Dysfunction in American healthcare is a self-inflicted problem

The most urgent problem with the US healthcare system — which pre-dates Obamacare — is the continuous and accelerating rise in costs.

Cost increase are always the result of demand exceeding supply — in this case, a shortage of medical services. In a free market, shortages of this sort are temporary, corrected quickly by competition and redirection of economic investment through the natural forces of supply and demand. That is not occurring in healthcare because those self-healing forces have been thwarted and suppressed by massive misguided government interference — mandates, constraints, subsidies, price-controls, tax policies, — affecting every aspect of the healthcare economy.

Obamacare ignored the healthcare shortage problem and focused instead on increasing the number of people carrying Obama-approved health coverage cards. The resulting 2700-page legislative monstrosity is a bundle of new taxes, subsidies, mandates, and price controls impacting every stage of the US health care supply chain, further compounding the original problem. Basic economic principles guarantee that such policies would exacerbate the shortage… so the acceleration in premium costs we are now seeing is a self-inflicted wound … entirely predictable and, in fact, predicted.

Tweaks will not fix this…anyone truly concerned should support not just the repeal of Obamacare, but a fundamental rethink of our approach. Any ‘replacement’ that does not radically reduce/eliminate government involvement in healthcare will perpetuate the spiralling costs, declining quality, and general dysfunction… and inevitably drive healthcare rationing, the brunt of which borne by our most vulnerable: the disabled and seniors.

It’s time for Free-Market Healthcare was originally published in This Chord on Medium, where people are continuing the conversation by highlighting and responding to this story.

Late last week American voters listened to an audio clip of lewd, offensive comments made 11 years ago by Donald Trump, confirming some old news: the Republican candidate is a boorish narcissist. The more-interesting story is: Why are large swathes of ordinary, intelligent and goodhearted Americans still considering casting their vote for him?

Trump’s continued momentum is driven not by bigotry and hate, as some would like us to believe, but by the same groundswell of desperation and rage that kicked off the grassroots “Tea Party” movement in Obama’s first term. Americans who support Trump are terrified by the doubling of our national debt and damage to our country inflicted by Obama’s policies:

• Destruction of America’s health care system — huge cost increases, diminished quality, loss of patient choice;
• Excessive and ever-increasing regulation, mandates, and taxation of Americans and their businesses which is destroying economic opportunities, particularly for those in the lower economic tier;
• Feckless global strategy leading to large scale human misery and death in the Mideast and a substantial degradation of US strategic interests throughout the world

Hillary Clinton directly contributed to these failures as Secretary of State and at other points in her career, and is promising to expand them if elected.

Given that, it’s not too surprising that many goodhearted Americans are wondering if a narcissist in the White House who has America’s interests at heart might be preferable, and pose less threat to America and their children’s future, than a third Obama term.

Like those promoting the “Black Lives Matter” movement, I am angered and frustrated by the recent senseless deaths of Black men during confrontations with police. Unfortunately, these tragedies will continue unless that movement starts acting as if it truly cares about Black lives. And that starts with asking the right questions.

If police are trying hard to protect the families living in neighborhoods where there is a high incidence of Black men killing each other, there will be many tense, sometimes confrontational, encounters between the police patrolling those neighborhoods and Black men they encounter, whether those men are involved in the crimes or not. When there are many such tense confrontations, despite the best of intentions and careful training, it’s inevitable that, occasionally, one will spiral out of control, with police firing their gun and injuring or killing the Black man.

After each of the recent deaths, all attention focused, as you would expect, on understanding how the situation got out of control, determining whether there was police misconduct, and debating what can be done to improve the survival rate of Black men during such encounters.

Many/most in the Black community immediately concluded that the problem is caused by racist White people who don’t value Black lives. Always trying to be helpful, our President quickly endorsed that view by declaring his personal indictment of the local police; not surprisingly, in the weeks and months since those tragedies we have seen continual demonstrations, interspersed with rioting and police assassinations, promoting that message.

But there’s another perspective to which the Black community should give at least some consideration.

Black lives matter to me and to every White person I know. After each tragedy hit the evening news, sometimes with a very disturbing video clip, everybody I know was horrified and deeply saddened.

And everybody I know supports prosecution of criminal police misconduct, if the facts indicate it.

But that won’t solve the problem because it doesn’t address the more fundamental question, which our President and others pushing the White racism narrative don’t want to talk about.

