When Is It More Profitable To Be A Non-Profit?

Where do you think you get the most affordable hospital care?  In a non-profit hospital or a for-profit hospital?

You would think the non-profit facility would have significant cost advantages in that it is operating with an altruistic attitude.  It is also typically exempt from local property taxes and federal and state income taxes.  These are very significant advantages and you would think these would benefit the patient's pocketbook.  You would be wrong.

This link provides the average hospital costs per day for non-profit and profit hospitals by state.

Here are the average costs per day nationally for the most recent reported year of 2010.

Non-Profit                       Profit
  $2,025                           $1,629                             

Brett Joshpe recently wrote about the "Non-Profit Healthcare Myth". 

Steven Brill’s recent Time article, “Bitter Pill,” should refocus attention on non-profit hospitals, which have long deserved increased scrutiny. The exposure comes at an opportune time, as America is grappling both with a healthcare and budget crisis and Congress is discussing long-term budget measures that may include eliminating tax loopholes. If closing tax loopholes, from individual and business deductions to carried interest is all on the table, then the tax exempt status of certain non-profits, particularly hospitals, should be as well.

As Brill and others before him rightly point out, the “non-profit” designation that projects an air of selflessness, benevolence and charity, in many cases, is undeserved. When people hear “non-profit,” many naturally assume that money is not the primary motivation behind the institution.  In reality, however, non-profits, particularly in medicine, have become a huge business in America. Not that there is anything wrong with that, only that we should consider why taxpayers subsidize these entities and what we are getting for that subsidization in return.

In the case of non-profit hospitals, which comprise over 60 percent of the hospitals in America (for-profits and public tax-exempt hospitals make-up the remainder), the answer is not enough.

Joshpe asks the fundamental question that should be asked.  What is the public getting for the non-profit designation that has been given to these facilities?  Has something been lost compared to their original purpose?

Under the Internal Revenue Code (Section 501(c)(3)), non-profit hospitals are eligible for federal tax exemption if they fulfill a charitable purpose. These organizations are also typically exempt from property taxes, are able to accept tax-free donations, and are able to issue tax exempt bonds that lower their cost of capital. Prior to 1969, IRS regulations required that non-profit hospitals actually provide, to the extent of their financial capability, charitable care for those who could not afford medical services. But the IRS relaxed those requirements, and now hospitals need only promote the health of the community at large to meet their tax-free exemption obligations.

As a result, non-profit hospitals often inflict devastating financial pain on individuals that lack insurance or are under-insured. What is particularly troubling too is that these non-profit hospitals are providing virtually no price transparency to patients, one of the fundamental assumptions behind any free market.  Hospital chargemasters create bills seemingly out of thin air, after-the-fact, making the enormous invoices often sent to uninsured or under-insured patients and resulting in financial ruin even more sinister.

Meanwhile, many non-profit hospital executives make millions in salary annually. The non-profits have also embarked on an aggressive M&A spree that has consolidated supply, raising healthcare prices further, and making real consumer choice tougher. Overall, the average, non-profit hospital operates at a profit margin that is comparable to for-profits while receiving billions of dollars in tax subsidies per year.  HCA, one of the largest for-profit hospital operators, alone paid nearly $900 million in income tax in 2012.

We often hear about evil for-profit enterprises.  This is a constant refrain in health insurance as we hear liberals argue that we need Medicare-for-all.  Or all insurance companies should be non-profits.  Everything would just be great if it were not for those blood-sucking, greedy for-profit health insurance companies.  However, looking at the numbers in the hospital world, costs are actually higher for non-profits than with the for-profit hospitals.  In case you hadn't noticed, hospital charges are also the largest component of healthcare spending in the United States.

Joshpe sees a big reason for the higher costs with non-profit hospitals is the lack of accountability.  They are not accountable to tax collectors, shareholders, and most particularly, patients (due to our third party payment system where it is rare that the bill is paid by the person receiving the treatment).

