The American Dilemma and How We Can Fix It

CRONY ACCOUNTING

On April Fools Day amid blares, whistles, balloons and dancing buffoons our government announced that they had (due to a last minute surge in enthusiasm and interest) attained their goal of enrolling 7.1 million people in Obamacare.  Naturally, Chief Head Games Player Obama did a lap victory dance in the Rose Garden to make the announcement.

Frankly, I have always been suspect of government accounting.  There is a reason for that.  In my first job after college, I worked for the State of Illinois for two years and was one of the people who helped develop some of those numbers.  And I saw how they were crafted together.

My division of the Illinois Department of Revenue was responsible for determining the valuations for personal and real property which would be the basis for assessing the amount of property taxes that the railroads who ran through the state would pay to the various local taxing districts and to the state itself.  We had a formula for making these assessments which was fair and which had been used for years.  Not only had it been in use for a long time, it had been challenged in court by several of the railroads and upheld as a valid way of assessing their property by the Illinois Supreme Court.

As it happened, the man who was the head of my section was the retired general counsel for one of the smaller Illinois railroads.  In that position, one of his responsibilities was trying to reduce the assessments that the state levied against his employer.  Now he was sitting on the other side of the desk.  Naturally, over the years he worked for the railroad industry, he had many friends and associates at other railroads who had the same responsibility.

One of our largest railroads had a tradition of coming to our office a few days after we had compiled their assessment and taking my boss to lunch to “discuss” it.  Traditionally, they enjoyed this repast at one of Chicago’s nicer businessman’s lunch facilities, The Union League Club.  On his return my boss always seemed quite contented and a bit quiet – perhaps due to the Old Fashioneds which accompanied the meal.

Several days after one of these lunches, I had to go into that railroad’s file to make a minor change in the valuation of their property in one county for which they had filed an amendment.  As I pulled the file, I happened to notice that the total valuation which we had assessed had been reduced by a little over fifteen percent and that new valuation was certified by nothing more than my boss’ initials.

After spending hours trying to compute the assessment correctly and fairly, I was offended that all this work could have been wiped out with the stroke of a pen.  I was a little steamed and asked to see my boss to discuss this with him.  He always made himself available to me and we sat down to chat about the change.

During that conversation he told  me that the same Illinois Supreme Court decision which validated our formula for arriving at assessments also said, “Notwithstanding any formula, it remains within the purview of the Chief Assessor of Common Carrier Assessment to adjust, change or re-compute any assessment based on his knowledge and judgment.  His final determination shall be the final determination of any assessments for those railroads and private car lines who are required to report to his department.”

In other words, two Old Fashioneds and a nice lunch had far more value in determining railroad assessments than the hundreds of hours that my colleagues and I had put into following our formula.  While I followed the formula precisely during my second and final year with the department, I must say that I did so without the enthusiasm that I exhibited the previous year since I realized that the final number was going to be adjusted by my boss.  And I began thinking about starting my own business, which soon followed after my second year of employment by the state.

So what does all that have to do with yesterday’s announcement of Obamacare’s enrollment success?  Just about everything.  Simply put, I have always had some degree of suspicion when I view numbers that are generated by the government, based in part, on my personal experience.  The way in which this administration either throws around or withholds numbers seems more determined by whether they will bring political advantage or disability than providing the facts.  That certainly has been the case for Obamacare.

Since there is no oversight – no independent person or group who oversees the actual enrollment numbers – we will probably only know the truth after the fact.  But even if we were to take the generous position that the administration has accurately reported the number of enrollees, we should view that in light of the primary goal of the law to see how well it is working.

The key focus of Obamacare was to insure all Americans.  The estimates of those who do not currently have insurance range between 30 – 50 million individuals.  We need to take into consideration that many of those being counted in that 7.1 million are people who annually renew their applications for Medicaid.  Then there are the 5.6 million whose plans were cancelled because of Obamacare and might have enrolled because they had to replace their former plans with which they were perfectly happy..

So what is the net effect of this total shakeup of our health care system?  To make any definitive statement would probably be rash because all we have to rely on is anecdotal evidence.  However, based on that evidence, it is reasonable to make the estimate that we now have about two million fewer uninsured people than before the enrollment period began last October.  That number might be generously high.

And what have we spent to achieve this accomplishment that the White House celebrated yesterday?  It has cost the Federal government $677 Million to develop its website.  That states which developed their own websites have probably spent a nearly equivalent amount.  And then we spent another $100 million at the federal level to promote this law and get people to sign up for it.  That’s about $1.5 Billion to enroll perhaps two million people.  In other words, we spent $7,500 per person to get them health insurance.

Now we have to hope they continue to pay the premiums and choose to keep it.  Soon they will be receiving their insurance booklets and, if they read them, will realize that they are subject to high deductibles and will, except in the event of a serious medical event, be self-funding the entire cost of their own insurance.  In other words, with the exception of complying with the law (and even that is now in question with yet another Obama administrative change), they would still be better off if they get a bad cold or strep throat to bypass their insurance plan and get treated at the Emergency Room – as is the case now.

While I do not have a background in medicine, if one of my friends with a brand -spanking new Obamacare plan phoned me, sufferring with a sore throat and asked me what to do for it, my advice would be simple.

Have two Old Fashioneds and call me in the morning.

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Comments on: "CRONY ACCOUNTING" (4)

  1. Good prescription, Doc. 🙂

    I always remember that Churchill once said in relations to all government statistics (I think he was actually talking about the census) that, one must remember that in the last analysis, it all comes down to the little man with the clipboard and the stubby pencil, who puts down whatever he damned well pleases. Rough quote obviously but close.

  2. Statistics come in three categories, true statistics, estimated numbers, and political statistics.

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