Thanks to Drudge Report for compiling the news stories I am about to use to prove my point.
Clicking the titles take you to the source article.
Federal health department approves free birth control
WASHINGTON – Health insurance plans must cover birth control as preventive care for women, with no copays, the Obama administration said Monday in a decision with far-reaching implications for health care as well as social mores.The requirement is part of a broad expansion of coverage for women's preventive care under President Barack Obama's health care law. Also to be covered without copays are breast pumps for nursing mothers, an annual "well-woman" physical, screening for the virus that causes cervical cancer and for diabetes during pregnancy, counseling on domestic violence, and other services.
...
The requirement applies to all forms of birth control approved by the Food and Drug Administration. That includes the pill, intrauterine devices, the so-called morning-after pill, and newer forms of long-acting implantable hormonal contraceptives that are becoming widely used in the rest of the industrialized world.
If that is not enough look at this article as well.
Justice Department Sues Alabama Over Controversial Immigration Law
The Justice Department has filed a lawsuit against Alabama's new controversial immigration law, essentially fighting Alabama on grounds similar to its legal battle with Arizona over that state's controversial law.
Read more: http://www.foxnews.com/politics/2011/08/01/justice-department-sues-alabama-over-controversial-immigration-law/#ixzz1TseczcZCWhat do these two articles have to do with the Debt Debate Debacle? Let me explain it the way I see it.
If the Central Government is so destitute that it can not pay it's bills, it can not pay the military, it can not pay the Border Patrol or other employees. The Obama Administration has also threatened not to pay Social Security payments and Medicare payouts among all the other things. The Obama Administration demanded the debt ceiling be increased so he could pay the bills and the debt (do not get me started about borrowing money to pay for borrowed money sheesh!). The morning after a debt deal was announced (late Sunday evening 31July2011) the Obama Administration announces it will spend money, that they did not have just 10 hours earlier, to enforce new regulations placed upon American's Health Insurance coverage plans and it announces a lawsuit it will pursue against the state of Alabama to force them to scrap the state's immigration law. Please note, THEY DID NOT HAVE THE MONEY TO PAY FOR IT'S DEBTS AND PROMISES JUST 10 HOURS BEFORE THE ANNOUNCEMENTS.
You might make the case that with the health insurance mandates that the insurance companies are doing the payouts, not the Central Government. Okay, true, the brunt of the cost will be in the private sector; but the costs of enforcement for the requirements will run in the billions of dollars. Additionally, the cost of the requirements to the government in the long run will also be significant.
These services, drugs and devices are not free. Someone has to pay for them. The drug manufacturer has to pay it's bills and employees so it charges someone for the product. Same with the condom factories, the IUD factories, so on and so forth. The price is paid by the next guy in the chain, whether that be the doctor, clinic, hospital, medical supply companies etc... (Please note that these supplies are going to get more expensive once ObamaCare begins to tax medical devices.) Let's just say the path from production to end user is this: Factory --> Doctor --> Patient. The Factory charges the Doctor for the drug/device then the Doctor to recoup his costs has to charge someone...the insurance company of the patient.
The insurance company then has a decision to make. It has to pay the costs for the Doctor visit, the device and any other required service associated with the device or drugs. And Lord help us if the patient has an adverse reaction to the treatment and needs hospitalization. The decision is whether to eat the costs themselves (which reduces their ability to cover other people and procedures) or to pass on the costs to the customer in the form of higher premiums or to split the costs with the customer.
This is not an evil insurance company decision, but one of economic law. First I must explain elasticity of demand and elasticity of supply. Elasticity of demand is the measure of responsiveness of consumers to changes in price. In other words, how much is your willingness to buy a good or service changed if I change my prices. Elasticity of Supply is the responsiveness of quantity supplied to changes in price. In other words, How much of your product do you put on the shelves if prices change?
There are three categories of Elasticity: 1- Perfectly Elastic; 2- Elastic; and 3- Inelastic.
