Category Archives: Buffalo NY Local Politics

Diana Kastenbaum’s support of Obamacare more outlandish than anything Trump or Clinton has said

James Madison warned New Yorkers that in a representative republic, Congress posed a much greater threat to liberty than the presidency. Proving his point, here is a jewel from Diana Kastenbaum’s website. She’s the Democratic Party Nominee to represent New York’s 27^th District in the U.S. House of Representatives.

“For Diana, health care reform is about giving American families and small businesses — not insurance companies — control over their health care. For far too long, America’s health insurance system has made health care more costly, less accessible, and less efficient for families and small businesses. No one in America should have to declare bankruptcy because they can’t afford to pay their medical bills. Premiums should not be increasing at a rate of six times the rate of our GDP. That is why Diana is a supporter of the Affordable Care Act.”

Statements like this have a way of washing over most people without making more than a vague, emotional impact. Let’s unpack what she’s said here.

First, she says health care reform is about giving American families and small businesses – not insurance companies – control over their health care. This in support of a law requiring every soul in America to purchase health insurance, whether they want it or not. Not only does the ACA mandate insurance, but it mandates the services insurances will cover, meaning a smaller portion of total healthcare is left outside the purview of insurance companies.

Does this give insurance companies more or less control over health care?

She claims insurance companies have “made health care more costly, less accessible, and less efficient for families and small businesses.” Even if that were true, the ACA would only make things worse. But have insurance companies made health care more expensive? No.

Insurance companies reflect rising healthcare costs; they don’t drive them. Health insurers have all the same self-interested motivations of home insurers, automobile insurers and liability insurers. But we don’t see the premium rates of those other insurers outpacing inflation like health insurance premiums. Why?

Kastenbaum isn’t at all curious about this. But clearly, something besides the profit motives of health insurers is increasing the cost of healthcare disproportionately. Assuming the same laws of supply and demand apply to the price of healthcare as to other products, could it be the artificial limitation of supply caused by medical licensing laws, the FDA and other disproportionate regulatory burdens on healthcare? Could it be the gross artificial stimulation of demand by huge entitlement programs like Medicare and Medicaid?

If the government gave a trillion dollars to clothing shoppers next year, would you expect the price of blue jeans to go down, remain the same or go up?

Kastenbaum says health insurers have made health care less accessible and efficient. But the ACA hasn’t increased the supply of doctors and hospitals; it’s decreasing supply. And major insurers are dropping out of the program en masse, specifically because of the burdens imposed upon them by the ACA. In many states, there will be only one insurance option for consumers next year. All this in exchange for subsidizing coverage for a tiny portion of previously uninsured consumers, some of whom were uninsured by choice.

As for efficiency, the law imposes a one size fits all plan on everyone in the country, prohibiting efficiency-enhancing discrimination on the basis of gender, medical history and local risks. Is it really more efficient to force men without dependents to purchase OB/GYN coverage? Wouldn’t healthcare be less expensive for society as a whole if they weren’t?

Kastenbaum then makes the emotional appeal, “No one in America should have to declare bankruptcy because they can’t afford to pay their medical bills.” Agreed. How is this an argument for the ACA?

Finally, Kastenbaum says, “Premiums should not be increasing at a rate of six times the rate of our GDP. That is why Diana is a supporter of the Affordable Care Act,” which is driving premiums up faster than ever before our very eyes. Media everywhere are reporting premiums increasing as much as 25% for many next year, also specifically because of the ACA.

While Kastenbaum’s ideas on healthcare markets might be particularly obtuse, electing her less delusional Republican opponent is by no means a silver bullet. If Americans truly want to make healthcare affordable again, they’ll have to change their expectations. As long as massive entitlements like Medicare and Medicaid make demand virtually unlimited and massive regulatory burdens severely limit supply, the price of healthcare is going to continue to skyrocket. And as long as we keep sending people like Kastenbaum to Washington, Congress will remain the greatest threat to our liberty.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Job growth in WNY has speed, but does it really have credibility?

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Pair_of_2009_SolarCity_Dodge_Sprinters A July 26 article in the Buffalo News rejoiced, “Job growth in WNY gains speed, credibility.” There is no doubt about the speed. The credibility may be another story.

Writer David Robinson gave due credit to “high-profile projects, from the Medical Campus to Solar City’s 1,500-employee solar panel factory, that are giving a jolt to the local job market, first because of all the construction associated with those projects, and eventually with the hiring that will take place as those businesses ramp up.”

What he didn’t mention was why those two sectors were enjoying such spectacular growth: tax breaks and other incentives provided by local, state and federal governments.

It has become fashionable to call tax breaks “subsidies,” based on the perverse idea the government not only has a legitimate claim to all wealth you’ve created in the past, but any you may create in the future. Tax breaks aren’t subsidies, but they are part of a larger economic system that has never worked.

Step One is to tax and regulate everyone into a state of complete economic paralysis. Buffalo’s local governments perfected that fifty years ago. They never got around to Step Two until now.

Step Two is to grant limited relief to those businesses who either represent something politicians like or who promise to deliver something politicians need. Solar City does both. They represent the green energy movement, the cause célèbre of politicians everywhere. They have also promised to create a significant number of jobs, which helps politicians get reelected.

This may seem like a win-win for everyone, until that buzzkill called “economic reality” turns on the lights and turns off the music. Growth created by government privilege almost always turns out to be temporary. Viable business plans don’t need government assistance to make a profit and create new jobs. They produce products customers are willing to pay for at a price that supports the company’s costs and profits.

Solar City may or may not have a viable business plan. We don’t know, because it is presently riding government “subsidies” in all its markets, not just in Buffalo. We do know its stock is down over 8% since it reported earnings in May. We’ll get another report later this week.

The risk is Solar City turns out to be another Chevy Volt, a product that never would have made it to market without similar assistance from the government. Despite that assistance, the product’s sales have consistently failed to materialize. The government continues to help keep the product alive, but if jobs were actually dependent upon producing it, they’d cease to exist. Chevy’s sales of viable products are what actually subsidize the Volt.

Not only does this form of central economic planning promote unviable business ventures over viable ones, it encourages businesses to do economically idiotic things, like hire more people than it needs. A June 11, 2015 article in the News lamented, “Billed by officials as creating 400 jobs, FedEx center in Hamburg will fall short of that tally.”

The article attempts to incite outrage that Fedex has reneged on its promise of 400 jobs in return for the tax incentives, although it acknowledges it may have been politicians who made that promise, not Fedex. Lost in all of this is the basic economic principle that a business venture is supposed to produce its product at the lowest cost possible. It’s economically harmful to everyone when it intentionally raises its costs for political reasons.

That the other significant contributor to WNY jobs is the medical sector is ominous for all the same reasons. Medical care was already the most subsidized economic sector in human history before Bush and Obama subsidized it even more. It receives real subsidies, meaning direct cash payments from the government that represent about half of all U.S. health care spending. What happens when those subsidies run out?

Central economic planning doesn’t work. They found that out the hard way in the Soviet Union and China, where tens of millions literally starved to death because of it. Central Economic Planning Lite as practiced in this country doesn’t work, either. If tax breaks stimulate growth, they should simply be granted to all businesses, no strings attached. Then, the market will allow viable businesses to create permanent jobs.

Buffalo should try this approach and lead the nation in demonstrating the power of the free market, instead of following Washington to another disaster.