Tag: Health Care

The American Dream – Strangled by Government

George Noga

Two worker households are a Faustian Bargain, the second income pays only for government. 

The American Dream – Strangled by Government

By: George Noga – May 31, 2020

        I graduated from high school in 1961 and went on to college. Most of my high school friends remained in Orlando, began work, married, had children and bought homes. The wives stayed home; a second income wasn’t necessary to buy a house and to raise a family. I kept in touch with many of my classmates. Following is the true story of two such people, Steve and Sandy – their real names.

       High school sweethearts, Steve and Sandy married soon after graduation. Steve started work in the paint shop of the Martin Company (today Lockheed Martin) at $2.00 per hour, soon increasing to $2.25. With a little overtime, their income was $5,000 per year. A year after their marriage, they bought a new home and were blessed with a daughter. Sandy did not work and stayed home to care for the baby.

         I visited Steve and Sandy often. They bought and furnished a median-price home, accumulating enough for a down payment and furniture in one year with both working. Once the baby was born, Sandy quit work as they could live solely on Steve’s income. Their home cost the equivalent of 2 years of Steve’s income and their monthly house payment including principal, interest, taxes and insurance (“PITI”) was under $100, or 22% of his income. Sandy never returned to work; it simply wasn’t necessary.

        Fast forward to 2020 and see how a modern day Steve and Sandy would fare. We begin with the generous assumption that a high school graduate earns $15 per hour, or $30,000 per year. The median home price in Orlando is $260,000; assuming a 10% down payment and low interest rate, the monthly PITI payment is $1,167, or $14,000 per year. The house costs 9 years of income and requires 47% of monthly income to pay PITI. Many years are needed to save for a down payment and furniture.

       What could account for such a sea change in the course of a few generations? Why did these changes happen? Why is it necessary today for a family to have two wage earners merely to live as well as their grandparents lived on one income? The answer in one word: government. The causes are many but all have a nexus to government.

     Housing costs skyrocketed due to government diktats including, zoning, growth management, building codes, greenbelts, bureaucracy, anti-leapfrogging, concurrency, infill and regulatory delay. All taxes were increased, especially the payroll tax and many new ones added. The Florida sales tax Steve and Sandy paid was 3%; today it is 7% – an increase of 133%. Steve and Sandy’s real estate tax was $100; today it would be $2,600, a 2,500% increase. Government drove up the cost of many other things such as health care, tuition and child care. The more government got involved, the more costs increased over time, less intervention meant lower prices.

       At first, as the second family wage earner entered the workforce, there was a sense of faux prosperity; they could afford an extra TV and some other accoutrements. But higher taxes and government-imposed costs devoured the second income. By the time they realized they were hoodwinked, it was too late for a volte-face. Two income families are a Faustian Bargain, the second income pays only for more government. Families doubled the number of workers but have nothing to show for it.

       A modern day Steve and Sandy can’t afford to buy a house or to start a family and they often live lives of quiet desperation. The American dream didn’t just die; it was murdered. The cause of death was strangulation by government!

Watch for our special D-Day posting on June 6th.
More Liberty Less Government  –  mllg@mllg.us  –  www.mllg.us

Medicare For All – Lessons From Canada

George Noga

Long waits for procedures are common in Canada; Montana offers same day service. 

Medicare For All – Lessons From Canada

By: George Noga – December 8, 2019 

           Regular readers know we spend our summers in Whitefish, Montana – 50 miles from Canada and only four hours from Calgary and its 1.3 million souls; altogether two million Canadians live within an easy drive. Neighboring Albertans, flush with petrodollars, descend on us every summer. They come for the world-class attractions of Whitefish and Glacier National Park. They come for cheap prices vis-a-vis Canada. They come for weddings, which cost 50% less due to Canada’s sky-high alcohol taxes. They also come for medical care to escape rationing and long wait lists at home. 
 

          I have made it a point for 15 summers to ask our northern visitors how satisfied they are with the Canada Health Act (“CHA”), the name of Canada’s national health care. Out of scores I have queried, only two said they were satisfied. The first liked the care in Canada but comes to Montana when the wait lists are too long. The second defended CHA by asserting it was good at triage, i.e. if you were mired on a long wait list and your condition deteriorated, they would move you up on the list.  
 

        There are long waits for procedures in Canada, while Montana offers same day service. Some Canadian medical refugees are so desperate they pay out-of-pocket at great sacrifice. I have heard many heart-wrenching stories about CHA and most of my Canadian interlocutors passionately forewarn me against the USA adopting Canada’s style of socialized medicine. The data should scare the bejesus out of Americans. 

 

         The median wait time between referral and treatment in Canada is over 21 weeks, 42 weeks in some provinces and a staggering 4 years in extreme cases. The wait for a CAT scan is 11 weeks and increasing; there are no waits whatsoever in Montana. An average US city has more MRI machines than all of Canada. At any given time, over 1 million Canadians (3% of the population) are in line. The long waits are not just inconvenient; they often transform potentially reversible conditions into chronic or permanent disabilities. “Free” medical care is not much good if you can’t get it.  

