We Win, You Lose

It is wonderful news that America's enemy, Muammar Gaddafi, has been overthrown and killed.  He murdered hundreds of Americans, in the bombing of Pan Am 103 and other terrorist acts.

It is very unfortunate, and much to President Reagan's discredit, that we didn't overthrow Gaddafi in the 1980s when he was engaged in multiple attacks on Americans.  Reagan's bombing of Libya in 1986, in retaliation for Gaddafi's terrorist attack at a Berlin disco that killed American servicemen, didn't go far enough.  By hurting Gaddafi, but not killing him or ending his regime, it allowed Gaddafi to bide his time to strike back at America - which he did with the Pan Am 103 bombing in December 1988 that killed 270 people, most of whom were Americans returning home for Christmas.

For those who questioned America's national interest in removing Gaddafi, it is this:  an enemy of ours who kills Americans must suffer the ultimate consequence - so that others are deterred in the first place from attacking Americans in the future.

Tragically, much of our foreign policy does not allow us to achieve this deterrence, willing to sweep attacks on America under the rug out of fear of escalating a situation into an international crisis.

It is hard to argue with success, and Barack Obama deserves credit for playing a role in Gaddafi's demise. But Obama was willing to let the Libyan rebels go to the brink of annihilation before being dragged into intervening, and by waiting so long it turned an easier task into a much harder one.

Moreover, it raises profound concerns over how often, and to what degree, will Obama take our national security to the edge of success or failure again - such as in dealing with Iran's nuclear weapons program.

Miscalculating the point of no return in overthrowing Gaddafi is one thing; doing so regarding the destruction of Iran's nuclear program would be catastrophic for America.

Unintended but Predictable Consequences

Obama and the Democrats are shocked and furious that Bank of America wants to charge customers a monthly fee for using a debit card, now that the Dodd-Frank financial services legislation reduced the fees retailers pay to banks for debit cards.

So now bank customers can pay for debit card usage directly when retailers did before. While retailers in principle should lower prices to reflect lower costs, that may not happen.

This is a terrible deal for consumers, all due to the predictable consequences of Dodd-Frank.

Was increasing consumer costs so Wal-Mart could have lower costs the change voters had in mind when they voted for Obama? No, but it is what they've gotten.

Two Down

Mitt Romney and Newt Gingrich have both recently demonstrated why they are unfit to be the Republican presidential nominee in 2012.

Romney defended legislation he supported when governor of Massachusetts that vastly expanded the state's role in healthcare in Massachusetts, including mandating that state residents have health insurance and creating panels to oversee healthcare. If it sounds like ObamaCare, that's because it shares many similarities. Romney says he doesn't support ObamaCare, since it should be up to each state to impose Massachusetts-style controls. As if the loss of freedom is OK if a state does it but terrible if the federal government does.

Gingrich decided to lambast Paul Ryan's thoughtful plan to allow Medicare to survive its pending bankruptcy with reforms as "right wing social engineering". Ryan proposed allowing seniors who are currently under the age of 55 to buy insurance with a $15,000 subsidy by the government, giving seniors the ability to have a higher quality and/or more cost effective insurance then they currently have. Instead, Gingrich thinks the individual mandate to purchase health insurance is a good thing.

Gingrich's comments are already being used by Democrats to attack Republicans.

Romney and Gingrich have greatly undermined Republican opposition to the Democrats' efforts socialize healthcare. Since ObamaCare is such a fundamental issue in the 2012 campaign, Republicans have to look elsewhere for their nominee.

The Syrian Treatment

An American diplomat was recently hooded, roughed up, and detained by Syrian security agents.

In a different era, such behavior would be considered an act of war and America would respond accordingly. But in such a world, the prospect of America's response would have deterred Syria from engaging in this thuggish behavior to begin with.

Gaia Isn't Happy

In many schools, Earth Day means students will be inundated with the importance of environment. It can often take on a religious-like devotion to the cause.

But you never hear on Earth Day the full reality of humanity's relationship with nature, such as the devastating tornadoes that recently killed hundreds in the South, the earthquake and tsunami that killed over 14,000 people in Japan, and the hurricane that killed over 300,000 people in Haiti. Or why the 2004 tsunami in less industrialized Indonesia killed over 200,000 people, while in heavily industrialized Japan, the death toll was over 90% lower.

We need an Industrialization Day to celebrate the achievements of the industrial revolution, which so dramatically improved the material terms of the human condition. Your life may depend on it.

