The economic tape worm that is the U.S. healthcare industry

I just happened across and interesting graph in the New York Times, showing what, according to a non-partisan research organization called the Commonwealth Fund, we as a nation would have saved had we implemented the healthcare reforms proposed by Nixon, Carter and Clinton. I suspect it won’t change the debate much, as people seem to have already bought into this idea that Obama is attempting to pull off some kind of “Socialist” takeover of the healthcare industry, but it’s an amazing chart.

healthcarecosts

What might make a difference, however, is the opinion of billionaire Warren Buffet, who said yesterday that America has no hope of staying competitive without health care reform. Here’s the video:

Taken together, I think these two pieces of information are extremely powerful. If you look at the percentage of the U.S. Gross Domestic Product that’s spent on healthcare, it’s clearly not sustainable, especially when other industrialized nations are paying considerably less.

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47 Comments

  1. Kim
    Posted March 2, 2010 at 6:55 am | Permalink

    It’s amazing to me that such a huge number of individuals in this country are vehemently fighting for no change. The evidence is overwhelming that we’ve got a significant problem. It’s hard to imagine that the “anti socialist” message is that much of a motivator. But yet people on the right cling to it, in spite of all evidence, and the fact that they, on an individual level, know people who don’t have insurance and have lost their homes due to health care costs.

  2. EOS
    Posted March 2, 2010 at 8:43 am | Permalink

    There’s a big difference between fighting for rational change and fighting for no change. I don’t know a single person who has lost their home due to health care costs. Catastrophic medical expenses may necessitate declaring medical bankruptcies, but homes are protected in these situations.

    The reason change is necessary is because the government has promised medical coverage for the aged and the poor and has taken our money in advance to pay for it, yet now, or in the near future, they cannot fulfill their promises. Greedy politicians have spent the funds on other pet projects. So the solution, according to the socialist progressives, is to hand over even larger sums of our money for the same purposes.

    And they have even convinced some that they won’t have to pay their own way, because the majority can force a small minority of wealthy individuals to pay for everybody. Some see this as voting for their own interests, but this view is extremely short-sighted. When entrepreneurs and small business owners are forced to pay more than their fair share, they will have to get the funds from somewhere, most likely by reducing their businesses and productivity, and eliminating jobs for many. Some say make the corporations pay, but this only results in higher consumer costs, as corporations merely pass along the additional costs.

    Many who participate in the Tea Party demonstrations believe that since the government management of our health care has led to such disastrous results, we shouldn’t reward their malfeasance with additional funding. Many recognize this governmental grab for more power in the compulsory requirement for everyone to purchase medical insurance from the limited offerings of their employer or from the government itself.

    Many are justified in fearing a government that seeks to takeover the banking, automotive, and health care industries.

  3. Phelps
    Posted March 2, 2010 at 10:25 am | Permalink

    I hate name calling, but, you, EOS, are a boob if you think the government wants to take over the automotive, health care and banking industries. I’m confident that Obama would rather focus on other things. But the CEOs in charge fucked those industries beyond all recognition. Obama’s just dealing with the aftermath – trying to clean up after their orgy of gluttony.

  4. dragon
    Posted March 2, 2010 at 10:53 am | Permalink

    Don’t feel bad Phelps, not only is he a boob, he’s been wearing a wonder bra his whole life.

  5. Curt Waugh
    Posted March 2, 2010 at 11:10 am | Permalink

    Sweet! Another markmaynard.com post about a national issue where EOS and friends can spew their idiocy and everybody can debate absolutely nothing! Must be time to get back to work.

  6. Robert
    Posted March 2, 2010 at 11:30 am | Permalink

    EOS: “I don’t know a single person who has lost their home due to health care costs.”

    So we can get a meaningful statistic from your statement, please tell us, EOS, how many people do you know?

  7. EOS
    Posted March 2, 2010 at 11:40 am | Permalink

    A new Rasmussen Reports poll finds that a majority of Americans fear the federal government making health-care decisions more than they fear private insurance companies doing so.

    In a national telephone survey taken Feb. 21-22, 1,000 likely voters were asked: “When it comes to health care decisions, who do you fear the most: the federal government or private insurance companies?”

    Fifty-one (51) percent said “The federal government,” 39 percent said “Private insurance companies and 10 percent said they were “Not sure.”

    According to Rasmussen, when asked about their support for the health-care plan the president is championing, 56 percent of voters said they oppose it, while 41 percent said they favor it. Only 23 percent “Strongly Favor” the plan, while 45 percent “Strongly Oppose” it – a level unchanged since last Thanksgiving.

