ObamaCare Must Fail - Part 2

President Obama, Speaker Pelosi and Senator Reid have been actively trying to create an evil bogeyman that their program will fight because they know that the only way to get the needed support to pass ObamaCare is to show it as fighting an evil. The insurance companies and the medical profession were chosen, reportedly after a series of polls and focus groups. This tactic of demonizing a segment of society in order to get public support for a consolidation of political power has been around for centuries but is more effective now in the age of instant communication. By throwing out a “strawman” to focus the public’s anger and fear, it becomes easier to enact laws and legislation expanding the role of government and lessening the actual freedom of the citizenry. (Is Swine Flu another strawman to create fear? They keep telling us that it is a pandemic yet so far it's been more hype than fact. Interesting. You make people afraid of the possiblity of getting sick then attack the health care system to "make it better." Saul Alinsky would have approved of that tactic.)

Initially, ObamaCare was trumpeted by the administration as a reform of American health care. A problem quickly arose, however, that caused the Administration to change their plan of battle. In that a May 2009 poll by Rasmussen 70% of the American people rated their current health care as good to excellent. If you go down as far as “fair,” 93% of Americans indicated they were satisfied with their health care. The Administration, seeing the growing grassroots opposition of the American people made a conscious decision to change the debate from a reform of American health care to a reform of the American health insurance system. This allowed them to designate health insurance companies as the evil that had to be destroyed. It is interesting to note that despite their change in the evil strawman, nothing in HR 3200 was changed. It remains the same enabling bill as it was when it was announced that it would address the health care system.

In damning the health insurance companies the Administration and its’ allies have been actively bemoaning the profits of made by insurance companies by throwing out huge monetary figures and trumpeting the “obscene” amounts made by those companies. They know this works as they’ve used it successfully against oil companies for decades and this has made for some great headlines in the liberal Main Stream Media as, on its’ face it looks terrible. After all, who likes to pay more for gasoline and when we do who do we blame: The Oil Company, of course! It’s the same with insurance. We pay a hefty bill for our insurance every month and still have to pay a deductable or co-pay after treatment, which is always aggravating.

For anyone who stops and thinks about it, and especially anyone who has been in business, the question arises as to what profit margin is being enjoyed by that sector of the economy. Just what is the profit margin of the insurance companies compared to, say, brewers (remember the White House beer?), software for the computers, wines and, restaurants or personal computers?

To find out we need only to go to the internet and look at profit margins by industry and, in particular, I recommend Carpe Diem, a blog by Prof. Mark J. Perry (Economics and finance) of the School of Management at the Flint campus of the University of Michigan. He’s collected the data and put it in a handy table for you to peruse and when you do you will find that maybe the insurance companies aren’t the greedy ogres that President Obama and his minions have led us to believe. Brewers made a profit of 25.9% on those bottles of beer served at the White House picnic with Officer Crowley, Professor Gates and Vice President Biden. (I knew that should have been my career field!)

Now software is something I’ve purchased many times and it hurts to know that the profit margin there is 22.7%. The software companies haven’t been targeted as an “evil entity” just yet, which is probably why they are so liberal in their political donations. They know that if they aren’t liberal then they might be targeted as evil profiteers by the left; and, after all, there's no threat from Conservatives who believe in a free market where prices are determined by demand.

Wineries (and distillers) aren’t as profitable as beer but the profit margin is still a comfortable 11.7%. This profit margin is palatable to almost everyone. I mean, who can complain that making a 10% or 12% profit. That’s reasonable!

I’ve been patronizing restaurants around the globe for years and in talks with owners have educated me as to how hard it is to be a success in the restaurant industry. All that hard work, sometimes 7-days a week, for an average profit of only 7.5%. Not much when you consider that their profit margin is based on a much smaller figure than, say, health insurance companies.

Computers always seem too expensive—even the cheap ones that will crash daily aren’t something to sneeze at—but their prices have come down considerably over the last 15 years. And at present the personal computer industry makes an average of 7.5% profit on each computer sold. Reasonable by any standard, don’t you think?

Now where do the health insurance companies fall in this? If you ask the President or his minions on the left, they will immediately drop the term “profit margin” and throw out billion dollar figures. But a reasonable person doesn’t fall for that and a review of the facts shows that Health Care Plans with a profit margin of only 3.3% are in 86th place of the table. The big figures thrown out by the the liberal, left-wing minions of the Administration are handy but totally misleading as the Health Care Plan industry is a big industry. Yes, the money they made was big in dollars, but can you really complain about 3.3%? (And who owns those companies? Investors and stockholders who want to make a profit on their investment.)

I can’t complain about a 3.3% annual profit margin. And I’m not about to fall for the demonization and destruction of a business by the government under the guise of making things better. The government won’t make things better but it will destroy our choice and, eventually force us all into a rationed system where we are at the mercy of a hard-hearted Nanny. It can't make things cheaper without rationing, increased taxes and denying health care to the elderly as they account for the largest portion of health care dollar expenditures.

The problem is not the demon health insurance companies as the President and the Democrats have stated. They have conveniently failed to identify the source of the yearly increase in health care expenditures because that goes against their drive for increased government control over the citizenry. So why is the cost of insurance always going up? Why does the cost of health care go up?

The partial answer is that health insurance companies are over-controlled by the individual states that place unreasonable requirements on the health insurance product that is offered in a particular state. This places the health insurance companies in a position of being unable to price insurance on the dynamics of a nationwide population. Instead, they are forced to cover special interest procedures in the general population of a particular state. What are those? Well can you tell me why, in the State of Washington, everyone must have a plan that covers hair transplants? I can’t, other than the fact that some Washington State legislators must have wanted some their constituents to look like a Chia pet (sorry, Vice President Biden. No offense meant...well, not a lot of offense). Other states, for whatever reason, forbid the offering of a catastrophic care policy.

The first logical step in reducing health insurance costs would be the elimination of individual state requirements that restrict the insurance products of health insurers within the state’s borders or mandate coverage that is not needed by the insured. A person should have the right to choose the insurance plan that they need. In Virginia I can buy auto insurance from a company in Texas. Why not health insurance from a company in New York, Texas or Idaho? And hair transplants I can do without so I don't want, or need, that coverage.

But why does the Administration not take this step? A very good question because we all know that economy of scale drives down costs. The government needs to allow the health insurance industry to take advantage of it so we can all benefit. We don’t need a government option that will put insurance companies out of business by destroying profitability. We need government to get out of the way. We need the government to shrink, not expand for it is the problem not the cure.

More to come on tort reform's impact on health care costs. But what are your thoughts?