"The state is the great fiction by which everybody seeks to live at the expense of everybody else." - Frederic Bastiat 1850

Contraceptive Compromise? Betsy McCaughey vs. Igor Volsky

In the video above note that Igor Volsky states the “free” contraceptive is paid as “part of the premium” paid, then reframes his position as “straight from the insurer…out of the reserves of the insurer”. Volsky might want to consider he doesn’t understand the difference between insurance premium and an insurer’s reserve. That Volsky first argues part of the premiums is a cost and hence no free lunch then turns around and argues that an insurance company’s “reserve” pays and hence it is free lunch time.

Later in the video Volsky attempts to frame ObamaCare as the ability to freely choose. First of all if freedom of choice was the overriding concept then there would be no reason for ObamaCare. What Igor Volsky is attempting to frame as free choice is: choice by a central authority [the plans of the few] has authorized as the choice ObamaCare, and then one can choose from a predetermined choice. Hence choice is framed as choice of a predetermined choice which by definition is not choice. It’s an argument of political dupery.

“Free” contraceptive –or- Politico Dupery, Under Politico Nitwitery, and in Government Mysticism We Trust.

What if one is faced with the introduction or more succinctly the mandated introduction of the notion: “free” contraceptive. Why “free”, at what cost “free”, and does “free” mean transfer, and does “free” change outcomes?

Appearing in US Today 02/09/2012 was a story Birth control mandate stirs debate . The authors of the story refer to "free" contraceptives no less than three times in the essay and not once examine the fact that nothing is "free". Not once is there a reference that all economic propositions have an associated cost and an associated opportunity cost. Hence the authors proudly carry the politico dupery banner of "free". (1)

“What I tell you three times is true.” - The Hunting of the Snark.

“Free" contraceptives morphed today, in that, the religious employer e.g. catholic hospital can opt out of the coverage but the insurer must supply "free" contraceptives at the employee-insured’s request. Who is paying for the free lunch? In this case the cost of "free" is borne directly or indirectly by the employer and other premium payers. Hence nothing changed. Same exact song, different beat. (2)

Further, the concept mentioned above is being framed as, no, the employer doesn't pay directly or indirectly nor are other premium payers paying for the "free" contraceptive because (fasten your seat belt) the insurance company is paying for the “free” contraceptives. Hmmmmm.

Upon further review, Catholic hospital C opts out of the contraceptive provision, however insurer Y must offer the “free” item directly to the employee-insured. One knows for a fact that “free” cannot exist hence the cost associated with “free” contraceptive is passed onto all parties [the catholic hospital being one of those parties] by insurer Y.

Moreover, Catholic hospital worker E pays for the “free” contraceptive as C experiences a premium increase from Y associated with furnishing “free” and E’s potential total compensation is effected either by a reduction in compensation, an increase in employee health-care contributions, or lower benefits in the form of higher deductibles or co-insurance. Even if C attempts to pass on the cost to health-care consumer X then X’s health-care bills increase and insurer Y has to raise premiums to compensate for additional expense and keep reserve requirements healthy hence back to E we go with Y’s increase in cost.

“The state is the great fiction by which everybody seeks to live at the expense of everybody else.” - Frederic Bastiat, French economist, 1850

Assume for a moment that one agrees with the logic that "the insurance company" pays and hence the contraceptives are free. Then why stop at contraceptives? Shouldn't every last health-care item be furnished “free” as we merely have "the insurance company" furnish the items for free?

“The fact the compromise had not been proposed earlier angered the president, who felt let down by his staff, officials said. Obama waded into the details of the dispute himself this week and personally crafted the solution, according to a Democratic official who spoke on condition of anonymity to discuss a sensitive matter.” (2)

Ah, the political dupery was challenged and hence political nitwitery was introduced! Very nice.

“Under the new plan, administration officials believe insurers will comply for free because the coverage may not actually cost them anything. Evidence suggests that providing birth control coverage reduces overall costs for health plans because birth control is much cheaper than pregnancy, according to administration officials and some health industry analysts.” (3)

Hence “free” really does exist because politicos tell you so.