Why are there so many encounters between Black men and law enforcement? While taking whatever steps we can to to improve Black men’s chances of surviving encounters with police, shouldn’t we be expending at least as much effort to drastically reduce the number of those encounters?

Frequent confrontations between police and citizens are unavoidable when police are patrolling high-crime areas so…short of eliminating the patrols…the obvious solution is to reduce crime in those neighborhoods. Much of that crime and violence involves criminal gangs fighting over the lucrative profits of the drug-trafficking black-market created by that misguided big-government failure know as the “war on drugs”. We should end that war immediately, and focus instead on treatment!

And Black men, trying to escape the seduction of the criminal lifestyle, find alternative employment opportunities have been systematically eliminated by the economy-crushing mandates, licensing requirements, regulations, and taxes imposed on Americans and their businesses by armies of government bureaucrats in the name of the so-called “progressive” agenda. Lawmakers and other elected government officials who perpetuate and exacerbate that problem by slathering on more mandates, taxes and regulations, and those who continue to re-elect them, are directly responsible for the resulting misery.

We should restore employment opportunities to Black men by immediately eliminating all those unnecessary burdens!

Since President Obama took office eight (8) years ago, economic conditions and violent crime in Black communities have only gotten worse. The Wall Street Journal (8/2/2016) reports that Chicago just experienced its deadliest month in a decade. Its not too surprising the President is pushing the White racism story, rather than bring attention to the misery his “fundamental transformation” has visited on Black communities.

The men who lost their lives, and their families, deserve better. If the Black community is truly committed to finding real solutions, it must challenge what has been its unwavering commitment to politicians peddling the big-government “progressive” agenda.

Though always framed with happy-sounding metaphors about “leveling the playing field”, “making the economy work for everyone”, “helping main street, instead of wall street”, etc., these business-crushing policies have been worse than ineffective. They are the primary driver of economic stagnation which is disproportionately hurting the very group “progressives” claim they are trying to help.

Black Lives Matter was originally published in This Chord on Medium, where people are continuing the conversation by highlighting and responding to this story.

There have been steady and growing calls to raise the Federal and/or state minimum wage rates. In his 2014 State of the Union address, President Obama asked Congress to raise the minimum wage to $10.10 per hour, and promised to raise the minimum wage for federal workers to $10.10 via executive order. Minimum wage advocates would have you believe that, by raising the minimum wage, everyone working below that rate would get an immediate increase, and those out of work would be offered jobs at the higher rate.

The truth is a bit more complicated. No one would remain employed at the higher rate if their services are not, in the eyes of their employers, worth the higher rate. So while, no doubt, many people earning less than the new rate would initially get a bump in their hourly rate, it is equally certain that employers with limited resources would have to let many of them go — the less educated, less skilled, less experienced — as a result of the higher rate.

For those who have lost their job, or perhaps are looking for their first job, the effect is much more devastating. Though touted as an enhancement to workers’ rights, the actual effect of minimum wage laws is to deprive workers of a human right that is hugely important to those reaching for the bottom rung of the economic ladder: the right to offer one’s services at a lower (below minimum wage) rate when competing at some disadvantage.

For example, some job seekers might want to offer their services for a lower wage if they lack some important qualifications that employers require and which competing job-seekers already have — e.g., experience, skills, references, etc. — qualifications that can only be acquired by landing one’s first job. A law which forbids such offers not only keeps these job seekers out of work but effectively prevents them from acquiring the qualifications they lack and, thereby, overcoming their disadvantage.

Others might want to offer their services for a lower wage if they possess any of myriad traits that could be perceived as “different” and make some employers uncomfortable — e.g., physical or cognitive disability, excessive body piercing or tattoos, heavy foreign accent, criminal record, obesity, age, social awkwardness, etc., etc. Sure, some of these traits might be differences “protected” by laws that prohibit discrimination on the basis of an ever-growing list of categories, but the simple reality is that an employer choosing between two otherwise equivalent candidates will generally hire the one with which he is most comfortable. A law which forbids such offers ensures that these “different” people will consistently lose the “ hiring contest” and thereby deprives them of the opportunity to demonstrate that their “differences” are blown-away by their talent, dedication and enthusiasm.

Like many well-intentioned attempts to improve or fix the free market, minimum wage laws hurt the very people they are intended to help.

Minimum wage laws was originally published in This Chord on Medium, where people are continuing the conversation by highlighting and responding to this story.

