Robbing Peter to Pay Paul, Once Again

Get ready for a nuclear version of robbing Peter to pay Paul.  This story in today's Times details the effort to blame, and punish, the victims.  (By the bye, have a read of the story on the Commission, also in today's Times, which lays the blame just about exactly as this endeavor.)

Let's look at this action, from the point of view of macroeconomics.  Who wins, who loses?  The winners, not surprisingly, will be the highest earners in the states, who would otherwise have to pony up a few dollars more in taxes.  They've been paying alarmingly lower taxes each year, overall, as the last three decades have passed.  The rich have gotten richer thanks to the Right Wingnuts, and will get richer.

The losers, directly, will be those worthless poor people who don't deserve to keep living.  Or as Alan Grayson put it: "die quickly".  Why the so called Liberal media hung him up by his gonads is a puzzle.  Oh, wait, they ain't no Liberal Media, now is there, because what Grayson said is dead on true.

But there will be other losers, the economy of the states that go through with this.  Fact Number One:  the single largest growth industry in the country is health care, in all of its guises.  So, by cutting off their noses, these Stupid (mostly Republican, and therefore dedicated to making life easy for the 1%-ers) Governors will end up spiting their faces; slashing a substantial part of their tax base.  They will also put a substantial portion of the lower-middle class out of work.  Health care is mostly not about doctors and surgeons, it's mostly about nurses, nurses aides, orderlies, and pharma.  Big Pharma is just stupid enough to be in favor of this tack.  They will rue the day.

What the Right Wingnuts don't get is that doing this will inevitably, and quickly, raise the cost of health care for those who still have some form of health insurance.  Yup.  Basically, by reducing the number of "buyers", you raise the unit cost for the remaining "buyers", especially for capital intensive activities.

Here's an illustrative example; I'll make up some numbers along the way for emphasis.  The Right Wingnut governor of South Shitkicker imposes a 40% cut in Medicaid, across the board.  Before this action, there were 10 MRI centers in South Shitkicker, doing 100 scans in each center each month.  The billed cost was $100/scan.  Each MRI center had revenue of $10,000/month, and were "profitable".  Of those 100 scans, 25 were Medicaid.  So, now the centers have revenue of $7,500.  They no like dat.  They need the $10,000 to cover the mortgage, the tech who does the scans, and the note on the scanner (they go for at least $1,000,000).  What to do, what to do??  Raise the price of scans, and add a bit, just in case.  So, now the centers charge $200/scan.  The insurance companies decide they don't want to reduce their profits, so they say "No".  The remaining covered now get to pay twice as much, or more.  Ain't gummint spending just wasted money?

The Right Wingnuts yap about "wasting" GDP on health care, but are fine and dandy with enabling the financial services sector to siphon off billions.  And now they're doing their best to scuttle what little reform has been passed.  Financial services (banking, as it's known to civilians) just moves money around from one hand in one pocket to another hand in another pocket.  No value is created through this exercise.  None.  Those billions "earned" by banksters and their bank corporations aren't actually earned, in the same way that a new factory or machine tool earns through providing extra output.  The only way that the banksters get their billions is to skim it off the top (or bottom, depending on your view of the charade).

Zealots always end up dead.  They key is to avoid being collateral damage.  In this case, the damage will be 1937 all over again.  Obambi clearly has drunk the Flavor Aid, too.  I'm not surprised by that, given how quickly he spun around after inauguration (flashes of "The Exorcist" come to mind).

P.S.  The Obambi epithet just popped into my skull, but I decided I go look and see whether it's original; two years in, doesn't seem likely.  It appears that Maureen Dowd gets credit.  Company I'd sure want to keep.