Another reason to reconsider the special status of certain hospitals is the odd paradox that greed may infect the non-profit healthcare model—at the expense of patients—more than the for-profit model.  That is because for-profit hospitals are at least accountable to somebody, namely tax collectors, and, more importantly, shareholders. Shareholders have an incentive to police executives who may otherwise loot an enterprise with high salaries and perks and engage in overly aggressive capital expenditures. While for-profit institutions are primarily concerned with the bottom line, as opposed to charity, they at least must be somewhat cognizant of how the public perceives their business practices.  Ostensibly, non-profits should be as well, but with no shareholders to report to, boards, and therefore executives, are less accountable.

One more example that the world often does not work the way it is supposed to work.  My experience is that when this is the case, the incentives are misaligned.  It seems to me that the tax-exempt status of non-profit hospitals needs to be looked at much closer to insure that they are serving the public good.  If they are not, they should not be given the significant benefits they are receiving.

One Shining Moment

Tonight is one of my favorite nights of the year.

Sure, I will enjoy watching Louisville and Michigan battle for the NCAA Div 1 basketball championship.  However, what I really enjoy is after the game when CBS puts together its annual rendition of "One Shining Moment".  This is the montage of some of the great images of this year's NCAA tournament set to the music of the great song, "One Shining Moment".

I recently came across this video and the story of how this great tradition came about.  It is probably not surprising that the inspiration had its roots with a pretty girl and the song came to national prominence due to an old friendship and a little bit of luck.

The song's composer is David Barrett who wrote it in 1986 and who also sang the original rendition of the song that was used on CBS from 1987 to 1993 and again from 2000 to 2002.  Luther Vandross, Teddy Pendergast and Jennifer Hudson have also done vocals of the song for the finale of the Final Four weekend over the years.  They still use the original sound tracks of the song that was recorded in a small studio in Ann Arbor, Michigan.

The song is great but it really is special due to the great editing done on the piece by the CBS Sports production staff.  It always concludes with images of that night's game.  It must be a sight to see the staff put the finishing touches on the video in the minutes after the game.


Here are several YouTube videos that provide some of that wonderful history of a number of shining moments.


2012 One Shining Moment sung by Luther Vandross



1999 sung by Teddy Pendergast.  My personal favorite because it was the year my beloved Miami RedHawks made it to the Sweet Sixteen. Miami and its star forward, Wally Szczerbiak, get a lot of coverage in that year's version of "One Shining Moment."  Look for Wally's big smile, Miami celebrating its big win against #6 ranked Utah to get to the Sweet Sixteen and Wally's dazzling spin move and dunk.



1987 sung by David Barrett.  The very first time the song aired and the start of a wonderful tradition.  This was the year that Indiana won with the great shot by Keith Smart at the end.  Watch closely and you can see Providence coach hugging his star player, Billy Donavon.  Who knew that both of them would make so much Final Four history?  Maybe even tonight, 27 years later.


I think Rick Pitino is a great coach but how can I not root for a coach named Beilein?(for those that don't follow basketball it is pronounced bee-line).  BeeLine will be behind John Beilein's Michigan Wolverines tonight but I will really be waiting to see "One Shining Moment"once again.

Thank you, David Barrett, Armen Keteyian, Doug Towey and a pretty waitress in East Lansing, Michigan that inspired it all.

This is David Barrett's website, www.oneshiningmoment.com

Here are the lyrics to the popular anthem:

The ball is tipped
and there you are
you're running for your life
you're a shooting star
And all the years
no one knows
just how hard you worked
but now it shows...
(in) ONE SHINING MOMENT, IT'S ALL ON THE LINE
ONE SHINING MOMENT, THERE FROZEN IN TIME
 
But time is short
and the road is long
in the blinking of an eye
ah that moment's gone
And when it's done
win or lose
you always did your best
cuz inside you knew...
(that) ONE SHINING MOMENT, YOU REACHED DEEP INSIDE
ONE SHINING MOMENT, YOU KNEW YOU WERE ALIVE
 
Feel the beat of your heart
feel the wind in your face
it's more than a contest
it's more than a race...

And when it's done
win or lose
you always did your best
cuz inside you knew...
(that) ONE SHINING MOMENT, YOU REACHED FOR THE SKY
ONE SHINING MOMENT, YOU KNEW
ONE SHINING MOMENT, YOU WERE WILLING TO TRY
ONE SHINING MOMENT....

