Ronald Reagan: 'I'm from the government and I'm here to help.'
Conclusion First: I offer the conclusion first because if for some reason you stop reading here, it is an important lesson to understand! So here it is:
Regardless of political party affiliation listen less to what the politicians running for office is promising, and more to whether what they promise is actually viable or economically feasible!
Back to the premise of this article as most likely know the phrase above were Reagan's nine most terrifying words in the English language.
Terrifying because politicians will utter that phrase or one much like it to people who truly want to believe that what the person is telling them will actually come to fruition in the way that they describe.
That in some way some deficiency or deficiencies in their lives will be made better by the 'savior' in front of them who tells you that to accomplish these things he or she merely needs to be elected or reelected to office.
But what the politicians know that they can never let the voter know, is that the promises made are all likely a fools errand.
That in any world that exists beyond the walls of the political elites in Washington or in state capitals, whatever proposal they are laying out has little to no chance to be successful and likely is not fiscally achievable!
But the actual potential success or cost of the program, for whatever politician is speaking about it, is in many ways irrelevant and secondary to their immediate task at hand.
This is because in the end they will ultimately not be responsible or accountable for either. The taxpayers will!
In actuality and to more completely get down to the root of Ronald Reagan's phrase, what a politician really is saying by uttering words about 'leveling the playing field' or helping 'Main Street' and the 'struggling middle class', 9 out of 10 times means the following:
The Politicians Playbook: It's Not What They Say It's What They Mean!
I am here to make promises that sound great and actually would be great if they weren't fiscally improbable in the real world of business but,
I am not a businessman, I am a politician! The minutia of implementation, profits and bottomline accountability do not apply to me,
I will simply make grandiose promises that will garner votes now,
I will say how a program will be paid for although I know it's likely a false narrative (i.e. everyone will pay their fair share),
I will say who the program will help and never touch on who it might hurt. And I know that in most cases it is all smoke and mirrors* with a high percentage chance of doing the exact opposite that it was originally intended to do.
And ,when all is said and done and I've been elected, I will do one of two things:
Forget all about it or,
When it fails to be implemented or is implemented and fails, either distance myself from it all together or point the finger of blame at someone else. After all, it's government not business!
Case Study: Obamacare
What brings me to write this commentary is the fact that Aetna announced this week it will be the latest insurer to drop out of Obamacare because the financial model that was put into place could never have worked unless the government was offering huge subsidies to insure that it did. Or, unless business consolidation made a company's cost structure more efficient.
For the American people Obamacare was supposed to result in premiums falling or at the very least remaining steady. We were supposed to be able to keep our doctors if we wanted to keep our doctors or if not have a great selection to choose from. And at the same time 30 million additional people who were uninsured were now going to be insured.
Further, as part of Obamacare the health insurers had to accept everyone regardless of pre-existing conditions, cover procedures that may or may not be needed by the insured all while the healthy young were projected to enroll in order to help pay for it all.
Finally the individual taxpayer and businesses would bear the burden to make sure that it all fiscally worked.
The Smoke and Mirrors
Unfortunately, when it comes to government programs like Obamacare, fiscal and common sense realities have collided with the fantasy world that so many of our politicians live in! Some of the problems have included:
The lifeblood of the program, young and healthy individuals, failed to enroll. 'The first big problem for Obamacare is that it hasn't attracted the most sought after customers: healthier young adults. Since young adults are less likely to go to the doctor, or to need expensive medical care, their premiums are used -- and needed -- to offset the costs to treat older and often sicker individuals. Although young adult enrollment improved in 2016 from the previous year, there are still not enough young adults enrolled in Obamacare to make a favorable difference for insurers. Two factors explain the weakness in young adult enrollment. To a lesser extent, the "invincibility" factor is playing a role. Young adults who feel healthy and/or don't visit their doctor regularly would just as soon not be insured. Reaching this "invincible" crowd of young adults could prove tough for Obamacare.
But I believe the bigger factor is that the Shared Responsibility Payment, or SRP, isn't an adequate incentive to coerce young adult enrollment.' (Source)
Actual enrollees into Obamacare have turned out to be sicker and more costly than projected (see pre-existing conditions not excluded from coverage). 'According to a study conducted by the Blue Cross Blue Shield Association in April, after analyzing the medical claims of roughly 25 million employer-based group members, the average cost per member was $457 a month through the first nine months of 2015. Comparatively, analyzing 4.7 million individual Obamacare enrollees produced a monthly cost of $559 over the first nine months of 2015. That works out to a 22% increase over employer-based membership.' (Source)
The 'Risk Corridor' proved to be a failed concept. The risk corridor represented a type of risk-pooling fund among insurance companies operating on the Obamacare marketplace exchanges. Here's how it worked: Insurers that were excessively profitable would be required to put some of those excess profits into a fund. In turn, insurers that were losing excessive amounts of money because they priced their premiums too low would be able to request funds from this risk corridor in order to stay afloat. In effect, the risk corridor was designed to promote competition, especially among new insurers in the individual market, and give insurance companies a year or two to find the sweet spot when it came to pricing their premiums. Unfortunately, the risk corridor ran into plenty of issues. Just $362 million wound up being added because most insurance companies weren't overly profitable. In contrast, insurers wound up requesting $2.87 billion from the risk corridor to cover big losses. With only 12.6% of requested funds being paid out, many smaller insurers were forced to close up shop, including 16 of Obamacare's 23 approved healthcare cooperatives, or co-ops. (Source)
Less choice among insurer options means soaring premiums. Nancy Pelosi: 'Affordable, affordable, affordable, affordable!' Of course the reality is somewhat different. 'The final reason your premiums are soaring relates to a declining number of insurer options to choose from. As noted above, the failure of the risk corridor has eliminated more than two-thirds of the available healthcare cooperatives, and there may be more failures to come. But it's not just low-cost options that are bowing out.' (Source)
Bottom-line? Regardless of political party affiliation you must listen less to what the politicians running for office promises, and look more at whether what they promise is either viable or economically feasible!
And then do your work without relying on others to do it for you to choose who you think will be the best leader for our country!
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