  8. Erich Auerbach
    Posted March 2, 2010 at 11:51 am | Permalink

    Citing Rasmussen on healthcare reform is like polling the SS on menorahs.

    I wish to second Curt’s implicit motion, which is that these commentversations stay on topic.

  9. Peter Larson
    Posted March 2, 2010 at 11:52 am | Permalink

    I don’t doubt that, but just because a majority of Americans think something does not make it reasonable or right. Polls of Americans have indicated that a majority of people believe in ghosts.

    Government agencies have accountability, insurance companies do not. There is no equivalent to the GAO for private insurance companies nor are there elections of administrators of said companies.

    The poll may indicate that Americans don’t trust government health reform, but they sure don’t seem to mind it when Medicare kicks in.

    The irony is, that America has one of the most socialized of all health systems in the developed world. If we would stop being afraid to reign in and regulate private business practices and require that all individuals hold health insurance of some kind, we might be able to get on par with Japan and Germany. But, given the illiterate nature of the American populace and the unwillingness of Congress to put the foot down, we will continue on this path of economix self-destruction until only the wealthiest of all Americans can even walk into a health clinic without risking bankruptcy.

  10. Peter Larson
    Posted March 2, 2010 at 11:54 am | Permalink

    And I do know people who have lost their homes due to health care expenditures. My parents lost everything after my mother developed cancer in the late 70’s and to this day, she works not to support herself, but just to pay medical bills. Every dollar she makes goes to prescriptions and health visits. Her crime? Getting sick before 65 and being poor.

  11. dragon
    Posted March 2, 2010 at 11:57 am | Permalink

    EOS, don’t you think it would be fair to add some “real life” flavor to your bogus fear surveys and tell us your current health care status?

    I’m self-employed and uninsured.

  12. Curt Waugh
    Posted March 2, 2010 at 12:01 pm | Permalink

    People, no matter what you say here (or anywhere), you will not be able to get the anti-healthcare folks to make a single intelligent comment about either the chart above or the fact that we pay far more for far less in the U.S. Mark my words.

  13. Karen Smithee
    Posted March 2, 2010 at 3:06 pm | Permalink

    If this site is any indication, a vast majority support not only reform, but a public option.

  14. kjc
    Posted March 2, 2010 at 3:23 pm | Permalink

    “Polls of Americans have indicated that a majority of people believe in ghosts.”

    well at least they (we) get something right.

  15. Mr. X
    Posted March 2, 2010 at 4:16 pm | Permalink

    Those things wearing white sheets and pointy hoods aren’t ghosts.

  16. Peter Larson
    Posted March 2, 2010 at 4:30 pm | Permalink

    I was going to state that the majority of Americans also believe in God and that people can be raised from the dead by a rape child of a sky wizard, but figured that even people on this blog live in that completely irrational category.

    So I stuck with ghosts.

  17. Posted March 3, 2010 at 7:20 am | Permalink

    I agree with Dragon that everyone expressing an opinion about US health care should also have the guts to admit where they get their insurance, how much it costs and who pays for it. I’ll start and look forward to hearing from EOS and any Tea Partiers or Republicans..

    I’m self employed and buy Blue Cross-Blue Shield for myself for $161 a month. I’m in my early 50s and no one else (Humana, Golden Rule etc.) will insure me because I take a single generic medication which I pay for myself (this is a “preexisting condition” and despite the fact that they won’t have to pay for the medication, it makes me ineligible for insurance from anyone but Blue Cross.

    Blue Cross covers me because they are required to by Michigan Law. God knows what I’d do if I lived in a state of our fair union which did not have such a law – no doubt I’d have no insurance

    My $1920 in premiums per year buys a policy with a $2500 deductable and a $5000 per year annual limit. This means that after I pay the first $2500 in bills, BCBS pays 20% of the next $12,500. I pay an additional $2500 or total of $5000 per year before the insurance kicks in fully and starts to pick up 100% of the bills, assuming the bill is for something that is COVERED

    This winter I had got a bad concussion (totally unrelated to my “preexisting condition” ) which required 3 days of hospitalization, multiple CAT scans, IVs, a half hour ambulance ride etc. That total bill was $17,400 and I will owe at least $5000 of it. That is in addition to paying my BCBS premiums..

    I’m not complaining – U of M gave me excellent care without which I could easily have died. Concussions kill people. Just having insurance cut my bill in half (Lord knows what that’s about) and BCBS has not complained or argued about anything. I’m grateful for the bills. However, I can pay them without selling my house, my car or raiding my kids college fund – how many other Americans could do the the same?

