Things That Aren't "Sustainable": Socialism, Obamacare
/It was just over a year ago that Manhattan Contrarian won the award for the "World's Most Sustainable Web Site." OK, admittedly we gave the award to ourselves, but nevertheless it was richly deserved. For example, as noted in the linked post, unlike Barack Obama we did not fly to Florida on Air Force One to give a speech celebrating Earth Day; and, unlike Leonardo DiCaprio, we did not take six flights on private planes within one month. That's true sustainability!
But if you are following the news on the subject of "sustainability," you have undoubtedly noticed that the word has become more and more separated from any connection it may once have had to the root "sustain." Indeed, you could be forgiven for concluding that, as currently used by the forces of the environmental Left, the word "sustainability" means something more like "imposing new regressive taxes in order to further lower the living standards of low income people." For example, if you go to the "sustainability" section of the web site of prestigious Yale University, you will find that Yale believes it is achieving "sustainability" by joining something called the Global Carbon Pricing Leadership Coalition. What is the GCPLC? It is the cabal among the likes of the World Bank, the IMF, governments and non-profits seeking to jack up the price of energy for everybody else, including the poor and low income people of the world:
Yale will become the first university member of the Carbon Pricing Leadership Coalition (CPLC), a private-public partnership among the World Bank, International Monetary Fund (IMF), governments, nonprofits, and private sector companies to strengthen carbon pricing policies. . . .
And why stop with energy? How about still further impoverishing the poor by jacking up the price of food? Actually, our friends at the U.N. have exactly that as their next plan -- all in the name of "sustainability" of course. Consider this article from June 30 at the Washington Post's wonkblog, advocating intentionally increasing the price of food, particularly the price of red meat, because meat is not sufficiently "sustainable":
Maarten Hajer, professor at the Netherlands's Utrecht University, led the environment and food report that recommended the meat tax. “All of the harmful effects on the environment and on health needs to be priced into food products,” said Hajer, who is a member of U.N.’s International Resource Panel, which comprises 34 top scientists and 30 governments. “I think it is extremely urgent.”
Before we get too far here, perhaps we should step back and consider the original meaning of the term "sustainable," and what it would entail under that meaning for something to be truly "not sustainable." According to a standard dictionary definition, something that is not sustainable should be something that cannot "be maintained at a certain rate or level." In other words, a thing or process is "not sustainable" if it is on an unavoidable glide path to oblivion, i.e., a "death spiral." And of course, when you think of death spirals, the first thing that comes to your mind is socialism.
As you well know if you spend time trying to observe the world (or if you are a regular reader of this website), economies, or parts of them, that are organized on a socialist model inevitably go into death spirals. For an introduction, check out posts here and here. The one sentence version is that, when it's "from each according to his abilities, and to each according to his needs," rational people organize their lives to decrease their abilities and increase their needs. Thus productivity gradually declines, at first slowly and then faster, unto the inevitable collapse. Importantly, though, governments engaged in socialist policies have numerous tools available to conceal the early stages of the decline, so that when the collapse comes it appears to hit all at once. An excellent example of this process is currently unfolding in Venezuela. And yes, the government of Venezuela put out cooked economic statistics purporting to show rapid growth right up through 2013, when they just stopped reporting any economic statistics at all. (Their main fraud was reporting all government spending, no matter how wasteful, as a 100% addition to GDP. Our government practices the exact same fraud.)
Is there any example of such blatant "death spiral" unsustainability going on in the U.S. right now? Well, there's Obamacare. That's the program where we pretend that it's possible for people who are already sick to buy "health insurance" by the government decreeing that it be so. We'll just have "guaranteed issue," by which rule a health insurer must accept all customers who present themselves, no matter how sick they may already be. It's just like fire insurance, where insurers are happy to sell you an "insurance" policy after your house has already burned down -- not!! Anyway, nobody would game this "guaranteed issue" thing and wait until they got sick to buy the insurance, would they?
That brings us to the great article in yesterday's Wall Street Journal, headlined "UnitedHealth Sues Kidney-Care Chain." It seems that American Renal Associates is a company that provides dialysis services to patients whose kidneys have failed. ARA would like to charge some $4000 per dialysis session to patients. Since patients who need dialysis require about three sessions per week, this would mean that each patient would represent about $600,000 per year in revenue to ARA. But some of these patients were previously uninsured, and still can't afford the premiums. No problem. ARA has created a "charity" called the American Kidney Fund, and contributes to the "charity" (tax deductible of course!), which in turn makes grants to fund the Obamacare premiums of patients on dialysis. So some patient goes uninsured until his kidneys fail and he needs dialysis, then finally buys an Obamacare exchange policy under "guaranteed issue" and gets his premiums of about $10,000 per year paid by the "charity"; and then UnitedHealth from then forward must pay $600,000 per year to ARA. Somehow UnitedHealth doesn't think this is a good idea, and has sued ARA for "fraud."
Whatever you may think of UnitedHealth's claim against ARA, it's not hard to see how this is something that can't go on for long. It's unsustainable! But why hasn't the unsustainability manifested itself yet? Writing in Investors Business Daily on July 4, Sally Pipes points out that it's the usual government deception. The Obamacare statute came complete with various subsidy programs designed to cover over and hide the statute's losses for several years until the law could become entrenched. One of these programs is called the "reinsurance program," although, as Pipes points out, the word "reinsurance" is a complete misnomer -- this is no more than a federal handout to health insurance companies. Pipes:
The "reinsurance program," on the other hand, is just a federal handout. If an enrollee's medical bills cost an insurer between $60,000 and $250,000, the government picks up part of the tab. Originally, the feds planned to pay 80% percent of the cost within that window. But in 2014, they made the program more generous -- by paying 100% of costs between $45,000 and $250,000 per enrollee. They gave out almost $7 billion that year. As the Mercatus Center study concluded, ObamaCare has depended on these subsidies to keep the exchanges from collapsing. Without the reinsurance program, premiums in ObamaCare's first year would have been 26% higher than they were.
But these statutory subsidies run out in 2017. It's just in time for Obama to leave office, and leave the problem to somebody else. As usual with the unsustainable socialist death spiral, the government covers over the problem during the early stages of the decline, and then when the government cannot continue the deception any longer, everything falls apart all at once.
And the kidney dialysis issue is just the tip of the iceberg of the gaming of Obamacare's "guaranteed issue" provisions. For another example, see this post from April 11 on so-called "short term" health insurance policies.
How long can a socialist death spiral go on before the final collapse? For the Soviet Union, it was 74 years. Chavista Venezuela has only been 18 years so far, and the end already appears to be near. Cuba is at 56 years. North Korea is at 71 years. Compare those to the eating of red meat or burning of carbon-based fuels by humans, both of which have been going on for many millennia and don't seem to be heading toward any kind of imminent denouement as far as I can see. I'd be willing to bet on either of those outlasting any socialist economic system by easily thousands of years. I'd say it's rather obvious which is "sustainable" and which not.