The Facts about Health Care Reform Part 1

I expect this to be one of many posts I do relative to the new health care law the President Obama signed. Most Americans, and I would venture to say, most politicians who voted on this, have no clue what was actually signed into law. I hope to shed some light on some of what is actually in this bill.

Here is my first installment after getting through the first 44 pages, of which the first 17 were the table of contents.

Talk about a blank check. Below is the actual wording on page 40 of the new Health Care Law. $30 million in initial funding to carry out tracking of consumer problems, assisting with customer complaints, education on consumer rights and responsibilities related to group health plans, assisting with enrollment in a group plan and problem resolution related to premium tax credits. The kicker is that this legislation authorized unlimited funds in subsequent years.

(1) INITIAL FUNDING.—There is hereby appropriated to the Secretary, out of any funds in the Treasury not otherwise appropriated, $30,000,000 for the first fiscal year for which this section applies to carry out this section. Such amount shall remain available without fiscal year limitation.

(2) AUTHORIZATION FOR SUBSEQUENT YEARS.—There is authorized to be appropriated to the Secretary for each fiscal year following the fiscal year described in paragraph (1), such sums as may be necessary to carry out this section.’’.

What makes this amusing is the very next section of the law (Sec. 2794) is titled “Ensuring that consumers get value for their dollars.” Unfortunately, they are not referring to the $30 million above or the $938 billion in the whole bill. They are legislating the unreasonable increase in premiums for health insurance coverage. For that they are appropriating another $250 million. And by the way, if they don’t spend all $250 million by 2014, they won’t give it back to us the taxpayer, they get to keep the unused funds and use it for grants to the states.

I have an idea, how about if we design legislation that encourages the government to spend less, not more. There is absolutely no incentive here to save the taxpayer money. The provisions in this law always ensure that the money is spent, no matter how inefficiently. I would welcome incentives that provide good quality programs, but at a reasonable cost.

With the government I think it is safe to say: You can buy better, but you can’t pay more.

We need fiscally responsible legislation that encourages the most efficient use of limited resources. All too often politicians believe they have an unlimited source of funds. We, the taxpayers, provide that funding and it is limited and should be allocated where it can be put to the most productive use.

Enough rambling for now. I will continue to plow through the new law and report back what I find.

Fannie and Freddie - "The Money Pit"

Now let’s deal with what is probably the most costly bailout from the financial crisis. It is not a bank, it is Fannie and Freddie, which surprise surprise are run by the government. Fannie has received $60.9 billion of direct government support while Freddie has received another $51.7 billion. That is over $111 billion, way more than any bank has received. This $111 billion represents 4 times what is left to be paid in TARP money by the banks.


On top of the enormous aid provided, both Fannie and Freddie have had enormous losses. Fannie reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department which was down from the $25.2 billion they lost a year earlier and the $19.8 billion they lost in the third quarter. For 2009, Fannie's losses totaled $74.4 billion, compared with $59.8 billion in 2008.

The news at the much smaller Freddy Mac is not much better. Freddie reported a fourth-quarter loss of $7.8 billion, compared to a loss of $23.9 billion a year earlier. They lost $21.6 billion for all of 2009 which was an improvement over the $50.1 billion they lost in 2008.

So in essence, we the taxpayers, had to fund another $100 billion for Fannie and Freddie to cover their losses. Oh did anyone mention that the top brass at Fannie and Freddie got cash compensation in excess of $6 million. If this were a CEO at a bank you can be sure it would have been page 1 news.

To use Mr. Obama’s own words, We Want Our Money Back!! What is the plan to get the $100 billion back from Fannie and Freddie? What about the $174 billion still outstanding to all the non-banks?