Hostile Takeover: Resisting Centralized Government's Stranglehold on America (38 page)

Through this new law . . . every citizen will be able, in his productive years, to ensure himself against the ravages of illness in his old age. . . . [N]o longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, to their uncles, and to their aunts.
31

And to reassure doctors and patients that the doctor-patient relationship would never be infringed by Medicare bureaucrats, the very first section of the law promised: “Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided . . . or to exercise any supervision or control over the administration or operation of any [health-care] institution, agency, or person.”
32

Today, it’s clear that Medicare has broken all these promises and will never be able to deliver on them in its current form. In that way, it’s like the health-insurance equivalent of a politician’s campaign promises.

The second largest federal program, Medicare is also one of the fastest growing. Currently comprising 13 percent of the budget, this program is also the most important single factor in future deficits and debt. You can’t realistically balance the budget without rethinking Medicare for future generations.

Today the nation’s single largest health insurance benefit plan, covering more than 40 million elderly and 8 million disabled persons, or 1 out of every 8 Americans, Medicare’s rolls are currently growing at the rate of 10,000 people a day, and will continue to do so for the next two decades. In 1967, Medicare covered 9 percent of the U.S. population; today it covers about 15 percent; and by 2030, that figure is expected to be 20 percent.

Medicare spending has grown at an average rate of 9 percent a year over its forty-five-year history (10 percent in 2009) and is projected to grow by “only” about 7 percent a year during the coming decade, or more than twice as fast as the economy. The cost of Medicare has always been orders of magnitude higher than expected. For example, in 1965, its official projected cost for 1990 was $12 billion; the actual 1990 cost was $110 billion.

The official underfunding of Medicare’s hospital insurance trust fund is $2.4 trillion. The comparable figure for its other trust fund, the one for physician services and prescription drugs, tops $35 trillion. Combined, that’s nearly
$38 trillion
in future promises no one has figured out how to pay for. In fact, Medicare’s unfunded liabilities are so obscenely high that they are not really even a topic of polite discussion in Washington. No one wants to even think about it—after all,
in the long run we’re all dead
.

Beyond its fiscal impact is its enormous effect on the entire health care sector. Medicare controls one out of every four dollars spent on health care in America. The open-ended, blank-check nature of the Medicare system fuels a persistent health care inflation that has, on average, exceeded economic growth by 2.4 percentage points a year since 1970. Medicare’s inefficient design and price-controlling bureaucracy drive up the costs of care in the private sector, while also retarding medical innovation and diminishing quality and access to care.

And on top of all that, Medicare has the highest fraud rate of any health insurer. In 2009, fraud in this program cost taxpayers somewhere between $60 billion and $100 billion, or between 12 and 19 percent of the program’s total spending. Essentially a giant check-writing operation, Medicare audits fewer than 1 percent of the billions of claims it pays annually. Its ability to recoup stolen funds is weak. Horror stories abound.

The Medicare bureaucracy focuses all its efforts on trying to control medical prices, rather than on preventing fraud—and by every measure fails miserably at both.

Designed in the mid-1960s, Medicare has never been adequately updated to reflect changes in medicine. Medicare offers seniors and the disabled a benefit that is poorly designed, wasteful, and in many ways inadequate. Despite popular perception, Medicare covers only about half of the average senior’s expected annual health costs, and has never offered any protection against catastrophically high medical costs, the most basic purpose of insurance.

BETTER THAN MEDICARE

T
HE CHALLENGE IS TO FIND WAYS TO SLOW
M
EDICARE’S UNSUSTAINABLE
growth rate without rationing patients’ access to care or stifling medical progress and innovation.

The three conventional options for Medicare reform are: a) increase the retirement age; b) means-test the premiums; and/or c) ration benefits through lower reimbursement rates. None of these ideas put patients in charge of their health care.