Words & Music: David Barrett Hodges Song Supply/ASCAP

Fun and Glum Trivia

Three tidbits of trivia to amaze friends and family over the weekend or for idle cocktail party chatter.

Which NCAA Division 1 basketball roster this past season had the highest average height?

Syracuse University, which is in the Final Four, has the second tallest roster with an average height of 6-6.  However, the tallest roster was a surprise to me.  Princeton University's team not only towers over everyone else in height but most everyone else in brain power as well.

Credit: Princeton University

The Tigers average 6-6-3/4.  They only have one player under 6-2.  They actually could put five guys on the floor with the following heights-6-10, 6-11, 6-11, 6-11 and 7-1.

Baseball season opened up this week and do you realize that the total payroll of the Houston Astros at  $22.1 million is below what the New York Yankees will pay Alex Rodriquez ($29 million) alone?  The total Yankees payroll is $228 million.  That makes Houston's player payroll only 10% of the Yankees.  Now that is what I call income disparity!

$29 million

$22 Million

That is enough fun. It is time to get back to reality.  Yes, Barack Obama is still the President of the United States and things are not getting much better.  Remember how horrible we heard everything was with George W. Bush?  The terrible economy.  The poverty among children. The hatred for the United States in Muslim countries. All that we needed was a little hope and change with Barack Obama to fix things.  How has that worked out?

Do you realize that even if you doubled actual GDP growth under President Obama, it would still be the worst record of any President in the last 60 years.

This is an except from a column by Peter Ferrara in American Spectator.

Bush’s second term suffered the Great Recession for more than a full year, or more than 25% of Bush’s entire second term, while the recession covered only the first 5 months of Obama’s first term. Prior to Obama, Bush’s second term suffered the worst real GDP growth of any full Presidential term since the Depression, with an average of just 1.9%. But average annual real GDP growth during Obama’s entire first term was less than half as much at a pitiful 0.8%.

Indeed, not only was economic growth during Bush’s awful second term more than twice as high as during Obama’s entire first term. Even Jimmy Carter produced 4 times as much economic growth during his one term as Obama did during his entire first term. In fact, real GDP growth under Obama has been the worst of any President in the last 60 years, as observed by Jeffrey H. Anderson, a senior fellow at the Pacific Research Institute, in Investor’s Business Daily on January 13.

But it’s even worse than that. As Anderson further observes, Obama’s real GDP growth has actually been less than half as much as the worst of any President in the last 60 years. In other words, even if you doubled actual GDP growth under President Obama, it would still be the worst record of any President in the last 60 years!

Do you realize that there are now more people in poverty than at any time since the 1960's?

The U.S. Census Bureau puts the number of Americans in poverty at levels not seen since the mid-1960s when President Lyndon B. Johnson launched the federal government’s so-called War on Poverty. As President Barack Obama began his second term in January, nearly 50 million Americans — one in six — were living below the income line that defines poverty, according to the bureau. A family of four that earns less than $23,021 a year is listed as living in poverty. The bureau said 20 percent of the country’s children are poor.

Do you realize that the United States has less support today in most Middle Eastern countries than when George W. Bush had when he left office?

According to the latest survey by the Pew Research Center's Global Attitudes Project, confidence in Obama in Muslim countries dropped from 33% to 24% in his first term. Approval of Obama's policies declined even further, from 34% to 15%. And support for the United States in Egypt, Jordan, Lebanon and Pakistan is lower today than it was in 2008 in the closing year of George W. Bush's administration.

Only 19% of Egyptians have a favorable view of the United States, for Turkey it is 15% and in Jordan and Pakistan a mere 12% now have positive views about the country of which Barack Obama is President.

Here is the foreign aid that we provide each of these countries and their overall rank based on what we provide other countries.  It does seem ironic that Egypt, Pakistan and Jordan are all in the top 6 countries that receive our aid but the people really do not have a favorable opinion of us. 

Pakistan          $2.1    billion      #3     
Egypt              $1.6    billion      #5 
Jordan             $ .7     billion     #6
Turkey           * less than $5 million

That is enough to make me glum.  Have a great weekend.

Obamacare Is Still Dangerous For Democrats

We only have six months until the Obamacare health insurance exchanges are available for enrollments. Most of the provisions of what I call the "Unaffordable Care Act" go into full effect on January 1, 2014.

