National Health Care Ideas - A Financial perspective

At lunch today we talked about the ideas being floated around about universal heath coverage  being talked about by President Obama - and others.

 

Now all of them are talking about "reform" - which from what I have experienced usually means more expenses for most tax payers.

 

Let's run some numbers:

 

There are roughly 315 million people in the USA.

At any given time  50% of the population are below 18 - thus they don't count as taxpayers and legally are not responsible for themselves - thus moneywise they contribute an insignificant amount of money in taxes - earned income credit etc almost always refunds back all their income tax (Social Security exempt of course).

That removes 126 million people leaving 189 million payers.

At any given time 25% of the population falls within the retired social security / Medicaid / Medicare groups - thus wiping out 78 million people who could support a national system - both by law which dictates they fall into that system and if not they would be eliminated by their low fixed retirement income which would put them within 2x or 3x of being at the poverty level (see below) (no, I am not trying to double count them like Congress does when they do their accounting.)

That leaves 111 million people to pay.

All progressive ideas of "fairness" now come into play: poverty level, close to poverty level single parents, head of household etc all end up getting exempted from having to pay since they earn so little and that then wipes out 40% of the remaining possible payers into the health system leaving only 67 million people to pay for themselves AND the other 248 million people that would be in a NATIONAL system.

 

Since the average cost a month for a family of 4 in private insurance is (low end) around $200 a month per person - that means each person working would have to support themselves AND 5 other people in order for everyone to be covered! Each working person would have to pay $1000 a month to have a national health program FULLY funded.

 

Now of course the scaling would likely work out that starting a 3x poverty level each person starts to pay so that at 5x poverty you pay fully for yourself each month and at 6x you pay for yourself and someone else, 7x you and two other people scale up to likely a cap that at $500,000+ a year you pay for yourself and 10 other people. (so you pay $2,000 a month in health benefits to support yourself and 9 other people who earn less than you do.)

 

And of course everyone gets the same medical benefits.

 

Now if you have a DUAL system where private insurance (actually it more like heath benefits, you don't just occasionally use it, they want people to use it all the time) then if you wipe out the people who already have private insurance and do not have to pay into the system then you have around 20 million people supporting 248 million people and the price per month goes WAY UP. So the only way to have it is to force EVERONE to pay into the system - and why pay twice when you only get one benefit? That is what would kill large scale private insurance as we know it today - it would become supplemental and only the 10x poverty level people could afford to pay another insurance premium above what the government would take to have private insurance / doctors etc to visit if they need to.

 

 

After all, that is what having a fare (benefit) system is all about - but no one wants to talk about the payments required into the system of OTHER people to get that "fair" system.

Think Before You Join a Social Site

The most important thing is never mentioned - never start a NEW method of communication, new features, new expanded ANYTHING unless you have already allocated TIME to MAINTAIN them.
Using Twitter? You BETTER ensure that you have 10 minutes a day to post something  - AND - allocate time to READ what comes to you and stay involved - or else people will ignore your tweets.

You join into 4 or 5 social sites you have just dedicated an HOUR A DAY to them regardless of what is going on. Unless you ration yourself, you will soon find yourself hopelessly overbooked during a day and falling behind.

 

Taxes, Income, and President Obama's Socialist State

The press corps always has a love / hate relationship with any politician. The press does not care about policy - its main mission is to sell news to remain in business. How objective, and how much they care, is always governed by the questions asked - or not asked. The tax pledge that President Obama made that no one who makes less than $250,000 is going to be affected sounds VERY good - for anyone who does not own a business that is taxed through the 1040 as a PERSONAL business. If you are incorporated no problems, but the vast majority of small businesses run all income as personal income and thus through the 1040 long form with class C schedules - and every one of them WILL be affected by taxing people who make more than $250,000. This is not NET income, it is GROSS income - a BIG difference.

Oregon legislature is also looking to up the max income to 11% on all those making more than $250,000 a year - and you can be sure it is not what the papers reported as told to them by the people proposing the law. You can be sure - and NO newspaper is going to ask since they have the same political goal of redistributing the wealth and are themselves NOT affected by this - that the numbers told as being affected were individuals who worked for others earning $250,000 or more - not the small businesses that flow their income through their 1040.

The studies by University and "public interest" groups all tout that 1.9 to 2.7% of people make over $250,000 a year - roughly 6 million people. However, they look for people who WORK for others and / or lump them as part of small business income - like LLCs.

8% of all family farms earn more than $250,000 ( http://www.usda.gov/documents/FARM_FAMILY_INCOME.pdf ) who would be hit. Now the number of family farms is WAY less than the number of other family businesses.

