Healthcare: Disinflation or Deflation?

First of all, on the political side, Democrats argue that people don't know what is in the healthcare bill, and when they find out, it will have their consent (an apt description of tyranny in the republican form of governance).

On the economic side, the beauty of the healthcare bill assumes people will forget what is wrong with buying insurance in the free marketplace. Maybe we will forget buying requires adequate income, and if costs are going up (inflation) and your income is going down (deflation), your income, by definition, is verifiably inadequate. The problem, then, rather than not having adequate income, is not having insurance, and the solution is to provide it without adequate income (without self-determination).

There are nothing but speculative promises from Democrats and Republicans (the party) to increase income and reduces costs. The Bush tax cuts, for example, will not be voted until after the mid-terms, which will significantly determine the income side and the ability to pay for healthcare costs, for example.

Like Warren Buffet was recently quoted as saying, "if you need to pay for something, you have to go where the money is." So Republicans "pledge" to extend all the tax cuts of the Bush era (of the Great Recession) to provide the income (the demand) the economy has been deprived.

The vast majority of Americans have to wonder how the more-immediate conservative element of "the party" can successfully sell an obviously failed economic policy. The detriment is so extensive, and still growing, Republicans cannot reasonably expect the "Pledge" to be a credible expression of a populist political program. There must be some other expected benefit, or there is really nothing to lose by clinging to a failed policy platform if the popular vote is fully expected to cycle back to it, and choose the detriment.

It is absurd, of course, but voters are binomially determined to the detriment. All voters immediately have is a negative vote that applies a false consent to a risk (the Great Recession) that is all-too-well known. Just being aware of the probable detriment does not infer consent if the means are fixed to prevent it. Detecting the detriments of tyranny does not make it any less tyrannical.

To reduce the political dissonance (the extreme absurdity), Republicans will use the new healthcare legislation as a distraction. A controversial healthcare reform bill made to be so large and complicated that it will require a master's degree to administer makes more sense in a binomial, electoral context.

The impending fight over healthcare reform will be the distraction needed to continue applying the deflationary risk, which supports the double-dip hypothesis.

Healthcare reform itself provides plenty of deflationary support despite its being touted as a disinflationary, price-reduction program. (Remember that disinflation is price reduction that increases income and demand, while deflation reduces income and demand.) Combined with the binomial tendency to support the macro-deflationary risk, demand will be too reduced to support the equity valuations now being anticipated to rally with or without QE-2.

While support will be provided for healthcare-sector incomes to supply the demand, without reducing the barriers to entry, the supply will not be added. The disinflationary effect is dependant on the ability to enter the marketplace, but according to popular wisdom there is more efficiency in consolidation, which will reduce the price.

Since barriers to entry and rising prices are attributes of consolidation (along with unemployment and demand reduction), the detriment, instead of being reduced, is reorganized and re-extended. Deconsolidation is required to produce a disinflationary effect, reducing prices without reducing demand. The price support, then, provided healthcare-sector incomes to add supply will, instead, have a deflationary effect, reducing discretionary income, supporting the recessionary trend.

There is not much disinflationary benefit to passing tax incentives for creating small businesses, for example, that will be crushed under the weight of consolidated entities.

Without a highly deliberate deconsolidation of the healthcare market, the distribution is decidedly trickle down. It is a verifiable means of supporting the general detriment of inflation-deflation risk modeling that has most recently resulted in the Great Recession.

Since repealing the healthcare bill will be a generally disruptive action, it will be important not to throw out the good with the bad. Key to a commonwealth representation, however, are measures added to deconsolidate the marketplace, yielding a reform that provides a disinflationary benefit by denying a deflationary accumulation of income that will not add supply.

When demand exceeds supply--inflation; when the inflated income is accumulated and not reinvested in adding supply--deflation; but when supply is added with a distribution from the accumulation rather than borrowed in a crisis-recovery mode--disinflation occurs. Supply is added from the accumulated capital in a sustainable, non-crisis proportion; not by reducing demand, like we are doing now, in a deflationary, crisis-of-overproduction (gamma risk) proportion, condemning the commonwealth to an unnecessary and foolish process of deliberate deprivation.