Myth-conceptions About Government and Finance

For those who want to know how complex some of the labor and retirement laws are, check this out: Participants and Advisors Are Hurt By High 401K Fees. Apparently the retirement plans have high fees the advisors never get any part of, and may not be aware of. But, that's not the kicker. To find out what those fees are, you have to file a US Department of Labor form. In other words, we are being fleeced by our retirement plans, the government is aware of it—and has made it more difficult for us to find out (kind of like the Freedom of Information Act filing requirements). And, we trust Washington to straighten this whole thing out with more rules and regulations? Hmmm...

Then there is the explosion over the insurance industry report indicating health care insurance costs will rise if the government plan is enacted. No surprise, the Democrats are claiming it's self serving of the industry to publish the report, according to a Reuters news report. This after an AP report that Democrats were scrambling because of the report.

But, let's consider what may be false assumptions by the Democrats. Apparently, savings from cheaper insurance plans are begin considered in the cost-benefit calculations by the Democrats:

Critics of the study said it tilted those assumptions too far toward a worst case, ignoring the bill's potential to curb costs.

For example, the tax on high-cost health insurance that Baucus is proposing could lead employers and individuals to switch to lower-cost plans and avoid the levy. If that happens, there would be no additional costs to pass on to consumers.

Now, I am not a whiz at this. But, a couple of things become quickly apparent from this. First, does anyone else believe that a tax is supposed to lower costs? In business terms taxes are costs, and they get factored into price. Second, cheaper insurance plans also means higher out of pocket expenses. How does that translate to savings? When insurance premiums are factored, they are based on the likelihood of payout. Escalating risk by forcing absolute coverage increases payouts. If you don't believe me, consider the insurance cost and premium escalation for coastal home owners. Does anyone really believe it would be different for health insurance?

As far as I can tell, the plan does not limit costs, despite all the rhetoric. It adds them, through taxation and increased business risk. Previous reports from CNN indicate that at best the plan will decrease rate of cost increase by about a third of what it needs to reduce it by. That type of change will merely prolong the problem, while increasing the deficit. And, one important thing to remember: government reports of deficit control are almost always wrong when it includes spending increases. Instead it merely prolongs it.

Democrats and liberals are selling us a bigger bill of goods. And, unfortunately, this is a huge social hot button. With the volume of public support and demand for this, government is likely to win. Which means, we the American public are buying that bill of goods.