Charity or Extortion?

I'll be eating a bit of crow on this post.  Maybe.  In an earlier post I cited Catholic Charities as an example of the threat to religious liberty posed by redefining marriage to include same sex couples.  In March of 2006 Catholic Charities of Boston got out of the adoption business they had been in since 1903.  State anti-discrimination laws required them to provide adoption services to gay couples that were legally married.  They chose to stick to their religious principles rather than provide adoption services to gays.  When I first heard about this it seemed like a clear cut case of religious discrimination:  a privately funded adoption agency was being forced to compromise their religious position.  Well, it turns out that is not quite the whole story.  A Washington Post article dated Dec. 18th 2009 (link to article here) discusses a similar standoff ensuing in Washington D.C.  The mayor of Washington D.C. just made gay marriage legal in D.C.  So now Catholic Charities is in the same dilemma:  provide benefits to same sex couples or get out of the business.  What this article makes clear, however, is that "city-church contracts" are threatened if Catholic Charities doesn't comply.  Wait a minute, I thought they were a Charity.  You mean to tell me they get their funding from the city??  I did a bit of research and found the Annual Report for Catholic Charities in D.C. for 2008 (see report here).  It turns out they get 72.24% of their funding from 'grants and government contracts'.

That changes things in my mind.  If your so called 'charity' is actually a government contractor 3/4 of the time then of course you have to comply with whatever terms the government sets if you want to keep the funds flowing.  This issue highlights the problem with government run 'charity'.  How does the government get its charitable funds?  Through extortion.  Does that sound too harsh?  Think about it:  Government gets the funds through taxes.  You pay those taxes or you go to jail.  Does that sound like charity to you?  I thought a charity operated through funds that people willingly donated because of the warm fuzzies they got inside.

This story actually eases my mind about certain threats to religious liberty posed by gay marriage.  I'm LDS so I was concerned that these anti-discrimination laws could be used to put LDS Social Services out of the adoption business as well.  The difference is that LDS social services actually operates using donated funds.  Its actually a charity.  So maybe we're safe.  But just maybe.

There is plenty of precedence for the state violating private property rights when it comes to anti- discrimination laws.  Just look at the racial discrimination laws.  These laws apply to private business owners as well as government agencies.  I believe that private property is so sacred that people should have the right to discriminate against whoever they want for whatever reason if they own the property.  We may think a particular restaurant owner is ridiculous for not allowing a particular race in his restaurant, but its HIS RESTAURANT!  And if the general public finds his stance vile they will stop going to his restaurant.  These things have a way of sorting themselves out in the marketplace.  Once we give the government the power to prohibit discrimination for reasons most of us agree with, they may very well use that power in ways we don't all agree with in the future.

And no post of mine would be complete without a morally charged appeal:  If we want the government out of their so-called 'charity' business, we've gotta start actually donating money to charities.  Once our charitable institutions are healthy, demand for government 'charity' will decline.  An impossible notion?  Maybe, but its the only real solution.

Dropping the Bomb on Health Care - Peter Schiff's take

I really haven't even paid attention to the health care debate. I'm sure I wouldn't be in favor of whatever it is they are proposing and I don't need the added stress in my life worrying about it. I tend to view government involvement with the healthcare industry as something akin to a couple involved in an adulterous relationship trying to make it 'work'. A couple engaged in such a relationship might be able to manage for a while by hiding from spouses, sneaking out at the right times, erasing emails and the like. There are always little tricks and maneuvers to make the relationship last a bit longer than it should.  But ultimately it is an unholy union that was doomed before it even got started.

I read a post today by Peter Schiff entitled "Dropping the Bomb on Healthcare" (link to post: here). Mr. Schiff is a libertarian minded financial consultant who gained youtube fame by calling the housing bubble on many of the financial networks as early as 2005 (link to YouTube clip here) He provides a very insightful analysis of the looming consequences of the healthcare bill that just made its way through the Senate.  Since I haven't read the bill I'm trusting that the parts he quotes from the bill are accurate. Here's the meat of his posting:

The bill's centerpiece is a clause prohibiting insurers from denying coverage based on a pre-existing medical condition. However noble and marketable an idea, this proscription removes the very basis upon which any insurance model operates profitably.

A system of insurance requires that premiums be collected from a pool of low-risk people so that funds are available in case a high-risk event befalls a particular person. In that way, premiums can be low and coverage can be widely available, even if the benefits offered are hypothetically unlimited.

For example, homeowners buy fire insurance even though their houses are very unlikely to burn down. Recognizing that a fire could wipe them out financially, most homeowners endure the cost of coverage even if they never expect to collect. The same model applies to health insurance in a free market.

However, the health care bill removes the need for healthy individuals to carry insurance. Knowing that they could always find coverage if it were eventually needed, people would simply forgo paying expensive premiums while they are healthy, and then sign on when they need it. But insurance companies cannot survive if all of their policyholders are filing claims!

Correctly anticipating this incentive, the Senate bill imposes an annual fine which gradually escalates to $750 for those who fail to buy coverage. So what? I would gladly pay $750 in order to avoid the $8,000 per year I pay now for personal health insurance. Currently, I'm relatively healthy for a 46 year old and I don't anticipate making a big claim. But if I do, under the new rules I can always get 'insurance' after the fact. Heck, if I can stay healthy for the next couple of decades, I'll save a fortune. Think about how much easier the decision would be if I were 20 years younger! Since most people are capable of figuring this out, the entire insurance industry would collapse under such a system.

There can be no question that $750 annual maximum penalty is a mere placeholder. It is the camel's nose under the tent. When the non-discrimination provision kicks in, the only way these companies could remain solvent would be for Congress to raise the fine to the point where the penalty is greater than the gain of skipping coverage.

For me, that would have to be roughly $8,000 per year. Introducing such a fine right now would have surely killed the bill. So, the wily wonks in Washington have chosen to move slower, knowing that once the first step is taken, the second becomes inevitable.

However, there is another, more devious possibility. Perhaps our elected officials actually intend to bite the hands that feed them. They could double-cross insurance companies by not raising the fine in five years, thereby forcing the industry into bankruptcy as millions of healthy people opt-out. During the ensuing 'insurance crisis,' our courageous leaders could ride to the rescue with a nationalized, single-payer system.

I think Peter just talked me into canceling my insurance if this bill goes through! Although I agree with Peter's analysis, I imagine I am less sanguine about the prospects of a market solution to our health care woes than he is. People do need and deserve health care. Part of the reason the government option is even on the table is that the American people have stopped building the charitable institutions that used to fill this void.  It could be argued that the reason people have stopped supporting the charitable institutions is because government has taken over, making people apathetic.  I think its probably a combination: Government intrusion tends to go hand in hand with our moral decline.