    I am a self-employed entepreneur and small business person and fully support all of the Democrat’s and President Obama’a Health Care reforms.

    Next?

    Kirk

  18. EOS
    Posted March 3, 2010 at 9:10 am | Permalink

    Thomas Sowell had a great column yesterday:
    http://www.onenewsnow.com/Perspectives/Default.aspx?id=918930

    I’m not self employed. I’m in a HMO. I don’t have any pre-existing conditions. I pay about $200 a month and my employer pays $800 a month. I would prefer to put that $12,000 dollars each year in the bank and buy my own catastrophic insurance and be able to make my own choices and pay out of pocket for what I need.

  19. Sam
    Posted March 3, 2010 at 9:18 am | Permalink

    If we did have a public option, I’m absolutely convinced that it would open up the entrepreneurial floodgates. I personally work a corporate job just because it allows me to insure my family. Without that burden, I’d be much more likely to start something of my own, and potentially even create jobs.

  20. kjc
    Posted March 3, 2010 at 9:34 am | Permalink

    why oh why did i bother following your link EOS?

    “Both waiting lines and waiting lists grow longer when people with sniffles and minor skin rashes take up the time of doctors, while people with cancer are waiting.”

    what a bunch of bullshit.

  21. Posted March 3, 2010 at 10:12 am | Permalink

    EOS has no preexistiing conditions he/she is aware of. One of the favorite games our insurance companies enjoy playing to save money is sifting through patient’s medical records looking for previous medical treatments for supposedly harmless things like acne. The insurer can then claim the individual “lied” on the insurance application. The insured will then receive no benefits for something expensive like cancer or a transplant. Or maybe not so expenisve like a child’s broken leg. Naturally, our for profit insurers have the public’s health foremost in their minds, otherwise they wouldn’t do this.

    Of course, if EOS gets insurance through an employer HMO he/she is immune from this kind of fun. Only the self-insured have the privilege of playing this particular game with our insurance companies.

    Just to be clear, time spent on this productive and helpful research by the insurance companies is considered a “cost of doing business” and not a profit or a salary, so it doesn’t even figure into the critical documents coming out against our them.

    Cheers,
    Kirk

  22. Posted March 3, 2010 at 10:43 am | Permalink

    I realized later that EOS’s desire for a catastrophic insurance plan fails to consider that the $12,000 would be more like $7,000 after he/she paid the payroll tax (15% if you pay both the employee and employer parts) plus the regular taxes. This is what I get to do as a self-employed person. Of course, I get to write off the premium ($1920) I pay to BCBS for a catastrophic insurance plan.

    I also agree with Sam – I spent hours and hours going over the ins and outs of insurance rules before I dared to become self-employed. That’s how I know about all the cool things insurance companies like to do to the self-employed to save money,

    Kirk

  23. EOS
    Posted March 4, 2010 at 7:52 am | Permalink

    A CNN/Opinion Research Corporation poll was conducted February 12-15, with 1,023 adult Americans questioned by telephone. The survey’s sampling error is plus or minus 3 percentage points. 25 percent of people questioned say Congress should pass legislation similar to the bills passed by both chambers, with 48 percent saying lawmakers should work on an entirely new bill and a quarter saying Congress should stop all work on health care reform.

    Obviously, this site is not representative of the majority of Americans views.

  24. Peter Larson
    Posted March 4, 2010 at 8:23 am | Permalink

    You and most Americans haven’t read either version of the bill and have no idea what’s in it.

  25. EOS
    Posted March 4, 2010 at 8:38 am | Permalink

    The limited information that has been released and discussed in public already meets the standard for rejection.

  26. Peter larson
    Posted March 4, 2010 at 1:30 pm | Permalink

    Limited? The bills are publicly available as all bills are. Until then , you don’tknow what you’re talking about.

  27. Peter Larson
    Posted March 4, 2010 at 6:47 pm | Permalink

    EOS, I will present you with the House bill which you can read at your leisure. Perhaps, instead of spending your boss’ money trolling blogs of your enemies, you can spend your boss’ time reading the bill and getting educated.

    http://docs.house.gov/rules/health/111_ahcaa.pdf

    Upon reading it, you will find that it is a really middle of the road, Republican bill and not the call to the destruction of America as we know it.

  28. Posted March 4, 2010 at 7:23 pm | Permalink

    If you want, I can sit on him while you read it to him word for word, Pete.

