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Healthcare Reform Designed to Fail

FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
December 22, 2009

IN THIS ISSUE:

1.   An Important Article from Accuracy in Media

2.   Dick Morris on the Health Care Bill

3.   Conclusions – Let it Die

Introduction

While I haven’t written much about it, I have spent a lot of time monitoring the ongoing health care debate.  I have followed the various bills through committees, the House and now the Senate.  As the legislation has progressed, I have seen it go from a liberal-inspired attempt to ordain a single-payer plan to an incomprehensible collection of special provisions and compromises aimed at wooing single votes.

The Senate finally moved one step closer to passing its version of healthcare reform in a rare weekend session, despite a massive snowstorm in Washington.  Senators Joe Lieberman (I-Conn.) and Ben Nelson (D-Neb.) finally caved in and the vote was 60-40, the minimum required to bring debate to a close and end Republicans’ hopes for a filibuster.  No Republicans voted for this massive takeover of healthcare that 50-60% of Americans oppose.  There were some huge bribes to get several Senators to vote for this legislation.  (See the Special Articles below for an excellent summary of these pork barrel bribes.)

However, such political maneuvering is old-hat in Washington.  There’s a lot more to worry about in this bill than pork barrel bribes to get votes.  My friends, we’re being set up.  The House and Senate healthcare bills are both terrible pieces of legislation.  Both liberals and conservatives are calling for scrapping them and starting over, but the Obama administration and Congressional leadership are trying every way they can to get something passed, whether it’s a workable solution or not.

So why would Congressional Democrats want to pass a health care bill that is almost guaranteed to fail over time?  Are they so desperate to pass a bill that anything will do?  Or, knowing that the current reform effort will fail (ie – increase healthcare costs), are they simply biding their time just waiting for the opportunity to “save” working Americans from spiraling health care premiums caused by the very legislation they support?

When I look at how the provisions of the current bills are designed, there’s no way that they can succeed in lowering costs and increasing coverage.  In fact, some studies show that just the opposite will happen, as discussed in more detail later on.  You can’t tell me that our elected officials aren’t bright enough to see that the current health care proposals are destined to fail, so there must be another angle.

Why else would they pursue healthcare bills that their own party’s left wing detests, unless they are doing so with a wink and a nod indicating that the liberals will eventually get everything they want – a single-payer system?

This week, I’m going to highlight just a couple of recent articles that provide a very realistic picture of the current health care debate and the possible long-term outcome of the latest bill that the Senate passed over the weekend.  I have reprinted large excerpts from each article, since they explain the situation as well as I could.  They also provide links to other useful articles that make it clear that these bills are designed to fail so that the government can implement a single-payer nationalized healthcare bill later on.  Note that these articles were written before last weekend’s last-minute compromises, but what they have to say still rings true. 

The first article is from Accuracy In Media (AIM), which is devoted to reporting inaccuracies in the mainstream media.  The second article is from political commentator Dick Morris who explains just how much more the Senate healthcare bill will cost the American people.  You need to read the excerpts from both of these articles below.  Let’s get started.

AIM: Media Parade as ObamaCare Hangs in the Balance - Special Report
by Roger Arnoff, December 18, 2009

QUOTE: “The hour-by-hour drama of the Democrats' attempt to secure 60 votes in the Senate to advance their health care agenda is gripping the nation…  The mainstream media have largely been pushing this process as some kind of moral imperative for the country, and abandoned their role as impartial providers of information.

At this point, the battle is between Democrats who hate this bill and the process, but believe they need to pass something, anything, and those who now oppose it on principle and who feel it is so watered down, compromised, and beneficial to insurance companies that it is too distasteful to support in any way…

What is holding this coalition together so that the 60 votes are in sight, though not yet assured, are 1) the attempt to save President Obama and the party from a crushing defeat; and 2) the creation of the framework of national health care, which could and would be over the coming years amended, tweaked, redefined, expanded beyond all recognition from the bill; and 3) raw, power politics, including carrots (worth up to $300 million) and sticks, which would only be administered behind closed doors.