It’s a fact of life: scarce goods must be allocated. The question is not whether, but how: via individual choices, or bureaucracy? Government-run health care always favors bureaucracy. And it shows. For example, the reimbursement rate for doctors under Medicare is typically around 15 percent below the private sector. Medicaid’s rates are notoriously lower than that, so low, in fact, that 28 percent of doctors won’t take Medicaid patients, and an additional 32 percent will take them only under certain conditions.
33
Studies show Medicaid patients get substandard care and have worse health outcomes than others.
34
Because Obamacare is funded in part by reducing Medicare payments by $500 billion over ten years, Medicare is on track, by the end of this decade, to pay doctors even less than Medicaid does. This is a bureaucratic form of rationing care, and it the inevitable result of a centralized system.

True reform will occur only when we return the focus to individual patients. Medicare is simply too bureaucratic, top-down, and government-centric. We need to give patients more choice and control. We must make it patient-centered. It’s not about national health; it’s ultimately about
your
health.

From this perspective, an obvious question is why the government would force anyone to participate in the program we can’t afford. If Medicare is a good system, it should survive and thrive being chosen by individual patients.

First and most important, then, we need to let individuals opt out of Medicare. This is currently prohibited, and that is simply outrageous in America.

Second, let seniors who opt out of Medicare buy private insurance in the open market. This, too, is effectively banned today, because private insurers aren’t allowed to compete with the Medicare bureaucracy.

Third, allow individuals to opt into the popular and successful Federal Employees Health Benefit Program. This is the same program enjoyed by current and former members of Congress. The congressional health care program relies on competing private insurers to provide benefits, and as a result has a better record than old-fashioned Medicare, in terms of cost control, quality of benefits, and customer satisfaction. It also has very little of the fraud and waste that plague old-fashioned Medicare. This reform would also make the system more patient-centered. It would give beneficiaries more modern insurance plans with more rational cost-sharing and co-payments. This idea, the “Congressional Health Care for Seniors Act,” was first proposed by Senator Rand Paul of Kentucky. Senator Paul estimates the change would save about $1 trillion over its first ten years and cut Medicare’s $38 trillion unfunded liability nearly in half.
35

Fourth, eliminate IPAB, the Independent Payment Advisory Board. That’s the Obamacare care rationing panel consisting of fifteen unelected bureaucrats, whose job will be to squeeze savings out of Medicare through formulaic rationing. Government functionaries should never have the power to determine what you should or should not receive, especially care that could determine whether you live or die. You don’t have to call the IPAB a “death panel” to know it is morally wrong.

This plan doesn’t means-test the premiums, doesn’t raise the retirement age, and most important, it doesn’t ration. Instead, it ends the
current
rationing and reduces costs by putting seniors in charge of their health care dollars.

CONTROL YOU CAN BELIEVE IN

I
N
J
ULY 2009,
P
RESIDENT
O
BAMA TOOK GREAT JOY IN MOCKING ONE
lady who was upset with his plan to divert $500 billion from Medicare into a new government-run health care entitlement. He was speaking to a group hosted by the AARP, the massive interest group whose aggressive advocacy for new entitlement spending has been instrumental in creating the daunting unfunded spending liabilities faced by future taxpayers. Business, for the AARP, is great. Their Washington, D.C., headquarters has been referred to as the Taj Mahal.

“I got a letter the other day from a woman,” Obama told the crowd. “She said, ‘I don’t want government-run health care. I don’t want socialized medicine. And don’t touch my Medicare.’ I wanted to say, you know, that’s what Medicare is: a government-run health care plan,” Obama said as he smiled.
36
The AARP crowd laughed, with the President of the United States, at the author of the letter. The joke, it seemed, was on her.

He might as well have said, “I’ve got you now.”

The principles to fix the two biggest entitlements, Social Security and Medicare—choice, individual control, ownership, self-sufficiency—are quintessentially American ideas as old as our founding. They are the same principles that a young Ronald Reagan applied to the question of how to fix these top-down programs. In 1964, in what became one of the most important political speeches Reagan would ever give, he declared in “A Time for Choosing”:

They’ve called it “insurance” to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified it was a welfare program. They only use the term “insurance” to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. . . .

A young man, 21 years of age, working at an average salary—his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee 220 dollars a month at age 65. The government promises 127. . . . Now are we so lacking in business sense that we can’t put this program on a sound basis, so that people who do require those payments will find they can get them when they’re due—that the cupboard isn’t bare? . . .

