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Clunker Lessons for Healthcare

Beware the government’s next big idea. This should be our motto after watching how the the $3 billion dollar Cash for Clunkers fiasco has panned out:

But why did taxpayers, having already bailed out GM and Chrysler once, have to do so again to the tune of $3 billion through the $3,500-$4,500 C4C incentives? This taxpayer money simply enabled the dealers to avoid having to offer discounts off sticker prices and to extract higher profit margins than they would have otherwise obtained on the qualifying new cars. The program proved so popular that inventories of the qualifying cars soon dwindled, further boosting the dealers’ negotiating leverage and unit profit margin.

Did C4C sell more cars? Maybe in the short term but, in reality, the promotion stole largely from future sales with taxpayers subsidizing over half a million new car sales that would have occurred anyway.

Did the consumers win in this game? No, we did not. Was this a good deal for the American taxpayer? No, it was not. So, who are the beneficiaries of this latest round of bailouts? The same big businesses who have already gone to Congress with one hand out and the other in our back pocket. Of course, the taxpayer ripoff is only half of the story. I mentioned that consumers didn’t win either in the Cash for Clunkers debacle:

Like hundreds of thousands of folks this summer, Anna Causey knew a deal when she saw it. Enticed by the rebates offered under the cash for clunkers program, the Summerville, S.C., resident ran her 1986 Buick Century down to a local dealer last month, scrapped it for a 2009 Dodge Ram pickup, and scooped up a $3,500 government discount for the trouble.

A month later, it doesn’t seem like such a great bargain.

Causey’s trade, it turns out, didn’t qualify for a rebate based on the cash-for-clunkers’ mileage requirements. Though she’d signed all the papers, swapped the tags and updated her insurance policy, Causey was called back to the dealership shortly afterward and presented with two options: either accept a new contract — one that would grant $1,000 for the old Buick and require that she pay back the $2,500 difference — or give up the truck. Thinking a deal’s a deal, Causey and her husband chose a third route: they stormed out, and hired a lawyer instead.

Now, consider this was a rather straightforward program that went through billions in weeks. You have an old car with high gas mileage, and you bring it in and get $4,500 off a new car. Should have been simple, but instead, the execution has been a total disaster for everyone involved. Yet, there are still some of you out there that want to put these same people in charge of administering your healthcare program?

I don’t get it.