 

         The free medical care is anything but free. Canada’s confiscatory taxation results in high living costs; that’s why Canadians flock to Montana to load up their SUVs. The federal income tax is 29%; provincial income taxes are 15% to 20%; health care is 6% and a 13% VAT is embedded in all purchases. The grand total is 64% to 68%. Canada also is a nanny state that doesn’t want its children, err citizens, drinking and imposes alcohol taxes that make cocktails 600% more expensive than in Montana.  

 

         Americans can learn much from the disaster that is Canada’s national health care. Whenever anything is in great demand, it must be rationed via either time or cost. Since healthcare is free, it can’t be rationed via cost; that leaves time. BINGO!  
 

        How comforting it must be for Canadians to know if their medical condition goes to hell in a handbasket, they could be moved ahead of some of the other one million desperate souls waiting in line for treatment – that is instantly available in Montana.  

On December 15th, we reprise the greatest Christmas story in American history. 

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More Liberty Less Government –  mllg@mllg.us  –  www.mllg.us 

 

Lessons From Christmas Shopping

George Noga
The three gifts of Christmas embody important economic lessons.
Lessons From Christmas Shopping
By: George Noga – December 16, 2018

         This post was super popular with readers last Christmas; I have updated it and am reprising it for this holiday season. Christmas shopping embodies valuable lessons about economics and government. All gifts fall into three economic categories.

         First Party Purchase:  The most felicitous gift is the one you buy for yourself with your own money. Clearly, you know better than anyone precisely what you want as well as how much you will spend. Your priorities are both price and quality; you want the highest possible quality for the lowest possible price. There are many trade-offs between product features, quality and cost and many places to shop. You are uniquely qualified to evaluate all the permutations and to make the correct choice. Such gifts are never returned. This is a first party purchase; the person paying is the person using.

         Second Party Purchase:  Your Uncle Warbucks sends a generous check for you to buy a gift for yourself. You remain the best judge of what to buy for yourself, but you now are tempted to purchase something you would not have bought with your own money. You still want high quality because you are consuming the product, but you are not as concerned about price. When someone else is paying, the temptation to splurge is great. This is a second party purchase; the person using is not the person paying.

         The typical Christmas present is one you buy for someone with your own money. However, you often are reduced to guesses about the needs and wants of others, even those close to you. Because you are spending your own money, you care about cost but are less concerned with quality, as you are not using the product. You don’t invest time comparison shopping and your gift is likely to be returned. This is a different example of a second party purchase; the person paying is not the person using.

       Third Party Purchase:  Now we have the situation where you buy a present for someone else with money supplied by a third party. Say your boss asks you to buy a present for a customer. You buy the present with money that is not your own; therefore, you do not care about the cost. You are not going to consume the present; therefore, you don’t care about the quality – or even the appropriateness of the gift. You have absolutely no idea what the person may want or like. You don’t waste time shopping and buy what only can be described as a white elephant and certain to be returned. This is by far the worst of all Christmas gifts; it is called a third party purchase.

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      All government spending consists of third party purchases. Government takes money from you and others and spends it based on its priorities; often, there is not even the pretense of acting in your interest. They are not concerned with either cost or quality. But it gets even worse. Government agencies and individual bureaucrats have their own priorities which often are directly opposed to yours; they respond to their own personal incentives and disincentives. It is akin to shopping for a customer and intentionally buying a present you know the customer doesn’t want, need or like.

       The lessons of the three gifts of Christmas apply with a vengeance to health care. The cost of government funded health care continues to skyrocket while, at the same time, service and quality deteriorate. With single-payer health care, patients often are treated shabbily because they are not the customer – it is a third party purchase.

     Contrast this to private health care, the norm in dentistry, ophthalmology and cosmetic surgery. The inflation-adjusted cost of such private health care is stable or decreasing, while quality and service are good. When you visit your ophthalmologist, dentist or cosmetic surgeon you are treated with unfailing courtesy because this is a first party transaction and, if not treated well, you go elsewhere. The most powerful force on earth is a consumer armed with a free choice as in a first party transaction.

WE ARE TAKING OUR CUSTOMARY HOLIDAY BREAK. OUR NEXT POSTING IS PLANNED FOR MID-JANUARY. THANKS TO ALL OF YOU FOR READING AND FORWARDING. A MERRY CHRISTMAS AND HAPPY NEW YEAR FROM MLLG!

Our next post previews MLLG’s plans for 2019 plus another pithy topic.