At the same time, can’t we introduce voluntary features that would permit a citizen who can do better on his own to be excused upon presentation of evidence that he had made provision for the non-earning years? Should we not allow a widow with children to work, and not lose the benefits supposedly paid for by her deceased husband? Shouldn’t you and I be allowed to declare who our beneficiaries will be under this program, which we cannot do? . . .

I think we’re against forcing all citizens, regardless of need, into a compulsory government program, especially when we have such examples, as was announced last week, when France admitted that their Medicare program is now bankrupt. They’ve come to the end of the road.
37

France “saved” its Medicare program with tax hikes and borrowing—massive borrowing.

What Reagan could not have known then, in 1964, was that Americans would one day rise up off of our couches, stop yelling at their TVs, and demand accountability from their government. We are armed with facts from a multitude of sources online and offline. We know that our government has lied to us. We know that it makes no sense to shift $500 billion from a program that is already trillions in debt to create yet another new government takeover of health care. We know that this is the inevitable price for letting government control our destiny. And sometimes they even come armed with actuarial spreadsheets demonstrating, beyond a reasonable doubt, that our children and grandchildren will pay an unconscionable price if we do not act to take control of our government back.

A CEO would never make fun of a stockholder. It might cost him his job. But top-down government in the United States has sought to turn stakeholders into wards of the state. But that was then. Now is a new
time for choosing
.

CHAPTER 13
D
ISINTERMEDIATION
P
OLITICS

Let your life proceed by its own design.

—John Perry Barlow

I
T SEEMS AS IF EVERYWHERE YOU LOOK, EVERYTHING IN MODERN LIFE
is becoming more about the individual. Everything has become personal, more individualized. More to y
our
liking; what
you
need. Consumers are finding and buying what they want, not what some commercial on daytime TV told them they wanted. We are now used to rating products and celebrities by voting online, thumbs up or down. Markets and services have been radically democratized, providing every individual with a voice, an opinion, a say in what happens, what comes to market, and what is ingloriously pitched into the dustbin of history.

We answer to no single boss because, unlike our parents and grandparents, we typically do not work at one job for most of our lives. We search, we compete, and we explore options at Monster.com; we can reach hundreds of “friends” on Facebook and “followers” on Twitter in the time it takes to read this sentence. Sometimes we exploit our new mobility and move to a new locale and a new opportunity. We look out for ourselves instead of expecting some mother ship corporation and its underfunded pension system to tend to our family’s needs from the first day at work to the day we receive the gold-plated watch at our retirement.

We now get our information on the day’s events from a multitude of sources. We control our own newsfeeds and follow our own favored citizen-journalists. We can choose to get the latest happening, fact, breaking story, or career-wrecking, 140-character rant via Twitter. Bloggers in basements with personal agendas and ideological axes to grind get the story first while the Old Media monopolists struggle to keep up with yesterday’s news. We don’t need Dan Rather or the
New York Times
telling us what to think anymore.

We have access to goods and services that meet our unique—some might say weird—tastes and preferences. Much to my wife’s chagrin, I can buy the entire seventy-two-disc collection of the Grateful Dead’s Europe ’72 tour, browse an original printing of F. A. Hayek’s
Road to Serfdom
, and download the fourth season of
Breaking Bad
to my iPad, all before breakfast. Decentralization at least creates a
perception
of more freedom for husbands about to be reined back to reality by their loving wives.

Chris Anderson, editor-in-chief of
Wired
, put it well:

Our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare.
1

Anderson nailed this trend in 2004 and coined the term
the long tail
for it. He predicted something that was not so obvious then, but today is so ubiquitous that we almost don’t even notice it, like gravity or the air we breathe.

We Americans are free, opinionated, and utterly mobile. We are not to be controlled, not to be dictated to, not to be restrained in our opinions or consumption habits. Each individual in this radically decentralized world is, in effect, the fearless “Honey Badger” of YouTube fame—27 million hits and counting, no corporate sponsorship, unstoppable.

This democratization of information and choice is global. Everything is rapidly progressing away from top-down hierarchies toward bottom-up decisions driven by individual preferences.

