Category Archives: Guest Blogging

Guest Post: A Five-Part Plan For Fixing America’s Health Care System

Today’s post was written by regular commenter Dr. Gregory Tetrault (aka “Dr. T”). Dr. Tetrault is a clinical pathologist who has directed four different medical laboratories since 1989. He was an Associate Professor of Pathology and Laboratory Medicine at the University of Tennessee Medical Center until 2009. His plan below is, IMHO, a realistic way to introduce crucial market-based reforms into our medical system while still maintaining a social safety net. Enjoy!

Health care costs have increased far faster than the general rate of inflation for decades. The most important cause was the transition from out-of-pocket payments for routine medical care (common in the early 1960s) to employer-based or government-based insurance or health maintenance organization (HMO) coverage. This produced price insensitivity among consumers, who believed that their insurance premiums paid for all the medical care as they wanted, and allowed medical costs to rise rapidly. We cannot rein-in health care costs without making drastic changes to our health care payment systems. My five-part proposal, if implemented, could reduce health care costs.

  1. Dissociate health insurance from employment.

    Employers don’t provide home insurance or vehicle insurance. They should not provide health insurance, either. A disadvantage of the current situation is that workers with chronic health problems become tied to their employer—if they switch employers their new health care plan typically will not cover their existing medical problems. Another disadvantage of the current situation is that most employers offer only a few health insurance options. Workers who opt out rarely get fully reimbursed for what the employer would contribute, cannot deduct health insurance premiums from their income taxes, and usually pay more for health insurance because they aren’t in a group plan.

  2. Require all adults to either purchase catastrophic health insurance for themselves and their dependents or provide proof that they can afford a moderately expensive hospital stay.

    This proposal is similar to the requirements in most states that all vehicle owners buy insurance or provide proof that they can pay for damages. The requirement violates libertarian principles, but it is necessary because clinicians and hospitals must provide medical care even if the ill or injured patient cannot pay. A fully libertarian approach would mean refusing to care for patients who cannot recompense providers at a mutually acceptable price. We aren’t ready for that much libertarianism.

  3. Require health insurance companies to accept all customers (no cherry picking) with only moderate stratification of premiums based on age and controllable risk factors (such as smoking).

    Insurers and others apparently forget that the purpose of insurance is to spread the costs of catastrophic events across the pool of insured persons. Insurers should not be classifying, sub-classifying, and sub-sub-classifying individual risks before calculating premiums. They should lump similar persons into large groups and charge everyone in each group the same premium. Example groups: 40- to 49-year-old male non-smokers, 20- to 29-year-old female smokers, 0- to 5-year-old children, etc. As an incentive for healthy behavior, insurers could offer discounts to those who can prove they are fit and in above-average health.

  4. Give a tax credit for health insurance premiums based on the cost of a minimal coverage policy to lessen the financial impact on the lower middle-class.

    This credit would replace the tax-deduction given to employers who provide health insurance to employees. The credit is capped at the cost of the minimum required health insurance plan to prevent large tax credits for those who buy expensive, low-deductible or full-coverage insurance.

  5. Create a taxpayer-funded (or, better yet, a charity-funded) health insurance voucher program for low income persons.

    This would replace Medicaid. Eligible persons would choose a health insurance provider and a coverage plan and use vouchers to pay all or part of the premiums. The eligible persons would be responsible for their out-of-pocket health care expenses, but health care providers could offer discounts, delayed payment plans, or free care (something that is not allowed under current Medicaid and Medicare rules).

This five-part proposal will give workers bigger paychecks (no employer health insurance deductions) and return most routine care to an out-of-pocket payment system. The mandatory catastrophic health care insurance will prevent bankruptcies after serious illnesses or injuries. The proposal allows people to purchase however much health insurance they desire from HMOs, preferred provider organizations (PPOs), or other types of plans. Implementing this proposal would make people aware of the full costs of health care services. Some people will refuse expensive care or negotiate lower charges. Such actions will reduce overall health care costs.

Businesses will be pleased because this proposal reduces operating costs: no administrative personnel will be needed for handling employer-based health insurance. Productivity would rise slightly because employees would not spend working hours choosing employer-provided health insurance plans or solving problems related to health insurance claims.

Health care providers will experience reduced billing costs because most people will pay directly for routine medical care, dentistry, prescriptions, laboratory tests, and imaging studies such as x-rays and simple ultrasound exams. Elimination of Medicaid with its poor reimbursement and excessive documentation requirements will greatly benefit many providers.

The losers if this proposal is implemented are: employees who work in health insurance benefits subdivisions of businesses, government bureaucrats who hoped to control the health care economy, and advocates of ‘nannystate’ government who believe that Joe and Jane Average are incapable of making health care financial decisions lose. The winners outnumber the losers by at least 1,000 to 1.

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Contest: Threats To Freedom

I was recently contacted by Templeton Press, the publishers of a new book called “New Threats To Freedom”. While I have not read the book at this time, judging by the theme and by some of the authors who submitted, it’s definitely intriguing.