Howard Dean, former Democratic National Committee chairman, announced this week that he had finally had enough. He says pull the plug and start again. On MSNBC, after Sen. Harry Reid (D-NV) agreed to pull the Medicare option from the bill, Dean, who doesn't have a vote, weighed in. As a doctor and the spiritual leader of the ‘progressives,’ his opinion might carry enough weight to sink the legislation for this term. Howard Fineman of Newsweek, honorary member of the lobbying firm of Olbermann, Matthews, Maddow and Schulz (the evening line-up of MSNBC shows), who nightly (at least up until this week) have attempted to shame, cajole, ridicule, kick and scream this legislation across the finish line, followed Dean on Countdown (normally hosted by Keith Olbermann, but this night by former Democratic staffer and MSNBC analyst Lawrence O'Donnell). In between Dean and Fineman was Sen. Ron Wyden (D-OR), who disagreed with Dean, and basically admitted that there is no compromise too far that would cause him to vote against this legislation.

Fineman reported that Obama told the senators, during an approximately one-hour meeting with them on Tuesday, that if they don't pass this bill, it will weaken him, and he won't be able to be effective for them next year come election time.

This is where Obama's sinking poll numbers come in. He has dropped farther and faster than any first year president in history, according to various polls. And the public has turned against this health care process, and his handling of it. In the RealClearPolitics average of polls, the plan is opposed by nearly 14% more than those who favor it - 37.9% favor it, 51.6% oppose it. Obama's job approval has fallen below 50% in the RCP average of polls, marking one of the steepest first year declines of any president. The Democrat-controlled Congress, meanwhile, in a new NBC-Wall Street Journal Poll shows 22% approval, and 68% disapproval. And these polls are skewed to begin with. This same poll shows that Obama's approval is 47%, compared to 61% in April, and his disapproval is 46%. But if you look further down, it shows that of the people surveyed for this poll 40% identify themselves as Democrats, whether strongly, or leaning, or not so strongly, and only 34% identify themselves as Republicans, in the same three categories. So this six percent margin creates a built-in bias, which is found in many polls. By the way, a Rasmussen poll shows Obama's approval rating at 44% versus a disapproval rating of 54%.

Sen. Evan Bayh (D-IN), one of the few moderates left in the Democratic Party, said they are being asked to vote for a bill that they haven't seen. Even the number two man in the party, Sen. Majority Whip Dick Durbin (D-IL), told Sen. John McCain (R-AZ) that he doesn't know what's in the bill.

The Congressional Budget Office has surprised observers, who expected it to have scored the current bill by earlier this week. But in the meantime, the Department of Health and Human Services, the primary agency if this legislation becomes law, has already spoken. And it should be the final nail in the coffin. From an editorial in Investor's Business Daily: ‘The administration's own health department, in a devastating analysis, warns of rising costs, shrinking benefits and a long-term health care 'death spiral.' 'Reform' has been pronounced dead. It is referring to a report from the chief actuary of the Department of Health and Human Services' Centers for Medicare and Medicaid Services that says health 'reform' will mean the opposite of its advertised promises.

‘Reform was supposed to be about reducing ever-increasing costs. But HHS says that under the bill now being steamrolled through Congress, total health costs over the next decade (now estimated at $2.5 trillion) 'would increase by about 0.7%' over what would take place if we made no changes at all.

‘And the plan to 'save' nearly $500 billion in Medicare costs that Democratic leaders ask us all not to worry about? The result would be cuts in services as providers and physicians who take Medicare patients 'could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).'

Howard Dean said this on Countdown on MSNBC on December 15: ‘This is not real reform. It's not health care reform. There are no choices. What the decision has been made without really thinking about it, it's been made because people are exhausted and they want to pass a bill so desperately they're not thinking about what they're doing, it's been made to commit the United States to health care reform through the private sector.’ He said there are some good things in the bill, but that ultimately you have to buy from private insurance companies who will make big profits, or you will be fined, but that ultimately it is not health care reform.

He said the right thing for senators to do is vote no. ‘Absolutely not. You can't vote for a bill like this in good conscience. It costs too much money, it isn't health care reform, it's not even insurance reform. Take for example, this, there's a lot of talk about people who have pre-existing conditions can get health insurance. Well not exactly. The fine print in the Senate says the health care insurance industry gets to charge you three times as much if you're older than if you're younger. And they get to write the rules. This bill is no longer reform...If it were me, I don't think this will happen, I'd kill the bill entirely and have the House start in reconciliation which is what they should have done in the first place.’

He then suggested that another option is that ‘they could pass the good stuff, pass the exchanges, pass the money for the prevention and wellness, pass the community health care center money in a small bill, don't run our children into debt, and come back and do this two years later...We're in crisis here. This bill I think is more likely to make the crisis worse than it is better because it's so expensive.’

Later in the week, in a column for The Washington Post, Dean rightly pointed out that the process has resulted in ‘legislation that has been crafted to get votes, not to reform health care.’

And ABC's George Stephanopolous, new to his position on Good Morning America, clearly indicated his support for Obama and the health care legislation by chiding Dean, warning him that his opposition to the bill could harm President Obama.

Howard Fineman noted the significance of Dean's ‘defection.’ He said it could have a ‘big effect,’ and added that ‘the interview [that O'Donnell] just conducted with former governor Dean was remarkable, for a couple of reasons. First of all he's a doctor. He's got credibility on this. Second he's been a reformer on this for years and knows it as well if not better than anybody as an issue. And third, he was chairman of the Democratic National Committee…

Fineman added that it was problematic for President Obama. He said the subtext of the meeting that day at the White House was that if they couldn't pass this legislation, they're going to be damaging Obama. ‘You know the economy is bad,’ he said, paraphrasing Obama, ‘historical trends are against us in the midterm elections in 2010, but if we don't pass this bill, I'm the one that's going to look bad and that's going to make me useless to you as a vehicle to try to help you guys next year and the period after that.’

Fineman added that his understanding is that Harry Reid is saying, behind closed doors, ‘We need to pass a bill. We can't afford to damage our President further than he's already been damaged. That's kind of a back-handed way to argue the thing, but that's what's going on behind closed doors right now.’

Fineman insisted that between their tough choices, getting a bill, any bill, and selling what they consider to be the good parts of it, was by far the preferred choice for the Democrats. ‘The problem they've got,’ he added, ‘in order to make the thing deficit neutral, they've had to kind of backload it so that the fees go in first, and some of these great benefits don't kick in till later on. Some at the beginning, others later on.’

…David Freddoso of the Examiner reported on this confrontation, and concluded, based on the reporting of Phil Klein of The Spectator, that in fact ‘just $9 billion of the $848 billion total spending aimed at expanding coverage from 2010 to 2019 would occur in the first four years, while the remaining $839 billion wouldn't come until the last six. In percentage terms, a whopping 1 percent of spending would occur from 2010 to 2014. This was one of the accounting gimmicks that Democrats used to make the legislation appear cheaper over their 10-year budget window.’

Lawrence O'Donnell pointed out that the bill is now ‘filled with taxes that were never mentioned in the Obama campaign, an individual mandate that Obama campaigned against.’ Fineman said that all this is now ‘ancient history.’

Arianna Huffington of The Huffington Post was on the Ed Schultz show and basically agreed with Dean, that it was best at this point to defeat the current legislation. She said that Obama had ‘unequivocally caved in...and that's not the kind of change we believe in...Let's not pretend that we can just have any kind of bill passed and then declare it reform, the way we did with education...The White House is convinced that the minute it passes health care reform everything is going to change. The numbers are going to change. This is absolutely untrue.’

Schultz then said, referring to the White House, ‘Don't insult our intelligence on this. That's the whole deal that the White House has got to figure out on this. This is changes but it isn't reform.’

Rep. Anthony Weiner (D-NY) said that he ‘had already compromised his compromise, and now I'm here being asked to compromise again.’ He said that President Obama must be willing to get his hands dirty and that ‘we need the President to stand up for the values our party shares. We must stop letting the tail wag the dog of this debate." We're reaching that tipping point for a lot of us that we're wondering if Howard Dean is right. That it might be better to go start fresh.’

Sally Pipes of the Pacific Research Institute had an excellent column in the New York Post, explaining the folly of calling this reform: ‘To address the public's affordability concerns, the Senate would lavish billions in subsidies on people with incomes up to four times the poverty level, or $88,000 for a family of four. Senate leaders hope these subsidies will keep people from noticing that the reform package has increased the cost of their insurance.

‘Only in Washington could a measure that raises the price of insurance, requires everyone to buy it and then papers over the whole mess by throwing more public money into the system be considered 'reform.'’

As I pointed out in an article back in August, Obama doesn't really care what is in this bill. Just that it passes both houses of Congress. The test of whether he made the right or wrong move by leaving the process to Congress, while he refused to commit to the public option, is still open. And if anyone was spreading fear and misinformation, it was Obama and his spokesmen. And that continues to this day.

More from Investor's Business Daily: ‘Much of what the president said in his Tuesday statement was patently false. With its heavy regulations, the Senate bill, even stripped of its destructive 'public option,' won't mean that 'families will save on their premiums.' Independent studies make it clear that premiums will go up by thousands of dollars.

‘It also isn't true that 'this will be the largest deficit-reduction plan in over a decade' - and to hear such a promise from the biggest-spending president in his first year in office in history is hard to take.

‘The president claims 'the CBO has said that this is a deficit reduction.' But as Sen. Robert Bennett, R-Utah, who sits on both the appropriations and banking committees, recently told Fox News' Neil Cavuto, the definition of 'deficit-neutral' that Democrats have been using 'means it's going to cost you over $1 trillion, and we are going to find $1 trillion either in Medicare cuts or increased taxes, so that we end up with the same number at the bottom line.'

‘Speaking of the Congressional Budget Office, after candidate Obama last year promised a $2,500 annual reduction in health premiums annually for average families, the CBO has warned of premium increases of about $5,000 a year.’

On Wednesday, Obama told ABC News that if we don't pass this legislation, the country will go bankrupt. This was too much even for Lawrence O'Donnell. He went from being the host the night before on Countdown with Keith Olbermann to being a guest on the night that Obama made that claim. O'Donnell accused the President of fear mongering. ‘The federal government is never going to go bankrupt,’ he said. ‘We're not going to let that happen. But this is the kind of scare tactic that the President seems to be resorting to at this point, trying to convince people that there's something of extreme urgency. It must be done by Christmas eve.’

And Olbermann, in one of his rants that he calls special commentaries, turned on Obama and the legislation, seemingly influenced by Howard Dean's arguments. While his logic was tortured as usual, and his venom flowing, Olbermann's defection had to be an unwelcome development for the White House. This is, after all, where the left come every night to feel morally superior.

There has been some other very good reporting on the various aspects of this legislation, and all its implications. Two articles that came out several months ago should be viewed today, as the bill hangs in the balance. One is by Mark Steyn, who writes brilliantly for National Review. In a lengthy article from last July, called ‘Dependence Day,’ Steyn looks beyond the economics of the bill, and gives his take on the history, political philosophy, statistics and politics of health care. Peter Robinson of the Hoover Institute, in his weekly column for Forbes, described Steyn's article as ‘the most important journalism of the summer.’ He says that Steyn's conclusion is that ‘Obama doesn't care about health. He cares about power.’ Both of these are worth reading.

…We should know the fate of this bill very soon. If the Reid bill passes the Senate by Christmas, as they are determined to do, it could go straight to the House for approval, or more likely it will go to conference. And depending on what comes out of conference, it could still die in either the House or the Senate. Obama wants Democrats to understand that whatever shortcomings they may think the bill has, it will be ‘fixed’ later in one of the many new bureaucracies that will be created to run it, or in follow-up legislation or amendments. The media, on all sides of this issue, are beating the drums as the parade marches on.”  END QUOTE

Roger Aronoff is a media analyst with Accuracy in Media, and is the writer/director of “Confronting Iraq: Conflict and Hope.” 

Editor’s Update:  Dr. Howard Dean appeared on Meet the Press Sunday, December 20 after the above AIM article was written and as the Senate health care bill was being compromised to reach the needed 60 votes.  When asked if his position had changed in regard to the Senate bill, Dr. Dean responded: “My position is let's see what they add to this bill and make it work. If they can make it work without a public option, I'm all ears. I don't think that's possible.”

Dick Morris on the Health Care Bill

The above article from Accuracy in Media puts the health care debate in its proper perspective.  The debate no longer centers around reforming health care, but rather making sure that something – anything – passes Congress so President Obama can make an entry in the win column.

While the AIM article was quite comprehensive on the political machinations going on in Washington, it didn’t go into great detail about the eventual costs except to say that insurance premiums would increase by thousands of dollars.  Fortunately, Dick Morris and Eileen McGann wrote an article that does provide some details about who is going to be paying the price for health care.  Since his article is short, I have reprinted it below:

HOW OBAMACARE WILL HURT YOUNG PEOPLE
by Dick Morris & Eileen McGann
Published on DickMorris.com on December 17, 2009  

QUOTE:  “A detailed analysis of the Obama health care program now before the Senate indicates that it will force big premium increases for all families especially for those under 30 years of age.          

The study, by the consulting firm of Oliver Wyman, concludes that premiums for individuals will rise by $1,576 and $3,341 for families…under the bill.   Young people will be hit the hardest.  The study predicted that premiums for new health insurance policies purchased by the youngest third of the population would rise by 35% under the bill.               