Freedom is “trending,” as they say of dominant topics that emerge spontaneously, by choice, on Twitter. Everything is disintermediating. The middleman has been sent—mercilessly—to the back of the line.

Except government. Government is trending toward more centralization, more gray-suited middlemen dictating—usually unknown to you—what you may or may not do. More and more choices are being made for you, using your money, the money of your neighbor, and the money of someone you don’t know. Tellingly, the trends toward more centralized government seem to accelerate with the declining state of government balance sheets. From Brussels to Berlin, from Athens to Rome, from Harare, Zimbabwe, to Washington, D.C., insolvency and old welfare-state habits are being propped up with other people’s money and money that is being created, out of thin air, by government central banks.

Here in the United States, once the Land of the Free, the contrast is the most striking. What was once a “shining city on a hill” for freedom-loving people across the world, an example to be emulated and sought after, is now a quagmire of debt, bureaucracy, economic stagnation, and government failure. When it comes to the federal government of the United States, everything is trending toward more. More spending. More debt. More control. More one-size-fits-all. More “I’m from the government and I’m here to help”—a phrase Ronald Reagan famously called the “nine most terrifying words in the English language.”

As we become more independent, Washington, D.C., is growing, with increasing velocity, to inhibit our freedom. Everything coming out of the nation’s capital is more centralized, more command-and-control, more distrusting of our ability to live the lives we choose, to pursue the happiness we desire. The Obama administration and its growing legion of “czars” has been feverishly building more top-down structures to make more choices for us, and using our money to do it. Rather than creating an open-ended, transparent approach to health care to be molded by you, by your needs and preferences and demands, the government chooses a single approach to which you must conform. The pretense of knowing better what you need is then corrupted, “in committee,” by the favored interests, trough feeders, and crony capitalists that grow fat on a special diet of your hard-earned substance. When it comes to power, someone else is always getting privileged treatment different from what you will, or could, receive.

POLITICAL INDULGENCES

Y
OU ARE REQUIRED UNDER
O
BAMACARE—BY “INDIVIDUAL
mandate”—to buy a one-size-fits-everyone benefits package you may not want, need, or be able to afford. The primary beneficiaries just happen to be the health insurance companies who provide that benefits package. The rest of us are screwed. But if you happen to be an insider, if you know someone special who knows someone in Washington, you might just receive a waiver from that someone with the power and the discretion to grant special dispensation—an indulgence—from Obamacare. That someone might have been Nancy-Ann DeParle, described by
Time
magazine as “Obama’s Health Czar: Behind the Scenes but Leading the Charge.” She reports to President Obama; is immune from congressional oversight; and has been “tasked with what she has always done best, working behind the scenes to improve the health-care system.”
2

One waiver recipient—the Robert Wood Johnson Foundation, an aggressive advocate of government-run health care, as it happens—has friends in high places. And Czar DeParle “sits on the foundation’s board of trustees.”
3

If you didn’t know someone with the cell phone number of Czar DeParle, maybe you could get an in with the now-more-powerful head of the U.S. Department of Health and Human Services, Kathleen Sebelius. If you’re reading this book, it is highly unlikely that either DeParle or Sebelius will take your meeting, or will bless you with indulgences from the government’s rules. Because the rules are for your own good, except if you “know a guy”—then they’re for suckers.

Someone in the Obama administration did, however, take the meeting with Big Labor. As I noted earlier, labor unions have received a disproportionate allocation of waivers from the costly health care mandate. Almost half of the waivers distributed involve employees of unions even though union workers are only about 12 percent of the workforce.
4
,
5

At a rally in Detroit on Labor Day 2011, Jim Hoffa, president of the International Brotherhood of Teamsters, made a point of expressing his appreciation for the favor. He pledged his unconditional fealty to the man in charge of things: “President Obama, this is your army,” Hoffa declared. “We are ready to march . . . and when he sees what we’re doing here he will be inspired. But he needs help and you know what? Everybody here’s got to vote. If we go back and we keep the eye on the prize,
let’s take these son of a bitches out
and give America back to America where we belong!”
6

“These son of a bitches” Hoffa is referring to are the men and women of the Tea Party, of course. (Don’t dwell on the bad English. Let’s assume for the sake of argument that the head of the Teamsters is a victim, like I am, of the government’s education monopoly.) Hoffa deeply resents that these citizens might want a say, too; that taxpayers may want a voice in how their tax dollars are spent. They might even insist that everyone in America, regardless of who you know, is treated equally under the laws of the land. Those “son of a bitches.” A quick search of waiver recipients posted by the Sunlight Foundation in a comprehensive spreadsheet reveals that no fewer than twenty-one state and local Teamster unions have been blessed with waivers from the Obama administration.
7

QUID PRO QUO, MR. HOFFA?

