695 for individuals
$2000/employee for corporations plus a general tax (fine) of about $40,000 per year as far as we know

(We are not sure how or why a corporation would be 'forced' to pay this $2000 more than one time because once they drop all their employees into the exchanges, how can the government tax them again and again and again for years after the employees have entered the exchanges?)

What happens then?

The employee/individual then has to go to the exchanges, again assuming each state has set them up, and purchase a health insurance plan out of their own pocket from the most basic of basic plans with very high deductibles of about $6000/person at the Bronze level up to the Platinum level which is far more comprehensive and expensive.

People who are eligible for certain tax credits based on lower income will get some marginal assistance from the government to help pay for this new coverage out of their pocket.

But they will now have to pay the $695/person tax assuming they are an individual who previously had no insurance PLUS the roughly $2000-$3000 in annual premiums (assuming they are in their mid-20's) to pay for in the exchanges for health care coverage they either chose not to buy or couldn't purchase previously.

Do you see where we are going with this?

Obamacare presumes that everyone will be completely rational in their decision-making and purchase health care coverage instead of paying the $695 annual tax each year.  We think a majority of people are so scared of a catastrophic occurrence to them or someone they love in their household that they will go ahead, bite the bullet and buy the health care plan.  If they are financially able to do so, that is.

What do you think they will do?

We think the vast majority of the young people who currently have foregone health insurance, many of whom have college degrees by the way and just think they are immortal during their 20's and 30's, will pay the $695 tax, reluctantly, and forego the $200-$300/month health care premium.

Many others will do the same, regardless of their education level, background, training or career choice.

Just as millions of Americans are doing today.  Foregoing health care insurance because it is too expensive or they just plain do not want to pay for it.

We have anywhere between 33 million and 55 million people who are without health insurance coverage for some period of time each year at any one snapshot in time BEFORE Obamacare.

Not all of these are 'dirt-poor' simply because the 'dirt-poor' in this nation are covered by Medicaid.

Many, many millions of these people are educated young professionals or even some older wealthy folk who figure at age 62:
'What the heck!  I am about to go on Medicare at age 65 and I am in relatively good health and can basically self-insure for the next few years.   
I'll just save that money for the next 3 years and then I am olley-olley oxen home free where my sons and daughters will pick up 85% of the tab for my Medicare through Parts A, B, D and now the rest of the alphabet from Obamacare!'
After all, paying the $695 annual tax is far less than actually paying the $2000-$3000/year annual premium (much, much higher if you are over the age of 40 with a family of 4, let's say) so what would you rather pay, the $695 or the $3000+?

What does that mean in practice and in actual English?

'Many of these same people currently without health care insurance coverage will pay the tax and take their chances with their own health care, just like today.  If they do get ill or hit by a car or a bus one day, and are coherent enough to do the following, they will find the 'app' on their IPhone to sign up for health care coverage in one of the exchanges on the way to the hospital and then be covered for the $1 million costs of their treatment and recovery for perhaps one single health care premium payment for the first month.'

As we said, 'just like what is going on today', except many people don't sign up for health care coverage today either because they can't afford it on their own or they know the hospitals will treat them regardless of their health insurance coverage or lack thereof due to their Hippocratic oath and a sense of ethics and morality.

What about the newly-freed-from-the-corporate-health-care-plan people who will have to fend for themselves in the exchanges?  Will they just pay the annual $695 tax and forego buying the more expensive health care coverage as well?

We have had some experts say this will not happen.  They say that in Massachusetts, there has been a significant buy-in by individuals even though the tax is relatively light.

We hope they are right.  We hope, pray and wish every American citizen does the right thing every single second of the day and night, don't you?

But they don't, do they?  Just look at the obesity epidemic today.  You would think everyone would know that they are killing themselves slowly but surely and driving up not only their health care costs but that of the entire nation, wouldn't you?

We don't know about Massachusetts.  But we do know from experience working in the public sector, politics and government with the good people of the South for many decades that they can count and add and subtract and will put a sharp pen to the paper on this decision when it comes.