If one where to ponder the notional proposition that “…administration officials believe insurers will comply for free because the coverage may not actually cost them anything. Evidence suggests that providing birth control coverage reduces overall costs for health plans because birth control is much cheaper than pregnancy…” one would need to consider present circumstances and known-knowns, unknown-knowns, and unknown-unknowns:

       (1)    The cost of “free” is a known cost,

(2)    Contraceptives are widely available at modest cost yet unwanted pregnancies occur,

(3)    The assumption is that the cost of “free” substituted for the cost of widely available at modest cost, the transfer of cost thereof causes a different outcome,

(4)    The different outcome is an assumption that unwanted pregnancy is reduced although the same cost exists, the same population exists, the same wants and needs exist, yet a transfer of cost causes outcomes to change.

However, if offering “free” contraceptive causes free to be free via the proposition of “…administration officials believe insurers will comply for free because the coverage may not actually cost them anything. Evidence suggests that providing birth control coverage reduces overall costs for health plans because birth control is much cheaper than pregnancy…” then should not all health-care be free as the cost to produce X is offset by Y hence no cost exists and hence all is “free”. In other words why is anyone paying a premium of any sort as every last health-care item should be free as cost X is offset by the cost savings of outcome Y?

Therefore, a known cost is transferred and “transfer” is a magically, mystically procedure that creates outcomes of a much better variety which cancels out the cost. Hence we arrive at “free”.

We end as we began:  Politico Dupery, Under Politico Nitwitery, and in Government Mysticism We Trust.

Notes:

(1)    http://www.usatoday.com/NEWS/usaedition/2012-02-09-Contraceptive-debateRECOVERED-Wed-Feb--8-163722-2012-_ST_U.htm

       (2)    http://www.nashuatelegraph.com/newsworldnation/949794-227/obama-accommodates-  religious-groups-changes-birth-control.html


      (3) ibid.

The Free Lunch Phenomena and Election-eering

'The economist does, normally, attribute precise meaning to the terms "more" and "less." Moreover, if a similar model of rational behavior is extended to the collective-choice process, we are able to derive propositions about individual behavior that are parallel to those contained in economic theory. If the hypotheses are valid, the representative individual should, when confronted with relevant alternatives, choose more "public goods" when the "price" of these is lowered, other relevant things remaining the same. In more familiar terms, this states that on the average the individual will vote for "more" collective activity when the taxes he must pay are reduced, other things being equal. On the contrary, if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity. In a parallel way, income-demand propositions can be derived. If the income of the individual goes up and his tax bill does not, he will tend to choose to have more "public goods." '- James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

In a nice compact and succinct fashion Buchanan and Tullock have added grand insight to when people are more adverse or less adverse to additional “public goods”. But what if the politico or special interests through politico enablers, given short term political time horizons of the politico [next election] frame something for nothing through debt?

For instance, taxes are neither reduced nor increased, and income is constant, yet the demand for “public goods” is increased through the use of debt. Hence the politico is able to exercise political constituency building through taxpayer debt rather than taxpayer dollars. It’s the proverbial free lunch.

Politicos come and go. However their reign as politician, the series of short term political time horizons, accumulate into a summation or accumulation of the series of short term political time horizons [political short term “spending“ horizons]. Politicos, past and present, exercising political constituency building through taxpayer debt, the series of free lunches merely accumulate into a mountain of debt.

The politico, with a political constituency built through taxpayer debt, can not allow the flow of public goods, of what every type, to be reduced to the dependent constituency or else the politico risks failure in reelection as the dependent constituency seeks another politico that will keep the pipeline of goods flowing.

Therefore, the politico, faced with the accumulation of free lunches [looming debt accumulation and debt service costs] needs to raise taxes to keep past promises and more future promises flowing. However, we know from Buchanan and Tullock that “… if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity.”

Hence the politico attempts to deflect austerity [reduced public goods] by reframing the spending as “needed, necessary, and required“. That current spending levels, debt service costs included, are needed, necessary, and required or else massive pain and suffering will occur, bridges will crumble, pot holes everywhere, police and fire may not have sufficient safety service resources, children will not be educated, and so the argument goes. In reality, the spending has nothing to do with pain and suffering other than the pain and suffering the politico experiences if not reelected. That in essence the underlying argument is to keep the flow of spending at a level to preserve dependent political constituency and hence achieve reelection.