In the run up to their paperback edition, they’re holding a contest for writers to submit their own new threats to freedom*:

In the spirit of these essays, write or post a response to the question:

What is an emerging threat to freedom and why is it critical to address it in today’s society?

Prize
First Place $500
The winning entry may also be considered for inclusion in the paperback edition of New Threats to Freedom.

Entries must be posted on a personal or professional blog no later than August 15, 2010, by 11:59 p.m. EST.
Blog posts must be 500 words or less.
Entrants must eighteen years or older.

Seems interesting. I’m not sure if I’ll submit something or not, but I’ll make the following offer to our readers:

If you think you have something worthy of submission [and I agree], but don’t have your own blog to present it, I am willing to offer space here at The Liberty Papers to submit your entry as a guest post. Since this is our own space on offer, some caveats apply**.

If you’re interested, contact me at the email address on the left sidebar.
» Read more

Liberty Papers Bracket Challenge 2010

March Madness has arrived. For the first time, I’ve decided to throw together a Liberty Papers Bracket Challenge. Hosted at CBS Sports (p/w “thomaspaine”), feel free to sign up. Hurry, of course, as the games start Thursday morning.

Scoring rules are somewhat standard, but with a kick on the first two rounds. Picking a winner adds their seed to your point total, meaning you get significant benefit from picking the right upsets during those first two games.

The winner will earn a guest post here at The Liberty Papers, with minimal restrictions on tone and subject.

Sign on up and let’s see what you’ve got! And of course, consider this an open thread to root for your favorite team. I think my allegiance is well known…

GUEST COLUMN: Racial minorities and socio-economically disadvantaged targeted for eminent domain abuses in Alabama

BY DAVID BEITO

What is happening in the cradle of the modern civil rights movement?   Jimmy McCall would like to know.  ”It was more my dream house,” he laments, “and the city tore it down….It reminds me of how they used to mistreat black people in the Old South.”  In 1955, Rosa Parks took on the whole system of Jim Crow by refusing to give up her seat on a segregated Montgomery bus.  Today, McCall is waging a lonely battle against the same city government for another civil right: the freedom to build a home on his own land.

Although McCall’s ambitions are modest, he is exceptionally determined.  For years, he has scraped together a living by salvaging rare materials from historic homes and then selling them to private builders.  Sometimes months went by before he had a client.  Finally, he had put aside enough to purchase two aces in Montgomery and started to build.  He did the work himself using materials accumulated in his business including a supply of sturdy and extremely rare longleaf pine.

McCall only earns enough money to build in incremental stages but eventually his dream home took shape.  According to a news story by Benjamin Solomon, the structure had a “the high slanted ceilings, the exposed beams of dark, antique wood.  It looks like a charming, spacious home in the making.”  But from the outset the city showed unremitting hostility.  He has almost lost count of the roadblocks it threw up including a citation for keeping the necessary building materials on his own land during the construction process.  More seriously, he was charged under the state blight law, which allows a municipality to designate a building as a “public nuisance” and then demolish it.  Critics have accurately called this “eminent domain through the back door” and warn that opportunities for abuse are almost limitless.  In contrast to the standard eminent domain process, for example, property owners do not have any right to compensation, even in theory.  » Read more

Treatise on Property Tax Through Fiat Currencies

Below, please enjoy a guest article by Clayton Slade. Clayton is in the information technology field by trade, but has been an economics/finance buff for most of his life, as well as a believer in liberty and the free market.

Clayton’s article succinctly explains a rather complex concept rarely discussed, the effect of inflation as a tax on all those who hold dollars, both domestically and abroad.

As always, feel free to discuss in the comments. Clayton can be reached at clayton.slade@gmail.com.

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Treatise on Property Tax Through Fiat Currencies
By Clayton Slade

Property Tax
The United States has a property tax that applies to the entire world. In fact, all countries with fiat currencies do, but the extent to which they can tax is directly related to the distribution of currencies in circulation. This tax is called a fiat property tax. The tax rate varies between different currencies.

First, it must be understood that at any given moment, there is a finite total value of resources and services. Second, there is a total amount of currencies in the world, which can be manipulated. These two values form a ratio of Currency:Stuff. If more of a currency is created, such as new federal reserve notes, the total economic value of everything is not increased; this merely increases the currency side of the ratio, meaning that in the long run, it takes more currency to get the same amount of stuff. This amount of time is the response time or lag time of the market to realize the increased currency.

When more federal reserve notes (FRN) are created, the ratio of FRN:Stuff shifts accordingly, making it take more FRNs to get stuff. This means that each individual FRN is worth less than it was originally. The value of the “new” FRNs is derived from taking value away from the original FRNs. This is true for all fiat currencies when the quantity of a given currency in circulation increases.

