The statement “Fiscal Cliff” has become part of our discussions and news from the media as the deadline approaches. Our debating politicians continue to battle with no compromise from either side. Why? Because it is obvious that the White House feels strongly about its position, Obama does not have to compromise any tax cuts, but only proposes more spending. Hopefully, most members of Congress understand that their constituents are not going to be pleased as they continue to suffer from the depressed economy and possible recession.
Here in California the taxpayers understand and are concerned about the deteriorating economy and recession problems that continue to rise. Two of the main problems that contribute to California’s growing economic problems are: 1) 2012 report last summer of our legislators not addressing government workers’ pensions being underfunded, growing, and not being addressed by unions and legislators. The report stated and quoted figures from two counties, Ventura and Kern, which, respectively, had 84 percent and 77 percent of government employees who are retired and making more money than when they were working! 2) A report posted the first of December, 2012 from the DOL noted that one-third of all welfare recipients live in California.
Another growing problem for the fiscal cliff is the growing cost of healthcare caused by the rules and regulations of Obamacare. When signed into law in March, 2008, and implementing rules beginning in June, 2008, the cost for the largest health insurer in the state – Anthem Blue Cross – to comply with the law was estimated to be over $100 million. This was for the first year! Of course by law, these costs are passed on to the insureds. Obamacare is proving to be a headache for agents and brokers, as the law has created more work and regulations to comply, and more costs to the consumer. If you are on Medicare, you have experienced an increase of Part B costs of 400 percent in five years, a reduction of benefits, and the increasing costs of supplemental coverage.
If our government leadership had asked for the experts in the healthcare field, providers and insurers how to correct the rising costs of healthcare, it would have been evaluated that three items needed to be addressed to reduce costs and stabilize and improve healthcare for Americans. The three items I for the government to better serve our needs are:
The government should help in controlling fraud by providers and insureds.
Work with doctors to lower the cost of their mal-practice insurance. Keep doctors responsible for their action, but create a reasonable cost insurance program. The average cost of insurance for many doctors is between 30-40 percent of their gross income.
Work with Pharmaceutical Companies to lower the cost of drugs. A recent report noted that the cost of drug companies to get approval of a drug through the FDA can be up to $80 million. Of course, this cost must be passed on to the consumer. A report about 10 years ago stated that drugs were about one-third of all medical costs!
If these three items were addressed by our esteemed leaders, I believe healthcare costs could have been lowered by 30-50 percent, depending on how efficient the initiated government programs worked! But then, our leaders didn’t ask the experts in the medical and insurance fields for advice or direction. They, in their infinite wisdom, acted on their own political and personal agendas. And we, the taxpayers, are expected to pay these costs. In closing, let me ask you this question: why are our employees (all government employees from the President, Congress, state, and municipalities) not required to be covered by the same plans as we the taxpayers, since we pay for all their Cadillac plans?
Let us not be so busy working to feed our families, educate our children, support our businesses that create the economy, and pay our taxes that we don’t see that the horse has gotten out of the barn. It appears that the tail is wagging the dog. Don’t you think it’s time to go back to the principles that our Founding Fathers created for our Country?
Jim Lentini, CLU, ChFC, IAR is President of Lentini Insurance & Investments, Inc. Since 1964, LII has served SCV in helping others plan for tomorrow in insurance & retirement planning.