1- Perfectly Elastic means that either the buyer or the producer is so sensitive to prices changes that even the smallest change up or down in price results in radically drastic changes in demand or supply.
An example of Perfectly Elastic demand is a market with heavy competition with an identical product. Bottled Water fits this definition. Water is water and if you see a shelf full of water from different producers and they are all priced the same except one is higher priced by a penny, you will not buy the water that is one cent more expensive. And the opposite is true with a producer whose water is one cent cheaper.
2- Elastic is the middle ground. Your preference for Coca-Cola or Pepsi may override minor price differences between the two. But if the prices are drastically different you will choose the cheaper brand. For suppliers elastic means that changes in the amount supplied are in proportion to the change in price.
3- Inelastic means either the buyer or the supplier are not sensitive at all to changes in price. Both will buy or sell the same amount of goods regardless of price. For consumers, Gasoline is inelastic. You need to buy so much gasoline per time period to meet your needs of transportation, and, even though you gripe and grumble and complain and get mad and cuss swear shake fits call Congressmen etc...You will pay the price at the pump regardless of how high it is. You need to go to work, you need to get to the grocery store, you need to go to other stores to get necessities to live. To ease the pain at the pump you will cut other aspects of your life to compensate.
For suppliers, Hotels are good example of inelasticity. A hotel has a set amount of rooms, it cannot increase its supply of rooms and it loses money if it reduces the amount of rooms available. Hotels, to maximize profit, need to fill all the rooms every night. An empty room is money lost. So they sell the same amount of rooms regardless of the going rate of hotel rooms in the area. Travel websites use this inelasticity to get you good deals on hotels.
Why am I telling you this? To tell you this fact, in the relationship between consumer and supplier in the marketplace the one who is the more inelastic will pay the greater share of external costs. For example, the consumer is the most inelastic at the gasoline pump, so the consumer will pay almost all of the taxes government imposes upon gasoline. Why would the supplier bear the tax if you are willing to pay it? Another example is if government imposes a tax on bottled water. You have so many other choices to choose from that the supplier will eat the tax themselves to keep the costs down so you will buy their product.
I hope you made a connection between this Econ lecture and the Health Insurance industry; if not, I will connect the dots now. States place a barrier around their states and limit the insurance companies that can do business in their state. States also place minimum requirement coverages on the allowed companies in exchange for the quasi-monopoly. Consumers are then limited in choices making them very inelastic if they have to have health coverage. So consumers pay the brunt of external costs. But ObamaCare places a cap on the amount Insurance companies can charge in premiums (if the cap is on or above the market equilibrium the price will not change from the market equilibrium, however if the cap is below the Market equilibrium the price will be cap for all consumers). This cap if permanently set below production costs will give the companies incentive to exit the insurance market. These companies will find other investments to spend its capital on, but the insurance consumer will be out of luck. The cap will make firms exit and prevent any firm from entering the market.
There goes all that GDP potential from the Insurance industry! Not only that but insurance companies do not just sit on the money you give them. They invest that in stocks, bonds, Treasury notes, other business ventures and a lot more. All these increase money supply, and boost the GDP. Kiss that good-bye too.
If the insurance companies exit the market, Obama will no doubt fill that gap with MORE GOVERNMENT! Increasing government expenditures by trillions of dollars per year.
Didn't Obama just throw a hissy fit about not being to pay the bills now? Sheesh!!
As for the law suit against Alabama...Obama is going to spend millions of dollars that it did not have just 10 hours before they announced the intent to sue. WHY BOTHER???
If the states are willing to assume the costs of immigration enforcement why not let the states do it? Don't look a gift horse in the mouth. Save the money, let the states go for it and sit back and enjoy the accolades of getting the job done cheaply.
Dang Obama you are just not right in the head...or are you unwilling to share power and authority with the very sovereign entities from whom you stole it? Yep Teddy Roosevelt, Woodrow Wilson and LBJ would be proud of Obama...He finished the job they started.
No comments:
Post a Comment