Wow, that was fast!

The health care bill was just signed into law two days ago, and we already have this:

Caterpillar Takes Hit On Health Care

Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation.

The world's largest construction equipment manufacturer by sales, warned last week that provisions in the legislation would subject the company to federal income taxes on the subsidies it receives for providing prescription drug benefits for its retirees and their spouses.

I wonder how many more of these stories we'll be seeing in the near future?

Was he lying then, or is he lying now?

"Every year, the problem gets worse. Every year, insurance companies deny more people coverage because they've got pre-existing conditions." -- Barack Obama, March 8, 2010

"You can't demand insurance companies... take somebody who's sick, who's got a pre-existing condition, if you don't have everybody covered, or at least almost everybody covered. And the reason, if you think about it, is simple. If you had a situation where not everybody was covered but an insurance company had to take you because you were sick, what everybody would do is they'd just wait till they get sick and then they'd go buy insurance. Right? And so the potential would be there to game the system." -- Barack Obama, Feb. 3, 2010

Obama clearly understands why insurance companies cannot afford to take on customers with pre-existing conditions, yet he still uses it to paint them as villains.

Is the health care bill a plot to destroy the insurance companies?

When I hear questions like the one above, I think someone has their tin-foil beanie screwed on too tight. But on the other hand, if one wanted to create a law that would destroy the insurance companies, he could hardly have done a better job.

It's a basic concept in economics that people act rationally in ways that serve their own best interest. Let's look at some of the incentives in the health care bill, and the rational response to them.

First, there is the individual mandate that requires everyone to have a minimum level of insurance, or pay a penalty. In the Senate bill, this penalty starts at $95 per year and increases to $750 per year by 2016. Since no one can buy health insurance for $95 per year, or even $750 per year, the incentive is actually to NOT buy insurance. Especially combined with:

Mandatory coverage for pre-existing conditions. Both the House and Senate bill prevent insurance companies from denying coverage for pre-existing conditions.

Imagine a young couple, just out of college. Money is tight. Both are healthy. They can pay a $750 penalty at tax time, or they can spend $1,000 per month for insurance. It's pretty easy to see what the rational choice is. Even if they are planning to start a family, why buy insurance now? They can wait until the wife is pregnant and then get insurance that will cover the pregnancy. If one of them becomes ill, they can buy insurance then, so why bother with it now?

And what about employers? They will face essentially the same choice: provide medical insurance for all employees, or pay a $750 per employee penalty. Guess which choice is cheaper? Guess which choice they are going to make?

The insurance companies will have a huge adverse selection problem. The only people who buy insurance will be those who are going to use a lot of expensive medical services, and the healthy will just pay the penalty.

Why a health summit?

The general consensus seems to be that the health care bill is dead. So why is the president holding a "summit" with congressional Republicans today? I think there are a couple of reasons.

It gives him another opportunity to paint Republicans as "the party of 'No'" and blame them for the failings of the health care bill. Never mind that angry town hall meetings all over the country have shown that the people don't want the president's vision for health care. Never mind that the current bill passed a Democratic Senate. Never mind that the House has 255 Democrats and only 178 Republicans, so the GOP couldn't stop the Democrats from passing it, if they wanted to. In the president's mind (and in his reelection campaign) it is the Republicans who are being obstructionists.

It is an opportunity to possibly gain a couple of Democrat seats in the 2010 elections. With the public mood being what it is, any Republican who gets behind Obama's new health care bill is putting his job at risk. Obama will be glad to help him do it.

What should the Republicans do? They should stand resolute in stopping the current proposals. But they should also bring a couple of their own to the table. Here are two immediate steps that would vastly improve access to health care in America while bringing down costs:

1) Tort reform. Put a cap on malpractice awards, a cap on lawyer's fees, and enact a "loser pays" to stop frivolous lawsuits. If doctors don't have to practice "defensive medicine," that will eliminate a lot of unnecessary tests. We all pay for those huge malpractice awards, in the form of more expensive medical care -- the doctors and hospitals pay higher fees for malpractice insurance, that cost is passed on in higher fees for their services, and we pay for them in the form of higher medical insurance premiums.

2) Unleash the free market. End expensive mandates for insurers, and allow purchase of medical insurance across state lines. The same free market that gave us cheap cell phones and big-screen televisions can give us cheap insurance.

Let me see if I understand this...

We're going to pass a health care plan written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it but exempts themselves from it, signed by a president that also hasn't read it and who smokes, with funding administered by a treasury chief who didn't pay his taxes, overseen by a surgeon general who is obese and financed by a country that's nearly broke.

What could possibly go wrong?

363,000 Words

That's how long the latest version of the health care bill is.

That's 80 times longer than the Constitution (not counting amendments).

That's twice as long as the Bible.

Can anyone know everything that is in there? Can anyone possibly have read the whole thing? I think we can agree that the answer to those two questions is "no." It's just not possible for any single person to have read every word in that document at this time.

Given that we don't know what's in it, is it really a good idea to make it the law of the land? Would you sign a 363,000 word contract without reading it?