I think it will be very interesting to see this play out.

As an outside observer who knows a good deal about the health insurance marketplace, I would have serious concerns if I were the Obama administration and the Democrats.  This is one that can't be blamed on Bush, the right-wing Republicans or the Tea Party if it does not go well.  And there are many ways it could go wrong.

Credit: Reliapundit.com

There are three big areas where I think things could go very wrong for Obama and the Democrats.

• Exchange Chaos 
• Sticker Shock
• Economic Armageddon

Exchange Chaos

The first question I have is whether the health insurance exchanges will be ready and will function as intended?  I believe there is a good chance that the entire process could be chaotic and confusing for the public.

The fact is that the information technology challenge to establish the exchanges is considerable.  This challenge has become even more pronounced since so many states have decided to forego establishing their own exchange and have delegated that responsibility to the federal government.

Therefore, the federal government is tasked with creating on-line healthcare exchanges in over half of the states.  Those exchanges must be availalble online in less than six months and have interfaces built with the IRS, HHS, SSA, Medicare, Medicaid, Insurance companies and the like. They must be able to indentify the participant and be able to determine that individual's eligibility for coverage based on where they live as well as the amount of federal subsidy for the coverage.  It is a monumental task and if that system is not already being tested right now I don't see how it could operate smoothly.  See this Michael Barone column for a sense of what has to be done from an IT perspectivve.  Here is another Barone column that calls this an impossible endeavor based on comments from a 35-year IT industry veteran.

“Wow, what can go wrong here? Let me assess this based on my years of experience in this industry. The federal government is going to build 50 exchanges, using a data hub that doesn’t exist physically and in fact, the design hasn’t been solidified, and must be accessible to a variety of data processing technologies that range from archaic to old.

Each of the 50 states have different eligibility rules, and with a significant number of states opting out, the federal government now has to learn the intricacies of each state’s Medicaid eligibility models which then scale to different applicability rules for different members of a given family. The thousands of pages of bureaucratic rules that will drive requirements haven’t been completed yet, and those requirements are needed to drive design not only for the application programs, but for the entire processing architecture. The issue of network, processor, and storage performance has to be decided, modeled and tested.

In addition, an early draft of the online application that must be filled out to apply for health insurance in the state exchanges is 61 pages!   Does government ever do anything in a simple way?  The application form even asks the applicant if they want to register to vote!  After all, if you are a Democrat you need to make sure you can keep getting people to vote for what they think is free stuff. 

How much is all of this IT and other development work costing the federal government?  Who knows?  However, to give you idea, California alone has already received $909 million in federal grants to help it establish and open its individual state exchange.

So where’s all the money going? A big chunk is going to the infrastructure and information technology components—building out the website and database technology necessary to manage the law’s subsidies and facilitate enrollment in the exchange-based health plans. But a lot of it is just going to marketing and enrollment. As Laszewski notes, the state is launching a two-year, $250 million marketing campaign intended to get people to sign up for the exchange. The state is also paying 20,000 part-time "enrollers" $58 an application for each person they sign up. In contrast, California Blue Shield serves 3.5 million members with just 5,000 employees. 

If you think I am offbase on where this could be headed consider this report from The New York Times yesterday.  This tells me that there are big systems problems and this may not be the end of the story. 

Unable to meet tight deadlines in the new health care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees — a major selling point for the health care legislation.

Tight deadline?  It has been over three years since Obamacare was signed into law.  These small business healthcare exchanges were a fundamental rationale for the law and the main incentive for these businesses to support the law.  Should we expect other delays?

I thought this comment from Henry Chao, who is the deputy chief information officer for the Centers for Medicare and Medicaid-which is setting up the federal exchanges-was very telling. It tells me that chaos has a good chance of reigning come October.

We are under 200 days from open enrollment, and I'm pretty nervous. The time for debating about the size of text on the screen or the color or is it a world-class user experience, that's what we used to talk about two years ago. Let's just make sure it's not a third-world experience.