When that decision does come, we would be shocked and surprised if 100% of them opt-in to the exchanges, or even 90% of them.

What in the world happens if only 50% of them join the exchanges once set up?

Where do you think the tax would have to go before people will enroll in the exchanges on their own?

That is right.  Precisely $1 over the annual cost of the health insurance premiums.  If the tax is $3001 and the health care premium is only $3000, which one will they pay?  The health care premium, of course.

So get ready for a rapid expansion of the tax in the next 5 years.

Without an auto-enroll feature in this Rube Goldbergian Obamacare apparatus, we get a sinking feeling in the pit of our stomachs that we might wind up seeing millions of individuals sitting this one out who will pay only their annual $695 tax and adopt an attitude of 'I'll just wait and see when I need health care insurance and then buy it then'.

After all, Obamacare also got rid of any insurance rejection due to any 'pre-existing conditions', didn't it?

A person in a coma after a car accident is a 'pre-existing condition'.  Their spouse, family member or friend could buy the coverage for them on the new app perhaps.

Why not?  That makes financial common sense, doesn't it?

We remember hearing the great Christian speaker and pastor Tony Campolo give a talk on Capitol Hill one time at a Faith and Law Forum meeting where he said that some of the poorest people he had ever encountered 'were the best businessmen and cost/benefit analysts he had ever met!'

When pressed, he said: 'Think about it.  Many of the people who steal hubcaps or tires from cars have carefully weighed the costs and risks of doing so in order to sell them at a profit to someone who will pay them for it!'

He has a point.

Don't you think many more fortunate and educated Americans will do the same precise and in-depth 'cost/benefit' analysis before they enter one of the Obamacare state exchanges and perhaps just pay the tax and not buy the health insurance until and unless they absolutely have to?

After all, even the Supreme Court made it pretty darn clear that Congress could 'tax' people but they could no longer use the Commerce Clause to 'force' people to buy something that they had not previously purchased.

We are afraid that the number of people entering the exchanges will not be as high or as rapid as proponents promised when the bill was passed.

We remain skeptical that this might wind up being just another tax hike on middle-to-lower income people who can least afford it.

Many will be cut out of the corporate health care coverage and not enroll in the public exchanges until and unless the federal government picks up almost the full tab of their annual premiums which will send the CBO cost estimates through the roof.  More so than the estimates already are doing where the original costs estimates have doubled and tripled since March 2010.

The lack of an auto-enrollment feature in Obamacare is something to think about and could be a very serious flaw in the whole plan.

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Wednesday, July 11, 2012

A Strategy to Undo Obamacare

imageEvery once in awhile, we will read an op-ed or article that clearly explains the nuances of something we are interested in far better than we have been able to do.

So as sort of a public service, here's one for you from Keith Hennessey, from whom we have pirated quotes or quoted directly in past blog postings, which he had published in the Wall Street Journal on July 3 called 'A Strategy to Undo Obamacare'

We agree with most of his points, and since he was a budget policy director for Majority Leader of the Senate Trent Lott for many years and a fellow colleague on President Bill Clinton's Entitlement and Tax Reform Commission in 1994, we trust his understanding of parliamentary procedure and Senate rules far more than we trust our own.

He makes some interesting points about the finer arts of using the 'budget reconciliation process' (inside the Beltway jargon to be sure...but that is where Congress is and they passed Obamacare in 2010 and any effort to undo it has to be done with the same rules and jargon)

Read it for yourself and see what you think:

