By John Reizner |
A member of the Obama team said recently on a major financial television network that the savings in the administration's budget are coming from changes in our healthcare system, and yes, from tax increases. I guess in this new world, federal spending cuts have morphed into tax increases!
Changing the nature of our healthcare system, then, is the Obama administration's real key to actual cuts in the federal budget. And that may mean deep cuts in physician and provider reimbursements, refusal of some physicians or providers to accept such reduced payments (unless mandated by law), and the potential for the rationing of care.
Rationing may be the cost of greater access for all Americans to adequate healthcare (though you won't hear Obama mentioning the "R" word). My advice: get a cold or a toothache - but whatever you do - do not get a serious illness! Waiting lists for life saving operations could occur here as they have in Canada's medical system. The demand on resources simply may be too much for our system to handle.
In his Presidential campaign, Obama pledged that if you own private insurance and wish to keep it, nothing would change, except that your premium would drop by approximately $2,500. Your relationship with your physicians would not change.
I do not know if that promise will be kept. Mandates for universal care placed on the system may make it impossible for the existing doctor/patient relationship to remain the same. An influx of new patients and lower reimbursements may strain the system. Will the Obama administration mandate how all patients should be treated if the goal is equal treatment for disease? And there is no guarantee whether private insurance will be maintained in the long run.
Personally, I have no sympathy for the health insurance companies. Many pay only when beaten over the head with the truth of a justified claim. In my opinion, if the companies can get away with avoiding reimbursement, they will probably try to do so. I have my own stories to tell about that.
Yesterday, I heard an Obama sound bite where the President stated that his administration has passed tax cuts. When the Bush tax cuts expire, Obama is apparently willing to pay more taxes himself. On tax day, it was announced that the Presidential family's 2008 income was $2.6 million, and they paid about a third of that in taxes. If I had that kind of income on a regular basis, I would not mind paying more too in a couple years when the Bush tax cuts expire!
Successful small business owners who are the backbone of job creation in this country may be squeezed by tax increases, perhaps not eliminated, but conceivably may not hire extra workers or expand their businesses. This would not help ease the current economic crisis we face.
It may presently be unfashionable (or even politically incorrect) for certain citizens to have a surplus of money. Many Americans are hurting, and naturally many turn to the government for help. But I do not think the government has all the solutions. Government should be cutting back, but it is not. It is expanding. It is spending.
There is a "glimmer of hope," to use President Obama's words, in some areas of the housing market, in spite of increasing foreclosures. Eventually the market will clear, but it will take time. The stock market may enter another long term bull market, but perhaps not for many years.
The best financial strategy in this environment may be: to refinance your mortgage if possible with a low fixed rate, to reduce debt if you have the means to do so, to maintain moderate exposure in the stock market, to consider owning physical gold, and to protect yourself against the potential of a falling dollar.