If Obamacare gets off to a rough start with the public due to chaos and confusion with the health exchanges this could signal deep problems for the program going forward.  It is hard to recover from poor first impressions, especially if media attention picks up on it.   A compliant Obama-friendly media is not likely to play up any problems, however, if they jump on the bandwagon if things go poorly it will be difficult to turn around the public's perception of the program.


Sticker Shock

The second big area for trouble with Obamacare is with potential sticker shock.  This could cause problems from two perspectives.  First, I believe that a substantial number of Obama/Democrat low-information voters believe that Obamacare is going to provide them free coverage.  What will be the effect when the reality sinks in that this is not the case?

Let's take the case of a 27-year female who makes $35,000 per year.  Under Obamacare she is required to purchase health insurance coverage that is estimated to cost $3,391 per year.  She would be eligible for a government subsidy of just $66.  She would also be responsible for up to $4,167 in additional out-of-pocket costs for the year.

How about a family of four making $85,000?  They would be required to purchase health isurance coverage that is estimated to cost $14,245.  They would be eligible for a government subsidy of $6,170 reducing their net cost to $8,075. They would also be responsible for up to $8,333 in additional out-of-pocket costs for the year.  However, if their annual income increased to $94,000, they would no longer be eligible for any subsidy.  In effect, $9,000 in additional income would cost the family $6,075 in subsidy not to mention the additional tax costs they would pay on that income.  So much for the incentive to work harder.

You can check out all sorts of Obamacare subsidy scenarios with this online tool that was developed by the Kaiser Family Foundation.

Of course, what is the penalty  tax if someone does not buy the required coverage?  For that young female the tax penalty would be the higher of 1% of her income or $95 in 2014 increasing to $325 in 2015.  What do you think she will do?  Pay $350 or pay $3,325 ($3,391- $66 subsidy)?  Of course, if she gets sick she will want to buy the coverage and there is nothing to stop her since the law requires guaranteed issue. 

This is exactly what has happened in Massachusetts where 40% of all the healthcare policies issued at the Harvard Pilgrim plan are in effect for less than five months.  Claims on those plans average five to six times the expected actuarial cost meaning people get in the plan when they are sick and get out of the plan when they are not.  The result is the overall cost of the plan skyrockets due to adverse selection which then hurts the people in the plan who play by the rules.

This is the other piece of sticker shock.  The fact is that Obamacare will increase the cost of healthcare thereby making it less, rather than more, affordable.  I wrote about this last week in "The Unafforable Care Act". This is exactly the opposite of what we were told was the objective of the law.  Where will most of these costs fall?  A lot will fall on individuals and businesses who were already doing the responsible thing by having coverage.  These are the people who will be hurt the most as their health premiums increase even faster due to a mix of mandated benefits, higher usage, adverse selection and other effects of Obamacare. 

The Obama administration now admits that costs are going up but they argue that federal subsidies will soften the blow for many.  However, at what cost?   It is interesting to note that the CBO recently raised the estimated cost of the Obamacare subsidies by $233 billion over the next ten years.  This was largely driven by an increase in the average cost of the required subsidies due to higher expected premium costs.

This is a chart that shows how the CBO has consistently been increasing the estimated amount of the average subsidies that will be required as the true costs of Obamacare have become better understood.  The CBO now estimates that 7 million workers will also lose their employer-provided healthcare.  That is double the original estimate.  These people will need to get coverages in the exchanges and the federal government will need to provide the subsidies.




Credit: National Review Online

Sticker shock is also going to be a factor in the public perception of Obamacare.

Economic Armageddon

The final big risk that Obamacare poses to Obama and the Democrats is the effect it is going to have on the economy and the federal budget.  You can get a sense of the potential budgetary effects from looking at the CBO revisions below.  Obamacare is going to be enormously more expensive than was originally estimated.  It is going to make our fiscal problems even worse even though we were told that it would make them better.

The bigger concern is what type of distortions is it going to have on the overall economy.  You have seen above how it could affect the incentives for a family of four whose income exceeds the subsidy level.  There are even bigger effects on businesses.  The law is written in such a way for businesses to avoid hiring full-time workers. If a business grows beyond 50 full-time workers it must provide healthcare coverage of pay a penalty.  The obvious answer for many businesses is only hire part-time workers.