  29. Peter Larson
    Posted March 4, 2010 at 9:02 pm | Permalink

    That would be amazing. We’d have to make sure that EOS would foot the bill for the catered meals that we would need.

  30. Posted March 5, 2010 at 6:35 am | Permalink

    I don’t use opinion polls to determine how I vote or speak and don’t recommend anyone else do it either.
    Kirk

  31. Alfie
    Posted March 5, 2010 at 9:04 am | Permalink

    Now EOS will come back and tell us that it’s too complicated.

  32. Urdon
    Posted March 5, 2010 at 12:53 pm | Permalink

    Since you like graphs, here’s another good one. This one shows the proposed expense of the Obama health care plan against the amount of Bush tax cuts.

    http://maddowblog.msnbc.msn.com/_news/2010/03/04/3978658-best-graph-ever

  33. EOS
    Posted March 5, 2010 at 1:33 pm | Permalink

    The House Bill is unlike the Senate Bill and neither will be a bill that will be enacted. The House is not able to approve the current Senate bill- there’s not even a 51% majority, and neither is the Senate able to approve the current House bill.

    Alfie- you may not think it’s complicated, but I doubt you could find two lawyers who would interpret it the same. The way Washington has been operating recently, they’ll likely present a new 4000 page bill and force a vote on it within 24 hours, before anyone has a chance to read or study it thoroughly.

    Kirk – I don’t use opinion polls to determine how I vote or speak either. The polls were referenced as evidence to dispute previous claims that most Americans want a government takeover of health care. It would be my preference not to have my employer choose my health care plan just as it is my preference not to have my government choose my health care options. Putting $12000 a year in a tax free medical savings account would be a better alternative and give me (and everyone else) more freedom of choice.

    Urdon – The CBO projection of the cost of the health care plan is based on 10 years of revenue and only 6 years of expenses. Also, the Bush Tax cuts were offset by the gains in revenue due to increased productivity which was not included the graph you referred to.

    Peter – There’s absolutely no credibility to your claim that the House bill is a middle of the road Republican bill. If you would study Conservative principals, you might have a better understanding of their beliefs. I am not an enemy of anyone on this blog. It is my hope that by participating in discussions on a liberal blog I might gain insight into alternative viewpoints. It is my hope that somebody on this blog might be able to articulate valid reasons for their point of view. But more and more the only response is ridicule and name-calling, which I can only interpret as an inability to engage in rational debate and evidence of an absence of reasoned argument to support an individual’s point of view.

  34. Robert
    Posted March 5, 2010 at 2:26 pm | Permalink

    EOS: “I am not an enemy of anyone on this blog. It is my hope that by participating in discussions on a liberal blog I might gain insight into alternative viewpoints. It is my hope that somebody on this blog might be able to articulate valid reasons for their point of view. But more and more the only response is ridicule and name-calling, which I can only interpret as an inability to engage in rational debate and evidence of an absence of reasoned argument to support an individual’s point of view.”

    EOS, don’t pretend you engage in reasoned debate. I’ve witnessed you repeatedly dodging simple questions asked of you point blank, and which would have been simple to answer, and which had you chosen to answer them would have been productive toward defining the substance of the disagreement. You’re almost as bad as BA in that way. I’ve also seen you repeatedly misrepresent known facts relating to issues. And you’ve done it repeatedly on the same details, even after having been clearly rebutted. You also frequently misrepresent the statements of those with whom you perport to be in disagreement. You do that so consistantly, it looks to me like you are engaging in argument with projected fabrications of your own mind more than anything anybody else might have actually said.

    To pretend that you have some sort of frustrated dedication to logical debate is laughable to anybody who has witnessed more than one of your exchanges.

    That isn’t to say much of what you say isn’t true, or that I believe anyone else here is actually interested or capable of intelligent and reasoned debate.

  35. EOS
    Posted March 5, 2010 at 2:36 pm | Permalink

    I have been asked and I answer more questions about my perspective than anyone else who contributes to this blog. You’re right – I don’t answer all. My last post answered 4 other individuals. I did not respond to your question concerning how many people I know – I thought it was a rhetorical device.

  36. Robert
    Posted March 5, 2010 at 3:04 pm | Permalink

    EOS, it may be true that you RESPOND to more questions than anybody else here, but I don’t think you actually answer questions very often.

