Tuesday, September 16, 2014

It's Hard to Participate, I Know All to Well (Post 6 of a Series of Posts)

The following is my sixth post in a series of posts that shows my letter to those members of Congress who voted for ACA.  If you have not read the first post then I encourage you to do so by clicking here and then reading each successive post until you arrive at this one.

The following portion of the letter is my attempt to help the reader have a better understanding of basic economics:


Economics 101 Helps Explain the Problem

I think you are familiar with the supply and demand curve shown to the right, which shows that:

               Demand is inversely proportional to costs of services purchased and
        Supply is proportional to cost of services sold.

I surmise that you must have thought by enacting ACA with its taxes and subsidies that the demand and supply curves would move to make healthcare more affordable. You were partially right at best; only the supply curve moved, but regrettably and contrary to your intentions.

The demand curve did not move because demand is arguably the same today as it was a year ago and as it was four years ago when you voted for ACA. The supply curve did move due to a shock to the system when the ACA, which was approved by your vote, was enacted with all its mandates/regulations. These regulations (as most do) moved the supply curve to the left as shown in the figure to the right.  

Healthcare became more expensive to the suppliers due to the increased cost-of-services sold caused by the mandates, which were subsequently, passed onto the consumer in a higher price (Pnew) resulting in less coverage (Qnew), regardless whether paid directly or subsidized by others. I note that the CBO recently projected that the subsidized costs will balloon future deficits.


Friday, September 12, 2014

It's Hard to Participate, I Know All to Well (Post 5 of a Series of Posts)

The following is my fifth post in a series of posts that shows my letter to those members of Congress who voted for ACA.  If you have not read the first post then I encourage you to do so by clicking here and then reading each successive post until you arrive at this one.

The following portion of the letter is my attempt to help the reader have a better understanding of the effects caused by their vote:


Salt Added to the Wound

I think you would agree none of these options are ideal. I find it even more galling that Senator Sherrod Brown (D., Ohio), who also voted for ACA, stated in his letter to the Wall Street Journal editor published on January 30, 2014 that “Americans deserve … thoughtful and vigorous discussion of … the looming retirement crisis facing too many Americans” in response to a previous op-ed by Andrew Briggs published on January 24, 2014, yet Senator Brown’s vote along with yours for ACA clearly contributes to our “looming retirement crisis” that he very passionately laments. Is that what you desire? For every cause there is an effect.


Subsidizing (through a transfer payment from some other hard working individual/family to us via the inefficient government conduit) is not an option for us, as we now make just enough income that the subsidies are immaterial, but do not make enough income that the increase in the healthcare premium is not acutely painful as I describe above.  More importantly and I stress more importantly, a transfer payment does not address the root cause that makes healthcare unaffordable and leads to perverse incentives as documented by the recent Congressional Budget Office (CBO) report. A simple understanding of economics explains why.