We Win, They Lose

One of my first thoughts of hearing the wonderful news that Osama Bin Laden was killed by American special forces in a spectacular raid into Pakistan was a comment by Ronald Reagan. Reagan was asked his vision of how the Cold War with the Soviet Union would end, and Reagan replied, "We win, they lose."

While Bid Laden's death is not synonymous with victory in the war on terrorism, it certainly is an important piece: America lives and thrives, while one of our leading enemies is dead. That is the lesson we want all of America's enemies to fear, so as to prevent them from being our enemies in the first place.

Another thought that quickly came to mind was the contrast in the success of this mission with the abysmal failure of the 1980 effort to rescue the American hostages held by Iran. 30 years of an American military build up led by Ronald Reagan, which provided the capacity and confidence to gain operational experience from successful war fighting and special operations activities, have honed our military's skills today to a degree that dwarfs the capabilities of the U.S. military in 1980.

Lastly, the extraordinary skill and bravery of America's warriors is remarkable, and for which we should be very grateful. Without men such as these, we could not enjoy the quality of life we take for granted in America.

Real Healthcare Reform

Imagine there was a healthcare innovation that resulted in a 14% decrease in costs in the first year of its implementation while preserving patient choice (unlike socialist healthcare policies in Canada and in Europe that achieve lower costs through government controls, limits, and rationing of healthcare spending).

Given the intense public debate over healthcare spending, you would think this was a major news event, and that healthcare reformers would be excited to discuss this remarkable result.

Well, there is such an innovation. A few weeks ago, the Rand Corporation published a study of high deductible health insurance plans, which showed that healthcare spending by first year members was 14% lower than members in traditional health insurance plans.

If such a result could be obtained across all healthcare spending in the United States, the savings in 2010 would have been over $350 billion. Federal and state budget deficits would be reduced significantly as Medicare and Medicaid spending decreased. And all based on individual choices rather than government fiat.

How can this be?

High deductible insurance plans increase the incentives for consumers to be prudent in spending money on healthcare, since the consumer has greater out-of-pocket costs before health insurance kicks in. But the greater out-of-pocket costs doesn't mean the consumer loses out relative to traditional health plans, since these plans can be combined with a health savings account (HSA), where an employer makes a contribution to an account which pays for out-of-pocket healthcare spending, and amounts which aren't spent are kept by the employee.

As an example, imagine a traditional health plan costs the employer and employee $18,000 in premiums and has no deductible (the $0 deductible is not the norm today, but makes for an easier comparison - the point remains valid with more typical deductibles of $500 or $1,000).

Let's say a high deductible plan, with a $10,000 deductible, costs $8,000 - and the employer contributes $10,000 to a HSA to pay out-of-pocket costs. And let's also assume that the two insurance plans have the same co-pay for amounts above the deductible.

What's happened here is that the the $18,000 premium for the traditional health insurance plan has been split into two components in a high deductible plan combined with an HSA: the same $18,000 now funds the HSA to pay for out-of-pocket costs and pays the insurance premium to cover healthcare spending above the deductible.

If the employee has health costs greater than $10,000, the employee's net cost is the same for the two plans. But for health costs less than $10,000, the employee comes out ahead with the high deductible plan, since he can keep the unspent money in the HSA. And since the employee can keep the unspent money, he has an incentive to be prudent in spending money on healthcare if his spending for the year turns out to be below the deductible amount.

This is a long of saying that incentives matter, which is one of the truisms of economic life. People respond to incentives, and traditional employer-provided health insurance, Medicare, and Medicaid have little or no incentives for the consumer to incur less healthcare costs since a third party is paying almost all of the incremental costs.

The Rand study also showed that consumers in high deductible plans used fewer preventive services - even though by law high deductible plans have no deductible on preventive treatments like vaccines. Such consumers presumably didn't know that the cost for preventive treatments wouldn't come out of their pocket; this issue can be rectified with efforts to promote awareness of their new plans terms.

It is important to point out that Democrats have fought the introduction, and then expansion, of HSAs. Republicans for years tried to get HSAs into law, which the Democrats opposed.

Since Rand's study is entirely predictable, based on the premise that people respond to incentives, why would the Democrats oppose HSAs and the cost savings they would bring? They did so because HSAs would be effective in reducing health care costs through individual choice and market mechanisms - instead, the Democrats prefer to promote the idea there is a healthcare crisis which can only be solved by increasing government's role in healthcare, such as ObamaCare.