The devaluing of each FRN is more than mere inflation. This is a property tax. It takes value away from assets, in this case currency owned by the holder, and redistributes it to the entity that creates the new notes (e.g., the Federal Reserve). Whomever has the power to create new currency inherently has the power to tax anyone and everyone who is holding that currency.

History
When the United States used the gold standard, people saw the US dollar as a sanctuary. The dollar was no more than a receipt (certificate) for a certain weight of gold, and the gold was protected in a safe location, which allowed the dollar to permeate throughout the world. When we moved off the gold standard domestically, we still met our obligations for foreigners who had gold certificates, and we also used relatively responsible monetary policies. This kept foreigners comfortable with using the US dollar.

At the same time, a very real economic boom after WW2 made the United States rich and a marketplace that other nations want to sell to. When the United States imports, it also exports federal reserve notes, which further serves to spread FRNs to all parts of the world. Some other consequences of WW1 and WW2 were that the borders in the Middle East were redrawn, and other political changes ensued that, for better or worse, involved making the US dollar the currency used in all major petroleum transactions. If anyone wanted to buy oil from Iran, Iraq, Saudi Arabia, etc, they first had to buy US dollars (now FRNs) on the foreign exchange market.

As a consequence. the world has been saturated with dollars, and then federal reserve notes, during the past century.

Real World
When the federal reserve creates new notes, it steals value from all existing notes. Since many existing notes reside outside of the United States, the property tax effect applies to anyone holding a FRN. This is a property tax on all notes that exist, and thus, the world.

When this newly taxed money is spent domestically, there is a net benefit to the United States. This has worked well for 30-50 years and is one reason why the trade deficit is not so bad. Money flows out of the country, but the value of it is then just taxed right back when new money is created. One must also consider that this is a tax on holdings, and not just cash flows. A country such as China that possesses a large quantity of federal reserve notes and treasury securities is taxed not only on the trade deficit, but also the notes from all previous trade deficits that are still held by the country.

Downfall
That sounds great, right? The United States gets to tax the whole world and spend it in ways that benefit itself! All moral issues aside, it would be wonderful if this could be done forever. However, other countries are not stupid and are wising up to this.

This most recent round of bail outs (paid for by fiat property tax) in the financial markets (sub prime, etc) is really waking people up. Take a look at the dollar against other competing currencies or even gold and silver. On it’s present course, the FRN will not be able to maintain reserve currency status much longer.

It seems like every year or two, another oil producing country moves away from the FRN in favor of other currencies that are destroying themselves slower. Most notably, Iran has been switching to Euro and Yen for oil transactions.

Effectively, all fiat money has a property tax rate associated with it. This system of fiat property tax only works when people are willing to accept a given currency. They have to either be naive to what is going on (general public), accepting it because it is the best option available (central banks, foreign governments, investors), or coerced (OPEC?). The Europeans are destroying (taxing) their currencies in order to help their exports, but they are doing it slower than the United States, making the Euro and £ the current better choice for maintaining value. This is why treasuries, central banks, regular banks, etc are shifting away from the federal reserve note to currencies such as the £, Euro, and gold – the fiat property tax rate is lower with those currencies.

It is a fragile system. Once the international community stops accepting federal reserve notes, the decline will be rapid. The decline may have already started. Depending on how widespread this rejection and decline is, the United States could experience massive inflation (WW2 Germany style).

Solutions
There are a only few ways to stave off a total rejection of the federal reserve note. One way is more conservative fiscal policies in congress that involve balanced budgets.

The other is to float some sort of commodity based currency that forces the value of individual currency units to be finite and relatively unchanging true value over time. If an option like this were adopted, it would be key for the new currency to be issued in a “natural” and non-obligatory manner in order to not shock financial markets. One such way would be to simply allow such currencies to float freely on the foreign exchange markets. If consumers of currencies wish to use that currency as a sanctuary, such as the dollars of old, they should be free to do so in a liquid manner.

The United States and some other super powers have had the luxury of a lifestyle that is subsidized through the taxation of the world with the practice of fiat property tax. One way or the other, those who currently are accustomed to the benefits of this system should begin to wean themselves off of it on their own terms as more and more people and organizations realize how this system works and refuse to participate.

Seigniorage is alive and well. Why should someone choose to hold federal reserve notes if there is an alternative that has a lower tax rate?

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Aside: There is probably only one candidate running for president who is concerned about this or even understands the situation. That person is Ron Paul. If someone does not understand how taxation through inflation works, they should not be president.

All conservatives, especially rich ones and those who would like to become rich, should be opposed to this system. It is a progressive tax that directly attacks savings, affecting those with more cash more than those with less. Such a property tax is contrary to conservative or libertarian principles. Anyone who wants to save money should be opposed to this.

This is a tax just like any other. The only difference is that congress does not have to pass a bill to raise or lower the tax rate and the general public does not even know what the rate is. It is meaningless to focus on marginal income tax rates, capital gains, dividend tax, etc while at the same time the government can tax all the money it needs regardless. And they do not even have to ask you for a dime. They simply confiscate it from your bank account.