On February 26, 2015, the Democratic majority of the Federal Communications Commission (FCC), over the objections of the Republican minority, voted to impose on all internet service providers (ISPs), a broad set of new rules and regulations that will achieve, in all important respects, complete federal government seizure the US domestic Internet.

To justify this unprecedented expansion of government power, the Democratic FCC commissioners offered various explanations:

• protect the open Internet
• preserve the internet as a platform for innovation, free expression, and economic growth
• eliminate the uncertainty about the future of the Open Internet
• promote investment in the nations broadband networks

What is striking about this set of pretexts is that there isn’t a shred of evidence of a problem that needs fixing in any of those areas. To the contrary, no where in this world can be found a more robust and compelling demonstration of openness, free expression, innovation, economic growth and investment than the US Internet. This extraordinary success was achieved without government regulation, so claims that a government takeover is necessary to protect it are preposterous.

In a surreal perversion of logic, several of the commisioners even argued that the takeover of the US Internet by our government is necessary to prevent the kinds of Internet censorship and suppression of citizens’ Internet access that we have seen committed by certain oppressive foreign governments!

This is the President’s, not the FCC’s, Plan

To put this unexpected and inexplicable action in context, it’s necessary to understand that this plan for a government takeover of the Internet was not based on some FCC study that determined our Internet is broken. Rather, it is the result of the Democrats at the FCC scrambling to comply with a directive issued to the FCC by President Obama.

The relentless expansion of federal government power over key institutions and sectors of our economy has been the driving theme of the Obama administration and this plan for a government takeover of the US Internet is simply the latest phase of that assault. In November, the President directed the FCC to develop and implement the “strongest possible rules” to enforce a set of ISP regulations which have come to be known by the innocuous-sounding slogan, “Net Neutrality”. To sell the public on this plan, the President simultaneously released a position paper to promote it entitled “Net Neutrality: President Obama’s Plan for a Free and Open Internet”. Those who feel a bit betrayed by the President’s dishonest “you can keep your doctor” claims, with which he sold his healthcare plan, would do well to view this benevolent-sounding document with some skepticism. It has little to do with neutrality, openness or freedom, and everything to do with a government control.

The Plan: Government power grab

As is typical of his speeches, the President’s position paper is a masterful medley of metaphors and bumper stickers, but when you strip away the fluff, it boils down to two (2) main points. The first point, obvious from the title, is that the President supports the Net Neutrality rules. I will show below why the Net Neutrality concept is itself a bad idea, but the more important story is his second point, where he leaps to a claim that FCC enforcement of the Net Neutrality rules justifies, and in fact requires, the reclassification of all ISPs as “public utilities”, subject to regulation under Title II of the Communication Act of 1934(!).

What this means is that the Net Neutrality rules adopted as part of the initial announcement will be just the first of a relentless escalation of regulatory meddling and interference with the operations of those companies that build and maintain the Internet infrastructure and the subscriber connections to it. Henceforth, day-to-day operational decisions that ISPs would ordinarily make to adapt to changes in their customers’ preferences, new network security threats, advances in software and hardware technologies, etc. will be subject to review and, potentially, obstruction by the unelected minions at the FCC. The President tries to allay these concerns with promises that the takeover will be “carefully designed” so it “appropriately forbears from … regulations that are not needed to implement the [net neutrality] principles” … in other words, “if you like your internet, you can keep your internet”.

Analysis

There has never been a case where an expansion of government power did not quickly grow far beyond the narrow scope with which it was initially sold. And there has never been a case where government control over an important institution was not abused for political purposes. Clearly, reassurances from President Obama regarding this concern can not be trusted.

What is especially alarming about this latest plan to expand government power is the nature of the target. The Internet has become an integral part of virtually every aspect of American activity. We rely on the Internet to express ourselves, converse with each other, conduct our personal affairs and maybe most importantly, to receive timely, uncensored and unfiltered reports and perspectives about important local, national and world events. Handing control over such a vital institution to politicians and government bureaucrats raises opportunities for corruption and abuse that are truly frightening. Promoting and ultimately approving such a plan suggests a degree of naivete bordering on insanity and begs the question: “Why?”.

If, for the sake of discussion, one accepts Obama’s claim that his motivation for seizing control of the Internet is solely to facilitate the enforcement of the Net Neutrality rules, then his case collapses if either of the following statements are true:

• Net Neutrality can be enforced without the FCC takever of the US domestic Internet.
• Net Neutrality rules are themselves bad policy and should not be implemented.