 

The problem is trying to find out how many small businesses file as such through 1040 and the IRS does not seem to release those figures to the public - so everything is a guess. Based on various numbers sited at IRS, SMA, Census, around 17 million small businesses exist who have employees - and from that you can deduce that around 10 million gross more than $250,000 - who would be hit with higher taxes by the Federal as WELL as the state since all income flows through 1040. Remember, EVERYTHING that is being talked about is GROSS INCOME - not NET income after expenses. Nothing in 1040 states that you only pay taxes on your NET income after expenses for a person - limits, items that you can no longer deduct is ALWAYS based on GROSS income. Example, if you earn $100,000 a year and you send a kid to college the expenses are ALL deductible - other people are subsidizing your kid in college. If you make $160,000 or more NONE is deducible at ALL. You are now the ones subsidizing those earning less than you do. The same will be true for the Oregon and Federal upping on incomes more than $250,000.

Oregon has around 425,000 individual tax filers, of those 104114 had employees and if any business has more than 4 then their gross income will be over $250,000 on average. So that means roughly 60,000 small businesses will be hit by the new proposed Oregon tax hike rate to 11% for all people running a business as income on schedule C through their 1040 and Oregon taxes.

 

It seems that the government (all) are deliberately hiding the number of firms who file as personal income their business income in the US - you cannot find this data in any form on any site.

 

And NO reporters are asking for it - they are hiding the truth by avoiding the question.

 

Best Project Planning Method

Who?, what?, when?, where?, why, and how? - the way to do any project.

 

If you start out assigning who - you can forget about having to work on the other five questions yourself.

Ideas and Code

Software is nothing more than an sequence of human ideas in a physical form. Unlike ideas which can change in a person's mind and be assimilated in an instant, software changes can take years for the code to match the idea.

 

Predicting Success

The ability to predict success is based on the previous inabilities to predict failures.

Sen Specter Switching Sides - How Medieval!

The onetime Democrat Senator Specter went to the Republican side in the 1980s when President Regan was on the upswing, now in 2009 when the Democrats are on the upswing he switches sides to go back to the Democrats to be on the "winning" side again.

During the Middle Ages mercenary troops were routinely hired to supplement the King's forces and often in the middle of a battle they would switch sides once they figured out who was going to win.

Now Sen Specter IS a mercenary in the US Senate - he was hired by the state's people to do it's bidding in the Senate. All elected people are mercenaries - they are hired to do the bidding of people who hired them on their behalf and that is the way all elected government officials have ever worked and the way it is supposed to work.

Switching sides is normal - they want to stay employed and all mercenaries will switch to the "highest bidder" so they will stay employed.

As it was stated in "Harry Potter" : "standing up to your enemies is easy, standing up against your friends is harder".

The problem facing those in the US Senate with Senator Specter is that now no one knows if they are a friend or an enemy - or both at the same time.

 

Tax Tea parties - Think about the Visible and Hidden Taxes

The Tax Tea parties that went on around the whole USA on April 15, 2009, but our President, talking through a spokesman, was totally unaware that they were happening at all till asked on April 15 in the morning, the protests were not about "just taxes", but about the amount and the purpose that the money taxed against the people and how it is put to use for by our elected - and in reality mostly appointed to make decisions by elected officials - in the government (at all levels).

If you really looked at all the taxes buried within other goods, for most people the REAL tax rate is somewhere around 40% of your gross income is being siphoned off to the Government - who in turn is doing things "for you". In reality, most of the money sent to any government is spent on someone else other than "you" - it is spent on people who the government itself has decided it does not want to tax but provide services to. That is why 50% of the people in the USA pay no Federal Income Tax - they get it all back at the end of the year or in some cases get more than what they ever paid into the system.

Lots of taxes received go to "infrastructure" and of course the military. However, the military takes up at most 30% of the total federal budget, and of that 30% , 50% of the money paid out comes right back into the tax man's coffers as income tax, business tax and other fees that the private businesses and employees pay. So the true tax cost is really less. Money used in the the other 70% of the budget, Medicaid and social security etc, is not nearly recovered as much - since those people usually fall below the tax cut-off and thus never pay income tax, or are other government agencies who do not pay thus the flow-back is cut to maybe 10% of what is paid out.

Add in sales taxes, property taxes, business taxes, transpiration taxes, and thousands of pages of other taxes, I bet that there are some people who pay 55% of their gross pay in taxes - but only really see 40% showing up as a tax on any statement to that effect.

Government is a PAID contractor in effect, you hire it to do something you COULD do, but you thought it would be cheaper to pay someone else to do it than yourself. The problem is that once you contract any function out to the modern Government, it wants to please everyone and thus it puts in lots of extra steps to ensure that it does, takes longer to accomplish it due to these steps, and no longer really allows the people to make a decision since they are now the "experts" and know better what you want done than you do. Add in the new checks and balances that they put in to make things "transparent", and you will always double or triple the cost of accomplishing anything. In private business a single person can do 5 jobs, but in the government in order to ensure that power is not abused, concentrated, bypassed, they HAVE to hire 5 people and create a process to accomplish that same task. This is really the main reason government has grown so much - they will spend a million dollars more a year in order to save $50,000 - but now that the process is transparent, don't you feel better?