For a real-life look into how a business sees the risks of Obamacare take a look at this excerpt from a prospectus for the recapitalization of a restaurant chain that I saw reported on in PowerLine.  Bear in mind that this is not a political statement, this is a legally-required disclosure on the risks to this business of Obamacare as deemed necessary by its attorneys and accountants.

If you don't want to read the whole excerpt let me summarize-in order to deal with increased costs with Obamacare they are cutting back the number of full-time jobs, they expect even higher health care costs in the future but they will either reduce benefits under the plan or raise menu prices to cover the extra cost.

Although [XXX] already offers health care, there is expected to be an increase in costs associated with the affordable health care act (“ACA,” see “Risks” section). To mitigate this cost, employees that were working more than 30 hours per week, but less than 33, have moved down to 29 hours per week, reducing the “full time” pool requiring health insurance from 1100 to 835 employees. Those full time employees will be offered health care insurance through the Company’s program or may obtain it through the state Exchanges or expanded Medicaid programs. The Company cannot estimate the number of enrollees in the future program but based on several discussions with Health Insurance Agencies and the experience of restaurants in other states instituting mandatory health insurance, many are expected to turn it down or seek other publicly funded options. According to an NFP study of the Company’s health insurance and potential impact of the ACA, the total cost increase to the Company in 2014 is estimated to be $400,000 (or a 33% cost increase) which we have factored into our Projections. We believe this cost will continue to increase as the ACA is modified over the next several years but that most of the impact can be managed through cost reducing the plan or offset through menu price increases. Management does not agree with some in the industry that want to make a political statement by adding a line item to every check. Given their broad menu and ability to control portions, we believe the company has substantial control to raise prices at a time when everyone else in the industry will also try to raise prices or somehow otherwise improve margins.

Replay this scenario thousands of time across the economy and it will have a substantial negative effect.  

Conclusion

The ultimate test of Obamacare is just over the horizon beginning later this year with the open enrollment process.  Obamacare took a real body blow with the 2010 elections but gained new life with the Supreme Court decision upholding the law and it seems to be here to stay thanks to the Obama victory in last Fall's election.  However, I am not prepared to say the final story has yet to be written quite yet. 

I want to see how the public reacts once they really see what is in the law.  If I were the Democrats I would have serious concerns of what that reaction will be once the provisions are really understood and we start seeing the real-life effects.

At the same time, money talks and Obamacare, like all federal programs, is spreading a lot of money around.  Health care companies, technology providers, hospitals and others are already putting that money in their pockets.  Look no further than the pressure that the hospitals and other groups are putting on various governors and state legislatures to expand Medicaid under Obamacare. 

Betsy McCaughey recently wrote that the reality of Obamacare is adding up to a disaster for Democrats in 2014.  I think that is premature at this point.  There is risk from all of the factors I describe but we need to see how this plays out.  I will watch with a lot of interest between now and the 2014 mid-term elections.

Since only Democrats voted to impose ObamaCare on America, there’s no question who voters will blame for this colossal mess. The chances for a new Pelosi speakership are minuscule; we’re more likely to see Republicans win control of the Senate.

The GOP only needs to pick up six Senate seats to do that — and three seats the Republicans will target are in Iowa, Virginia, and Arkansas — the states set to be hit with the highest premium increases in the individual market.

Of course, all that may not be enough to repeal ObamaCare — it may take a few more elections before the will of the people prevails. But the system the Obama health law sets up is so dysfunctional, there’s an excellent chance voters will persevere until they get their way.

It’s not over til it’s over.

My view is that Obamacare is still dangerous for Democrats but it is not time to write their obituary. Money talks and as long as the money keeps flowing, they are alive and well with the voters.  What happens when the money stops is the unanswered question.

Marriage and Money

What is gay "marriage" really about?  Supporters say it is about equality, respect, commitment and love.  I agree that they are all factors.  However, the bottom line is that gay marriage is about money.  Specifically, the money that flows through the hands of the federal government.  Spousal deductions and exemptions.  Social Security and Medicare benefits.  Joint tax returns, disability and survivor benefits.

If it were not for all this money in play, I doubt that we would we have seen two cases argued in the Supreme Court last week.  Marriage would remain in the realm of the religious roots where it began.