** Both are true **.

Even if Net Neutrality was a good idea, its enforcement would not require FCC takeover of the Internet

The federal government has a long history of enforcing all sorts of rules and regulations on private businesses — including ISPs — without the need to define them as “utilities”. So regardless of the merits of Net Neutrality itself, an argument for federal takeover of ISPs based solely on the need to enforce net neutrality is absolutely specious.

When an elected official claims an interest in fixing some specific problem and then, as a means to accomplish that goal, argues for massive expansion of government power and control, far beyond what would be necessary to accomplish their claimed goal, it is almost certain that the specific problem is merely a red-herring to distract from the real motivation behind the power grab.

Net Neutrality is a bad idea

Now let’s talk about the merits of the Net Neutrality concept itself, which President Obama defines with what he calls “simple, common-sense bright-line rules”:

• No blocking — ISPs are prohibited from blocking any consumer’s access to any web site/service hosting “legal content”. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it.
• No throttling — ISPs are prohibited from intentionally slowing down or speeding up content based on the type of service or the ISP’s “preference”.
• No paid prioritization — ISP are prohibited from causing a service from being “stuck in a slow lane” because it did not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth.

Prohibition Against “Blocking”

With regard to the first rule which prohibits “blocking”, though the language is subtly crafted to insinuate that ISPs have been blocking certain customers’ access for nefarious reasons, there is no evidence of that. And, importantly, the rule does not specifically target malicious behavior — it outlaws blocking for any reason (with some limited carve-outs for illegal or dangerous content). As usually results from ham-fisted bureaucratic policies, this rule will have grave unintended consequences.

For example, the rule will prohibit ISP from implementing certain traffic flow control measures that might be needed to protect a critical web service from being swamped during a network traffic flood, such as a distributed denial of service (DDoS) attack. In general, any rule that constrains a ISP’s ability to quickly set and adjust network traffic policies, in response to rapidly changing network conditions, will inevitable have a negative impact on the network service and those customers who depend on it.

Beyond the operational considerations, this rule also would hinder innovation, outlawing a whole class of new and potentially useful ISP services that could offer great value to internet customers.

For example, many businesses and government agencies today pay their network service providers to enforce web site access policies which block access to certain sites and even specific content on certain sites. An ISP might want to experiment with extending this business service to residential customers by creating, for example, a residential “Family Internet” service offering that, during certain customer-specified hours of the day, blocks access to sites deemed inappropriate for kids.

Or an ISP might want to experiment with an low-priced “Budget Internet” offering for low-usage subscribers where, in return for a very cheap subscription price, the ISP reserves the right to block subscribers’ access to the Internet if their monthly (weekly?, daily?, hourly?) usage exceeds some defined limit.

We could go on. Why would we institute rules to prevent this kind of innovation? By obsessing about a problem that doesn’t exist, the Net Neutrality “no blocking” rule bans a whole class of potentially useful internet service offerings. I’m not qualified to know if the examples above are viable services, or if there are some other ideas that are. But neither is the government.

Trying to anticipate all the “good” reasons to block internet access and create a list of valid exceptions is a futile exercise. The point is not that we need omniscient visionaries who can accurately predict the future and, with that insight, carefully craft prohibition language that won’t block useful future services and technologies down the road; its that we should let the free market figure it out and keep the government out of the way, as we’ve done with miraculous results for the last 25 years.

Prohibition Against “Slowing/speeding”

The second and third of the President’s “common sense” Net Neutrality rules prohibit ISPs from slowing down or speeding up network traffic based on type of service, content, or application in exchange for compensation of any kind. Though, as with the first rule, the language seems to insinuate ISPs are engaged in some sort of malicious behavior, in fact they are merely attempting to do what is permitted and expected in virtually every other service industry: categorizing the network services they offer based on how costly they are to provide, and then charging customers rates for the different services that reflect those different costs.

For example, package delivery establishments offer different tiers of service based on size and weight of the package, how quick it needs to arrive, whether it must go by ground or air, is it fragile, does it need to be insured, does the recipient need to sign, etc., etc. — and charges different rate for the different tiers that reflect the additional costs of the special handling. Does this pricing model mean that those who choose not to send a particular package at overnight rates are somehow “stuck in the slow lane”? Has it “undermined the level playing field” or in some way impeded the growth and innovation in the package delivery business?