The Four Presents of Christmas

George Noga
The story of four Christmas presents is an economics primer. It also applies to government health care and indeed to government spending in general. 
The Four Presents of Christmas
By: George Noga – December 3, 2017
     The process of shopping for Christmas presents contains valuable lessons about economics and government. The four presents fall into three economic categories.
        Present #1  The most felicitous gift is the one you buy for yourself with your own money. Clearly, you know better than anyone precisely what you want as well as how much you will spend. Your priorities are both price and quality; you want the highest possible quality for the lowest possible price. There are numerous trade offs between product features, quality and cost and many places to shop. You are uniquely qualified to evaluate all the permutations and to make the correct choice. Gifts like this are never returned. This is a first party purchase; the person paying is the person using.
       Present #2  Your Great Uncle Warbucks sends you a generous check with the proviso you buy a gift for yourself. Although you remain the best judge about what to buy for yourself, you now are tempted to purchase something you would not have bought with your own money. You still want high quality because you are consuming the product, but now you are not quite as concerned about the price. When someone is buying your dinner, you order the lobster rather than the brisket. When using OPM (other people’s money) the temptation is great to splurge. This is a one example of a second party purchase; the person using is not the person paying.
       Present #3  This is the arch-typical Christmas present – you buy a gift for someone else with your own money. However, you often are reduced to guesses about the needs and wants of others – even those close to you. Because you are spending your own money, you care about cost but are less concerned with quality as you are not using the product. You are not very interested in investing much time comparison shopping. Frequently, you buy something that the recipient would not have bought for him/her self and your gift is very likely to be returned. This is a slightly different example of a second party purchase; the person paying is not the person using.
       Present #4  Now we have the situation where you buy a present for someone else with money supplied by a third party. Say your boss asks you to buy a present for a customer. You buy the present with money that is not your own; therefore, you do not care about the cost. You are not going to consume the present; therefore, you don’t care about the quality – or even the appropriateness of the gift. In any event, you have absolutely no idea about what the person may want or like. Therefore, you don’t waste any time shopping and promptly buy a ten-foot rubber elephant at the store next door. This is by far the worst of all scenarios; it is called a third party purchase.
* * * * * * * * * * * * * * * * * * * * * * * * * *
        All government spending consists of third party purchases. The government takes money from you and distributes it to others based on what government considers best. They are not concerned with either cost or quality. It is even worse; they have priorities of their own that often are directly opposed to the needs or wants of the recipients. Government employees respond to their own personal incentives and disincentives.
     The lessons of the four gifts of Christmas apply with a vengeance to health care. The cost of government funded health care continues to skyrocket while at the same time, the service and quality deteriorate. Compare this to private health care as is the norm in dentistry, ophthalmology and cosmetic surgery. The inflation adjusted cost of all of these is either stable or decreasing while quality and service are good. The difference is easy to explain. Government health care consists entirely of third party transactions while dentistry, plastic surgery and eye surgery are first party transactions.
Our next post previews MLLG’s plans for 2018

Trump Presidency at Six Months

George Noga
Trump earns an A+ for being Donald Trump – and not Hillary Clinton. 
Trump Presidency at Six Months
By: George Noga – July 16, 2017
     This post is in response to many reader requests for our take on the Trump presidency. Recall that MLLG is non partisan; we don’t much care for either political party. Our lodestar is all in our name – more liberty and less government. Nonetheless, unlike liberals, we don’t live in a bubble and must deal with the world as it is.

     First off, Trump has done a phenomenal job on the singularly most important aspect of his presidency, i.e. he is not Hillary Clinton! In the end, little else matters as he gives America a respite from its progressive-led death march toward Gomorrah. Each day Trump is in office is a day Hillary is not; that alone is ample cause to celebrate.

      If Trump is judged on his actions and appointments, and not his words and tweets, there is much to like. Assessed against the more liberty, less government standard, he also earns reasonably good marks. Trump’s critics err by taking him literally but not seriously; whereas the key to understanding Donald J. Trump is to take him seriously but not literally. His accomplishments, in addition to not being Hillary, are:

1. National Security. Trump’s national security team of Tillerson, Mattis, McMaster and Pompeo is outstanding and they work together seamlessly and in sharp contrast to the internecine feuding of the Bush and Obama teams. Trump is squarely addressing the festering problems Obama kicked down the road including North Korea, Iran and ISIS. However, Trump’s proposed increase in defense spending is far too little.
2. Cabinet Appointments. Including the inspired national security team, his cabinet is arguably the strongest since George Washington. Ben Carson, Betsy DeVos, Tom Price, Scott Pruitt and Ryan Zinke round out the cabinet; don’t forget Mike Pence.
3. Judicial Appointments. His Supreme Court and lower court appointments have been as good as anyone could wish for. In four (or eight) years, he can make a difference.
4. Taxes, Regulation, Environment and Energy. Trump aces all these business related issues. He showed courage and leadership in pulling out of the Paris climate accord.
5. Health Care. Although imperfect and incomplete, Trump has done about as well as possible given the resistance from Democrats. If Hillary had won, she would have used the implosion of Obamacare to impose nationalized health care on America.

     There are also many things not to like about Trump’s first six months; the worst ones, in approximate order, are: (1) protectionist trade policy including opposition to NAFTA, TPP and China; (2) lack of discipline in keeping on message, talking and tweeting too loosely and often; (3) failure to understand the traditions and protocols of his office; and (4) law enforcement issues including continuation of the failed war on drugs, civil asset forfeiture and ignoring the need for police reform.

     To evaluate Trump, judge him on his actions and appointments, not his words and tweets. Take him seriously but not literally. Finally, rejoice each and every day that Trump is president, because that is a day when Hillary is not. Hallelujah!
Our July 23rd post describes the threat America faces from an EMP attack.