Saturday, July 18, 2009

Fannie Med Revisited

A few months ago we penned our review of a blogpost by Richard Scott on what he termed "Fannie Med". In Mr. Scott's post he drew parallels between the mortgage meltdown and health care reform.

A scant 3 months later we are caught up in a full court press debate over health care reform that seems to be moving forward in blitzkrieg fashion. Issues surrounding health care which have been a concern for some for at least 40 years have suddenly become a crisis.

For some reason, spending more than you take in is not a crisis but solving a "problem" that has existed for years is a crisis.

Go figure.

What would happen if Fannie Med became a reality? What if some of the lending practices of the last 10 years were applied to the health care crisis?

It is well known that anyone who wanted a mortgage could get one through what were referred to as "liar loans". These stated income, no documentation loans were offered to nearly anyone regardless of their ability to pay back the loan.

Proof of citizenship was not required, neither did you need to prove your income . . . or if you even had an income. You could apply for a loan with nothing more than the shirt on your back and get approved.

The good part (for the borrower at least) was you never had to worry about paying it back. If you missed your mortgage payment, no big deal. After a few months the lender foreclosed and you were out on the street.

What if the same criteria is used to solve the health care crisis?

Anyone can get health insurance regardless of citizenship or ability to pay for the coverage. Just like everyone needs a place to sleep at night, everyone needs health care.

So Fannie Med comes to the rescue and gives health insurance to everyone, regardless of their ability to pay and without regard to their medical conditions.

This grand scheme certainly has a nice ring to it. The wealthiest nation in the world, the one that once tried to give housing to anyone who wanted it will now give health insurance to anyone who asks.

But what if you can't pay your premiums, or for the health care that is not covered by insurance? What happens then?

But first consider this.

National unemployment is currently 9.7% and the foreclosure rate is "only" 4%. That means 1 out of 10 are unemployed and looking for work.

1 out of 25 have lost their homes to foreclosure but this number is rising quickly.

The federal government is on track to spend $1 trillion more than it takes in this fiscal year which is a record deficit. That means Congress is spending roughly $2.7 million more each day than they take in.

This can't continue.

But what happens if the government takes over health care and then realizes they can no longer afford to fund it? What if there are no bailout funds available for those who are having their health care paid for by the federal government?

Does Obamaman tell them, like he did Rick Wagoner, I'm sorry, but you are no longer on the health plan? Will Barney Frank chastise those who dared use the health plan like he did the employees of AIG who received compensation that was promised them? Will he then demand that they return the money they took from the taxpayer to pay for their health care?

Something to consider.
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