Now that the Supreme Court has ruled ObamaCare's individual mandate constitutional, the direction of American health policy is in the hands of voters. So how do we get from here to "repeal and replace"?
Step one is electing Mitt Romney as president, along with Republican House and Senate majorities. Without a Republican sweep, the law will remain in place.
Reconciliation allows a bill to pass the Senate in a limited time period, with limited amendments, and with only 51 votes; filibusters are not permitted. In 2010, Democrats split their health-policy changes into two bills, one of which they enacted through this fast-track process. In 2013, a Republican majority could use the same reconciliation process to repeal those changes.But a President Romney does not need 60 Republican senators to repeal core elements of ObamaCare. Democrats lost their 60th senate vote in early 2010 after Scott Brown took Edward Kennedy's seat. To bypass a Senate GOP filibuster and enact portions of ObamaCare, they used a special legislative procedure called reconciliation.
The reconciliation process, however, applies only to legislative changes to taxes, spending and debt, or the change must be a "necessary term or condition" of another provision that affects taxes or spending.
Crucial parts of ObamaCare meet this test. Thus, if a President Romney has cohesive and coordinated majorities in the House and Senate, a reconciliation bill could repeal the Affordable Care Act's Medicaid expansion, insurance premium and drug subsidies, tax increases (all 21 or them), Medicare and Medicaid spending cuts, its long-term care insurance program known as the Class Act, and its Independent Payment Advisory Board, a 15-member central committee with vast powers to control health-care and health markets.
Chief Justice John Roberts ruled that the financial penalty enforcing the individual mandate is within Congress's constitutional power to "lay and collect Taxes," and that the mandate and penalty are inextricably linked. This should suffice to enable repeal, through reconciliation, of both the individual and employer mandates, and their respective penalty taxes.
The state exchanges and insurance rules—"guaranteed issue," which forces an insurer to sell a policy to someone who is already sick, and "community rating," which severely limits the insurer's right to charge that person a higher premium—are procedurally more difficult. Yet both are linked to the individual mandate, which increases taxes. Whether they can be repealed in a reconciliation bill will ultimately be decided by the Senate Parliamentarian.
Once the individual mandate is repealed, these popular insurance changes cannot stand by themselves. Without the mandate, people have every incentive to save on premiums and not buy insurance until they fall ill. This will send premiums through the roof for healthy people and, if the government clamps down on increased premiums, destroy private insurance companies. Those Republicans who say they favor legislated guaranteed-issue and community-rating requirements but oppose the mandate will be forced to acknowledge that all three must go.
Repealing core parts of ObamaCare cannot take place immediately. The opportunity to use a reconciliation bill requires first passing a budget resolution, something the Senate Democratic majority has not done in three years. This, too can be done with simple majorities, but realistically it would take until April to pass a budget resolution, and to enact a repeal through reconciliation in May.
The president and his allies argue that ObamaCare reduced the deficit, and that repealing it would mean a deficit increase. That claim was always laughable. In any event, the Congressional Budget Office is now re-estimating the effect of repeal on spending, taxes and deficits in anticipation of an upcoming House vote, scheduled for next week. Repeal may look fiscally more attractive in coming days than it did two years ago. If the new CBO estimate concludes that repeal would increase the deficit, then those favoring repeal will just have to make more spending cuts. Given the size and rate of growth of government spending, it's not that hard to do.
Repeal and replacement should be separate legislative efforts. This will allow more opportunities to create bipartisan center-right coalitions. Future Republican majorities can work with moderate Democrats to enact needed insurance market reforms and the bipartisan Wyden-Ryan Medicare reform plan, which provides a stronger system of competing private health plans as opposed to government-run "fee-for-service" Medicare.
Piecemeal reform does not mean incremental reform. The pre-ObamaCare status quo is unsustainable and unacceptable, and a President Romney and his allies must be as bold in their pursuit of consumer-driven health reform as President Obama was in his pursuit of government control.
Reform should start by replacing the tax exclusion for employer-provided health insurance with a flat tax deduction or credit. This should be combined with insurance reforms that allow consumers to buy portable health insurance sold anywhere in the nation, through their employer or on their own. That means you'll be able to take your health insurance with you from one job to the next. Tax policy will no longer push Americans toward lower wages in favor of more expensive health insurance.
Top it all off with expanded contribution limits for health savings accounts, aggressive national medical liability reform, and structural Medicare and Medicaid reforms that dramatically slow the growth of government and deficits.

In 2009 and 2010 the nation took huge steps down a path toward more government control of health care. A shift to the consumer-based reform path is still available—if voters want it.
Mr. Hennessey is a fellow at Stanford's Hoover Institution. He served as director of the National Economic Council for President George W. Bush.

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