But How WIll Savings Truly Be Achieved?

In the what the fuck do I know but I'm still going to comment category:

I'm a pretty competent feller when it comes to reading and interpreting financial figures but when I listen to the Baucus bill I must admit I'm lost. Let me see if I get this straight. The Democrats claim it will cost $800 billion up front but will save money in the long run?


Let's assume this is true. Let's assume health care spending drops to say, 12% from 16% of overall GDP. That's a 4% savings. Sounds great. But will it necessarily translate into the $800 billion just to flatten the debt incurred? If so, over how long a period? What's the interest cost on it? Representing 1/6th of the U.S. economy, the interest costs alone on such a massive amount can be crippling.

In other words, if something costs you $10, you're $10 in the hole. You have to make back the $10 just to balance your budget and only then you can begin to save and grow your finances. Normally, you make that by working or selling something.

But the health care reform bill, as far as I can see, is not a profit making endeavor. It uses free market lingo but the government doesn't produce anything. So where is the money going to come from? How can they recuperate the $800 (more like $2 trillion as Senator Harry Reid admitted) just through savings? How are they shifting funds around?

Oh. Wait. They propose to make cuts in Medicare - something politicians apparently always balked at. What are the odds they will do it this time? If they don't, the only option is, well, to increase taxes across the board I would surmise.

Moreover, it will take years if not decades to see any real savings in this deal. Health industry and demographic factors change over time. Financial variables change over time. You can't say "this will cost us X amount now and this is where we will be later on" without discounting the future.

When it comes to finances, things should always be simple and crystal clear. If you plan to build something you should have the cash already on hand. Put it to you another way, they remind me of investors so desperate to get in on the action (think tech bubble) they will not think twice to leverage themselves on margin with the risky thinking it will all pay off somehow down the road.

Guess what happens? Yup. Margin call! And the person is left stunned and incapable of meeting the call.

To me, as it's proposed, this makes no financial sense. Unless, of course, I'm probably missing something. Can someone set me straight?

Finally, there's a lot of "the private sector being more efficient than the government is a myth" logic going on. It's so patently stupid to assert this, it doesn't even merit a response. People who say this don't, I'm assuming, own businesses or have a clue how business works.

This doesn't mean companies in the private sector aren't efficient or aren't subsidized. That happens. But it doesn't follow that the private enterprise system is a myth.

I'm going to take my chance and guess this $800 billion dollars will likely grow over time. Whatever inefficiencies and shortcomings the system has now, why not try to tweak it with new laws (such as Torte reform) as opposed to create a whole new government bureaucracy? See how that plays out.

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