D
IDN’T WE DECLARE OUR INDEPENDENCE FROM THIS TYPE OF FEALTY-TO-A-KING
servitude some 236 years ago? Didn’t our Founders pledge “our Lives, our Fortunes, and our sacred Honor” to ensure that no American citizen would ever act as vassal to some self-anointed government overlord? The Declaration of Independence and the Constitution are binding contracts that have as the basis of their power
the consent of the governed
; not to be ignored, renegotiated, or broken.

The centralized control of health care is just the beginning of the story. Our government is centralizing the banking system, too. One of the main drivers of the financial collapse of 2008 was too much concentrated risk in the banking industry, which was incentivized by past bailouts. Banks deemed “too big to fail” still existed because of past government interventions. Fannie Mae and Freddie Mac, the oxymoronic “government-sponsored enterprises,” centralized financing of the mortgage industry, driving the writing and signing of bad loans. Both actions socialized risk, leaving you, Joe and Jane Taxpayer, on the hook if something went wrong. And it went really, really wrong.

Later, the same legislators most culpable for this concentration of banking power “fixed” the system again by turning an implicit guarantee of taxpayer bailouts into an explicit socialized risk pool that punishes sound banks and is too shallow to protect from another raid on the public treasury. Dodd-Frank, the shorthand for this legislative train wreck, was authored by then Senate Banking Committee Chairman Christopher Dodd (D-Countrywide Financial) and then House Financial Services Chairman Barney Frank (D-Fannie Mae and Freddie Mac). This is what President Obama refers to, in a mirror image of the truth, as “Wall Street reform.” No, Mr. President, it’s the protection of bad actors on Wall Street, retrenching the status quo.

How do we fund centralized health care and centralized investment banking? With centralized money, arbitrarily printed, more and more, to monetize bad judgments.

What could possibly go wrong?

DECLARING INDEPENDENCE

I
N 1996,
J
OHN
P
ERRY
B
ARLOW, A ONETIME CAMPAIGN COORDINATOR
for Dick Cheney in his first run for Congress, a lyricist for the Grateful Dead, and cofounder of the Electronic Frontier Foundation, posted “A Declaration of the Independence of Cyberspace” on the Web. Channeling a young Thomas Jefferson, it read in part:

Your increasingly obsolete information industries would perpetuate themselves by proposing laws, in America and elsewhere, that claim to own speech itself throughout the world. These laws would declare ideas to be another industrial product, no more noble than pig iron. In our world, whatever the human mind may create can be reproduced and distributed infinitely at no cost. The global conveyance of thought no longer requires your factories to accomplish.

These increasingly hostile and colonial measures place us in the same position as those previous lovers of freedom and self-determination who had to reject the authorities of distant, uninformed powers. We must declare our virtual selves immune to your sovereignty.
8

Barlow’s declaration became a manifesto of sorts for cyberlibertarians who believed that the spontaneous spread of information could create, in Barlow’s words, “a right to know.” The liberating forces of knowing, at diminishing marginal cost to the end user, had implications for individual freedom, politics, and the functioning of democracy. Beyond even Barlow’s futuristic optimism, the free flow of information online was breaking down barriers and leveling the playing field between mere citizens and the insiders who had always exploited special access to information to fix the game, concentrate benefits for a select few, and disperse costs outside the walls of the establishment.

In a 2008 speech before the Icelandic Digital Freedom Society’s conference in Reykjavik, Barlow anticipated the coming clash between bottom-up freedom and top-down control in the name of intellectual property.
9
He quotes Jefferson, the radical democrat, from an 1813 letter to Isaac McPherson: