Tom Pittman's WebLog

2010 March 23 -- Peering through the Gloom

My sister called yesterday to tell me that ObamaCare had passed. Normally I don't learn of such news until two weeks later when the last of the weekly newsmagazines arrives with scant reporting of it, or maybe at church the following Sunday if everybody is talking about it. I guess my sister knew that I don't watch the left-wing news bias on TV.

Although she admitted that ObamaCare would raise the cost of living for almost everybody, she still has high hopes of being a beneficiary. She is among the "poor, uneducated, and easily led" minority who helped put our President-Trainee in office. She's actually pretty smart, but declines to do the math -- she says she's no good at it, which is nonsense. I know because she calls from time to time for me to help with her son's math homework. I talk her through the problems and am continually amazed at her understanding. When she wants to.

What she doesn't seem to understand is that no "insurance" company is going to pay hunmdreds of dollars each month for the prescription drug habit she has her son on without charging somebody more than that each month to cover it. I'm not a doctor, and I don't know the details of his medications, but I do know math.

Insurance is based on the premise that the cost of rare catastrophes can be spread among a large population at risk to prevent the few victims from being bankrupt by such events. There are such catastrophes in health care, such as heart transplants and surgical repairs after a major accident, but that's not what people expect from modern health insurance. Instead, they want the everyday medical expenses that befall everybody during their lifetime to be paid by somebody else at minimal cost to the beneficiaries. Either Obama and his cronies in Congress are lying through their teeth, or else they are idiots, because there is no "somebody else" who wants to pick up the tab. I think they are hoping to "tax the rich" but in fact the bill they just passed is retrogressive. Besides being based on failed Marxist economic theory.

Right now no insurance company wants to take on my sister and her son for premiums less than she is paying in health care costs. That's good business, as it should be. I guess she is hoping that ObamaCare will be different. I don't think so. Money doesn't grow on trees for the insurance companies to pluck off and pay our doctors and pharmacists. They have to get it from their premiums, or else cut the benefits. Either my sister will be compelled to pay in premiums more than her fee-based medical costs are today, or else they won't pay her drug bill, and she will have to pay it out of her pocket in addition to the compulsory insurance premiums. Or do without. But she has that choice today. Next year it won't be a choice.

My college major was math. I know ObamaCare cannot possibly help anybody except the insurance companies -- but not even them for long. So it's cheaper for me to pay the penalty tax, and morally preferable. I'm hoping somebody will go to court and prove that it's an unConstitutional excise tax on products you are not buying, or else an unfair income tax that denies the taxpayer equal protection under the law. But fighting it in court costs money, which I don't have. If I were rich, the tax would be a nothing, because it is retrogressive. So rich people are disinclined to fight it out in court. This one raises the tax disproportionately on the poor, who don't have the resources to fight it. Score one for the political party whose party name is a lie.

The USA income tax was designed to be progressive. That's good social policy, somewhat along the lines of the mindless slogan "tax the rich" but better thought out. Rich people pay at a higher tax rate than poor people, but not so high as to destroy their incentive to become rich (which generally raises the wealth of everybody). Social Security taxes are retrogressive: the rich people pay a much lower percentage of their income than the poor. The Schedule-A medical deduction is also in effect a retrogressive tax on income: rich people get no deduction but also pay no tax on it, while low-income people like myself end up with a marginal tax rate of 17.5% on every dollar we earn if we have large medical expenses. That's a higher rate than the middle-income people pay on their income. The new ObamaCare penalty tax is retrogressive like Social Security: rich people will pay a flat tax equal to the national average for approved health insurance premiums, which is a much smaller proportion of their income than us low-income people, who are stuck with a full 2.5% penalty on every dollar we earn. The original Senate version of ObamaCare exempted people like myself earning less than the Federal Poverty Level, but that was removed from the bill they passed this week.

There is one possible loophole I noticed in the new law they passed this week. I didn't see it before, but the new law is twice as big as the original I downloaded last year. Section 102 "Protecting the choice to keep current coverage" defines "Grandfathered Health Insurance Coverage" as "individual health insurance coverage that is offered and in force and effect before the first day of Y1..." Maybe I can successfully argue that my self-insurance counts as "individual health insurance coverage" and it was "offered and in force and effect before the first day of Y1." Since they give no other relevant definitions nor restrictions, they have no basis for arguing otherwise. Except of course the intent of (half of) Congress, which apparently is to tax the poor.

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Other links:

Essay "Health Insurance Is the Problem, Not the Solution"
Blog post, hospital administrator admits "I'm responsible"
My letter to President Obama
A Physician's perspective
A better solution, without raising taxes