Other examples of service models that use service categories are everywhere. Movie theaters offer discount “matinee” tickets for off-peak showings to reduce the traffic surge during peak periods. Freeways offer “HOV” (high occupancy vehicle) lanes to incent regular freeway users to ride in groups. Mobile phone companies offer a vast array of different service plans in order to meet the diverse needs of the public.

The practice of breaking services into rate categories helps both the business and its customers. It enables the business to recover the greater costs it incurs when providing more-costly services, from those customers that are consuming the more-costly services. And it allows customers to save money by forgoing more-expensive services when they don’t require them.

The comments accompanying the Presidents third “common sense rule”, suggest he believes, or at least would have the public believe, that banning this practice is necessary to achieve a “level playing field”. To the contrary, such a ban actually tilts the field in favor of services, like Netflix and other streaming video services, that require the most network capacity and fastest transit speeds. If ISPs are prohibited from imposing higher rates for those more-costly services, the costs don’t go away. ISPs are simply forced to recover them through the flat rate they charge all services. This means that the more-costly services are not paying their fair share and that the other services are making up the difference — i.e., subsidizing the more-costly services.

Since service providers pass all their costs through to their customers in the form of subscriber fees, it also means that the end-users consuming the more-costly services receive a discounted rate, which incents them to consume more than they would if they were paying the full freight. This perverse incentive rewards precisely the opposite behavior one would want to encourage when seeking optimal use of costly network resources.

But the resulting economic distortion is actually worse than that. The Net Neutrality prohibition against ISPs applying special handling to any traffic on the their networks means that every service and customer must be provided the same grade of service, regardless of their specific requirements. Thus, in order to guarantee extremely high-speed network delivery to those services like Netflix that absolutely require it, ISPs are forced by Net Neutrality rules to guarantee high-speed service to all traffic on the network, whether they need it or not. The inevitable result will be huge and costly over-engineering of the infrastructure that will drive up the cost of Internet access for everyone.

Prognosis

Attempts to correct or improve the free market with heavy-handed government regulation invariably result in unintended consequences that are worse than the original condition and, in most case, actually exacerbate and perpetuate the very problem they were intended to fix. Net Neutrality is a particularly destructive example of this principle in that it targets a problem that doesn’t even exist. This ill-conceived “solution in search of a problem” will

• Outlaw a whole class of innovative yet-to-be-conceived services
• Distort the pricing mechanism of the Internet service market, leading inevitably to …
• Over-consumption of the more-costly network services
• Users of the cheaper network services forced to subsidize users of the more-costly network services
• A misallocation of Internet infrastructure investment
• Raise costs of Internet access for everyone

Comments accompanying the President’s Net Neutrality sales pitch posted on whitehouse.gov, and statements of those FCC commisioners who voted in favor of the FCC takeover, all recite a talking point about “nearly 4 million Americans” who voiced their support during the public comment period. They cite this as an extraordinary demonstration of regulatory transparency, a “shining example of democracy at work”, and base their “yes” vote in large part on the mandate they claim from that apparent public support.

But expressions of support for Net Neutrality are based entirely on talking points in the promotional material distributed by the FCC and other proponents of Net Neutrality which, like the President’s position paper, are uniformly devoid of any serious discussion of the facts and relevant economic principles, so claims of public mandate regarding Net Neutrality are suspect, at best.

More importantly, claims of an over-arching public mandate regarding the whole plan put to a vote in February is an absolute sham. Since that plan is vastly different from the proposal circulated for comment last May, any claims that public support for the current plan can be inferred from the comments about the original plan are clearly absurd. In particular, while the original proposal advocated for the Net Neutrality rules, it did not propose the FCC takeover of the Internet, which is the most important story about the current plan. Clearly, there is zero evidence of public buy-in for that.

Having said all that, this train has left the station and it’s unlikely that facts and economic discussion about this matter can stop its momentum. President Obama has devoted his tenure promoting the narrative that businesses are the root of all of the country’s problems and he has succeeded in whipping up a lot of that kind of sentiment. His disciples are convinced he has their interests at heart so, when he presents a government plan to take the Internet from them, as long as he includes happy words like “openness” and “level playing fields”, they will gladly hand him the keys.

And, unfortunately, a thoughtful rebuttal doesn’t fit on a bumper sticker.

Net Neutrality was originally published in This Chord on Medium, where people are continuing the conversation by highlighting and responding to this story.