These increases will stem from the bill's provisions that bar insurance companies from raising rates on sick people and from excluding people based on pre-existing conditions.  Both of these mandates will mean higher costs for the younger and healthier population.  This bill is, in effect, a tax on the young.               

Nor will subsidies do much to mitigate the impact.  To get a subsidy under the bill you have to earn less than about $80,000 a year (combined household income) and have spent between 2 and 10 percent of your income on premiums.                

So a couple making a combined income of $40,000 would have to pay about 5% of their income:  $2,000 before they could get subsidies.  Those making $60,000 would have to pay about 8% of their income -- $4800 - before they could get a subsidy.  And those making $80,000 would have to chip in 10% of their income -- $8,000 - before they would get a subsidy.                

These are hefty bills for young families to bear.               

So most won't do it.  The fine for failing to have health insurance is only $750.  So most young people will just pay the fine and be done with it.  When they get sick, they'll get covered and the insurance company can't charge them a higher premium than it would have charged when they were healthy.  And it can't turn them away.               

So this bill is not a measure for full national health insurance coverage.  At best, it's a bill that will insure you when you are sick and make the rest of us pay the bill.  And, in the meantime, you'll have to chip in $750 a year for the privilege.               

Employers, too, will find it much cheaper to pay the $750 per employee than to buy insurance.               

Ironically, there is a good chance that this bill will actually increase the number of uninsured.  Its ban on letting insurers raise rates on sick people will force premiums so high that many people will drop their insurance.  After all, when they get sick, they can and will easily get their insurance back.”  END QUOTE  

If the Oliver Wyman study is correct, the health care bill, if passed, could result in much higher costs and an even greater number of uninsured individuals, just the opposite of the goals of passing the legislation.  If young, healthy Americans can escape paying higher insurance costs and incur only a $750 fine, but be assured that they can be covered should they develop medical problems, then who wouldn’t take the cheap way out?

Conclusions

It’s clear to me that the debate in Washington is no longer about healthcare reform, but rather whether a bill of any kind can be passed to preserve Obama’s power base.  This process has openly revealed all of the worst of American politics.  From Mary Landrieu’s (D- LA) $300 million payoff for supporting the bill (among others), to closed-door haggling for votes to out and out lies, the healthcare debate has seen it all.  And who knows what other enticements and surprises lay in the bill that we’re yet to discover?

The result is a monstrosity that can be tolerated by neither the left nor right, but it still continues to move forward.  If the measure passes the Senate as expected this week, the next step will be to move the House and Senate bills to the Conference Committee, and no one knows what convoluted compromise bill will emerge.  The Democrats and President Obama know that their window of opportunity is closing fast, so they are desperate to pass something (anything) as fast as possible.

If Dick Morris and others are correct, insurance premiums are likely to skyrocket in the future as healthy individuals opt out of coverage while sick individuals opt in.  The insurance industry calls this “adverse selection,” as it puts them in a position of being more likely to have to pay claims.  As always, these increased costs will be passed on to us through higher insurance premiums.  What else is new?

Finally, I have concluded that this is all a big setup for an eventual single-payer plan.  Our elected officials are smart enough to know that the current bills are rigged to produce higher insurance premiums in the future.  It doesn’t take too much imagination to foresee a popular revolt against increasing insurance company premiums for health insurance, allowing a future Congress to step in and “fix” the problem by creating a massive single-payer, universal healthcare bureaucracy managed by the federal government.   Think about it.

Merry Christmas!

As we enter this joyous time of year, I can’t help but think of all of those who are unemployed or underemployed, and the effect it’s going to have on their Christmas plans.  My heart goes out to these families.  However, there may be a silver lining to this cloud.  I know that many families are scaling back on Christmas giving plans because of the economy, even though they are still employed.

Perhaps we’ll rediscover a Christmas celebration centered on family and friends rather than gifts of material items.  Wouldn’t it be nice to see relationships valued more than trinkets and communication more than gift cards?  Most of all, perhaps less emphasis on gifts will allow us to remember God’s greatest Gift of all, which is the reason we celebrate in the first place.

Wishing you the Merriest of Christmases,

Gary D. Halbert

SPECIAL ARTICLES:

The Demcare Bribe List
http://michellemalkin.com/2009/11/20/the-demcare-bribe-list/

Cash for Cloture:  Demcare Bribe List, Part II
http://michellemalkin.com/2009/12/21/cash-for-cloture-demcare-bribe-list-pt-ii/


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Read Gary’s blog and join the conversation at garydhalbert.com.


Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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