    However, you were right that my question asking how many people you know was mainly rhetorical. It was really just an attempt at humor. So , I didn’t count that as one which you didn’t answer. Though you could have, now that I think of it. I do suspect you don’t get out much, which was the humor of the comment. Instead of telling us whether or not you have any personal experience with a statistic, why don’t you just go out and gather information on that statistic. (That was a rhetorical question too)

    The key to debate, and the demonstration of a strong position, is in how well one stands up under cross examination. This is why it is the most crutial aspect of our court system. It is also why so many with weak positions are so empowered under conditions where cross examination is not a factor.

    I actually do think you make some good points on the health care issue. And I agree with you that others just seem to want to ram something through without thinking it through. You must understand their frustration though, as I feel I do. It is far too easy for narrow interests to trip up genuine attempts to make positive change. It’s a frustrating process, but something has to be done, and the guys who you’ve allied yourself with on this one had years and years to do something, and didn’t.

  37. Curt Waugh
    Posted March 5, 2010 at 4:23 pm | Permalink

    I’m just gonna repeat this because it was so much fun to write the first time:

    “People, no matter what you say here (or anywhere), you will not be able to get the anti-healthcare folks to make a single intelligent comment about either the chart above or the fact that we pay far more for far less in the U.S. Mark my words.”

    So marked.

  38. Peter Larson
    Posted March 6, 2010 at 9:10 am | Permalink

    I am not going to begin to engage EOS in any sort of argument, but I would like to point out to him that “Conservative” and “Republican” are not synonymous in the same way that “Liberal” and “Democrat” are not synonymous. The wild spending of the Bush years pretty much confirms that although we had a Republican controlled government, we had few true conservatives.

    I didn’t post the Senate version because the link was dead.

    Also, I never said I supported or didn’t support the bill, merely that people like to blab on and on about it on both sides, but don’t really seem to know much about it.

  39. EOS
    Posted March 6, 2010 at 7:02 pm | Permalink

    Peter –
    As an independent conservative, you’ll certainly get no argument from me that the Republican party of today has abandoned conservative principles. Even still, if it really is a middle of the road, Republican bill, to what do you attribute the nearly total lack of Republican support for the bill?

  40. Peter Larson
    Posted March 6, 2010 at 7:45 pm | Permalink

    If they could take credit for it, they’d vote for it. If they had any power, they’d have to vote for it. When you have no power, you can vote any way you like. Right now, it’s politically advantageous to be the party of obstruction. Look at the stimulus bill. 40% of it was tax cuts, much of which Republicans had already proposed.

    The worst thing for the GOP would be to have a massive success that provided health care to people who need it be attributed to Democrats. Neither Republicans nor Democrats do not care a lick about big or small government. Republicans have proven again and again that they do not care about fiscal responsibility nor about personal freedoms, aside from those which gather votes from their constituents. If they were truly conservatives and not vote whores, I might give them some more respect. Not that they’re all bad, though.

    Like I said, I’m not saying whether or not I’m in favor of the bill or anything else that has passed through Congress in the past 50 years. My opinion is that it does not go far enough. I won’t be happy until all people are required to carry health insurance of some kind (my definition her is broadt), and when all health insurance providers are barred from making profits. But that’s just me. I’ve lived in countries that do just that, and such a system works out rather well for rich, middle and poor alike. But that has nothing to do with the bills in Congress right now.

    Just saying that people rattle on about this and that on all sides, and don’t seem to have done their homework, including yourself. The only thing you have ever offered about the health bill was some abortion nonsense, and you later admitted that you didn’t know anything about the bill and only presented it because it was a polarizing issue that would keep the-bill-that-you-know-nothing-about from passing. Likewise, on the left, often what I hear is “any bill is a good bill” which is also nonsense.

    My rant is over.

  41. EOS
    Posted March 7, 2010 at 8:45 am | Permalink

    “The worst thing for the GOP would be to have a massive success that provided health care to people who need it be attributed to Democrats.”

    Since the Democrats have the majority in both Houses and a President poised to sign the bill, wouldn’t the Republicans refusal to vote for the bill result in the worst case scenario you’ve described? If the Republicans voted for the bill, why couldn’t they take credit for it?

    What country have you lived in has a health care system that works out rather well for rich, middle and poor alike?

    I never said I knew nothing about the bills. I don’t consider abortion as nonsense. I did point out that the Senate version would require citizens to pay for all abortions and provide the same level of health care for illegal aliens who don’t contribute to help defray the costs and that those two issues alone would result in an inability to garner sufficient votes of support. Do you think the current Senate bill will pass?

  42. Lisele
    Posted March 7, 2010 at 9:52 pm | Permalink

    We are so completely embedded in a culture of fear in this country that I don’t know if health care reform will ever be enacted. I just came from the funeral of my brother-in-law — a good man whose death could not have been more tragic. A farmer of a centennial holding in South Jersey, he had no health insurance. When he became ill with renal failure and diabetes, he and my sister had to sell off parcels of the family farm in order to pay the medical bills. After four years of terrible suffering, he died. After nursing him (and working as a home health aide), she now has only her house left, and a mountain of medical bills that she’ll never be able to pay off. He had only death benefit with a local funeral home, so after paying for that, she has only her small income and no health insurance for herself either. I believe her house itself is mortgaged to the hilt, also to pay his medical bills. My sister is missing several teeth because she can’t afford to see a dentist.

    And YET, when I commented that our health insurance system is a travesty — she disagreed. She cited shows on TV that promised doom if we adopt a Canadian style plan. She said she’d heard call-in shows where disgruntled Canadians talked about how long they had to wait for care. It chills my blood that the very people who are suffering the most from our broken system are so blinded by right-wing depictions that they fear ANY change, convinced that it could only be for the worse.

  43. EOS
    Posted March 8, 2010 at 6:36 pm | Permalink

    Another good read:

    http://www.hillsdale.edu/images/userImages/mvanderwei/Page_4221/ImprimisFeb10.pdf

  44. Peter Larson
    Posted March 8, 2010 at 7:24 pm | Permalink

    This is the option he presents:

    “the model consistent with our Constitution, in which health care providers compete in a free and transparent market, and in which individual consumers are in control.”

    He’s got to be joking. Small businesses can’t even negotiate affordable deals for their employees, how are individuals going to?

    Exactly how will being able to buy insurance across state lines change insurance monopolies? It has done nothing to reduce credit card fees. I don’t see the logic in this solution at all. You can get a credit card from any state of the union (as far as I know), but they will still tap you as much as they can.

    Someone has to explain to me how this is supposed to solve all our problems. Methinks that the people proposing this solution live in states that house large insurance companies of one flavor or another.

  45. Posted March 8, 2010 at 8:11 pm | Permalink

    What, Pete, you’re not impressed by the scholarship coming out of Hillsdale?

  46. Peter Larson
    Posted March 8, 2010 at 8:34 pm | Permalink

    I wasn’t going to say it.

  47. EOS
    Posted March 8, 2010 at 9:08 pm | Permalink

    Peter-
    Let’s look at your example of credit card fees. I can get a credit card from any state of the union, and I have several. I’ve freely chosen a card without any fees. I pay my balance at the end of each month and I benefit from the option to use credit and not carry large sums of cash. Retailers benefit as I am able to make purchases larger than I might if I had to carry cash at all times.

    Others, seemingly unable to limit their spending, maintain large balances on several cards and pay significant amounts in interest each month. And, should they suffer a personal economic setback, are unable to even make the minimum payments, thereby triggering even higher interest rates on their balances. The credit card companies don’t loan money for altruistic purposes and suffer economic losses for every deadbeat who fails to repay their “loan” under the terms agreed to. The high fees offset these losses. If a credit card company or bank attempts to tap the consumer for as much as they can and charge excessive interest, the consumer is free to open another credit card at a lower interest rate and pay off the balance on the high interest card. Those banks that attempt to “soak” the consumers will soon find themselves without customers.

    But Congress recently decided to limit the credit card companies ability to recover these losses and have set more stringent regulations limiting penalties and interest rates. In order to stay economically viable, credit card companies will soon start charging monthly fees to all credit card users so that everybody will share the burden of those who fail to pay their bills. If I don’t want to pay extra for someone else’s abuse of credit, my only option is to stop using the credit cards altogether. The government interference has altered the natural consequences of the free market and set in motion regulations that will cause the fees to gradually but continuously climb as more and more consumers opt out of the system and leave larger percentages of credit card users who cause increased expenditures for the credit card companies. Retailers will lose some percentage of sales as a result. This is a clear case of government regulation having an overall negative impact on the economy.

    Let’s look a little further into this scenario. What if inflation returns and interest rates rise faster than governments willingness to increase the allowable charges? Some credit card companies may go bankrupt, others may limit credit card offers to only the wealthy. This contraction of consumer credit will impact the economy negatively. When the crisis really hits, government will step in with a bailout, claiming the banks must be saved in order to prevent a total economic collapse and severe depression. The bailout money will be added to the national debt and future generations will have lower standards of living.

    The free market works well. Control through centralized government bureaucracies doesn’t.

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