Why has government gone to the lengths it has to provide these incentives for marriage and the benefits that go with it?  It is an unrefuted fact, based on several thousand years of experience, that marriage is an essential foundational framework for a well-functioning and stable society.  To be self-sustaining a society needs to reproduce to sustain itself.  This is only possible with a man and a woman.  It is not necessary for a child borne of that union to be raised by these two parents.  Many children do not have this advantage. However, it also seems to be well-documented that children in a family unit that includes a biological mother and father united in marriage, a male and female, do much better than those in single-parent situations, in cohabitation arrangements or in situations with one biological parent and a step-parent.

Marriage has also been shown to individually benefit both men and women and, in turn, this conveys additional benefits to society.  There is more physical security and less violence against women in societies with high marriage rates.  Marriage also benefits men and society in corresponding ways.  Finally, there are significant economic benefits to couples and society as a whole as a result of marriage where both the division of labor and economies of scale result in the more efficient use of human and physical resources.

For all of these reasons it has made sense for societies and government to confer specific incentives and benefits to men and women who marry.  Does this mean that in every case that marriage produces these benefits?  No.  Some couples will not have children. Some unions undoubtedly should have never occurred. However, the broader social good has been well served by the marriage covenant by one man and one woman for thousands of years.

This brings us to the issue of gay "marriage" and whether the argument can be made that government should recognize same sex unions to the same extent as a marriage between one man and one woman.  It could be that these unions would have similar benefits to society.  Research and study might show that children in a household with a same-sex married couple is vastly superior to a single parent or cohabiting arrangements.  It might even show that it provides similar advantages and benefits as with a married man and woman.

This is simply impossible to know right now.  Gay "marriage" is too new.  Its benefits and advantages to society have not been time-tested over thousands of years.  In fact, the first country (the Netherlands) that legalized gay marriage did not do so until the year 2000.  It is utterly untested.  If there were new-born children placed in that environment they have barely gotten to the teen years. It will be many years until the effects of gay marriage on children and society can be properly assessed.

The fact is that the very early evidence on gay "marriage" is that it has caused an accelerating decline in overall marriage rates in the countries where it has been made legal.  In effect, it has devalued marriage and the number of out of wedlock births has increased fairly dramatically.

Therefore, why would government provide equivalent incentives and benefits for something that is really nothing much more than a social experiment at this point?  In particular, the government of the United States of America that can't currently afford its current Social Security, Medicare and Disability programs which use actuarial assumptions that only assume heterosexual marriages.  If you broaden the eligibility for these programs, you also increase their long-term costs compared to today.  Where is this money going to come from?

I know that there are many who would say that individual rights should control over dollars and cents.  It's a fair point.  However, if those advocates really believe this then they should be prepared to scale back the existing benefits under Social Security and Medicare to pay for the extension in the definition of marriage to gays.  Thus, for example, if the long-term costs of these programs will increase by 4%, benefits for those currently eligible should be cut by 4% to keep these programs in balance.  If people really believe this is about equal rights it should follow that other monetary rights and responsibilities should be balanced as well.

Of course, gay marriage advocates argue that if the federal government provides "married" status to gay couples it would actually be beneficial to the federal government's budget.  They cite a 2004 study by the Congressional Budget Office that it would actually lower the deficit.  The study states that this is principally because of two-income gay couples being pushed into higher married tax brackets and fewer people on food stamps, Medicaid and other social programs.  These "savings" offset higher Social Security and Medicare costs.

I think this study is highly suspect for the obvious reason that human beings rarely do anything against their self-interest.  Those who would pay more in taxes will be less likely to marry and pay the "marriage penalty". Those who will benefit from government benefits will be more likely to marry.  You can take that to the bank.

Look no further than the plaintiff in the challenge to the Defense of Marriage Act case to see what I mean.  Elizabeth Windsor, 83, brought the case because she stands to recoup $363,000 in estate taxes that were paid on the estate of her deceased "spouse" when she died in 2009.  Money talks and people walk to that talk.

What I find most interesting is the rush to judgment on this issue.  In that regard I particularly liked the questions that Justice Alito and Justice Scalia asked in the Supreme Court arguments on the constitutionality of the ban on gay marriage in California passed by the voters in that state.

Justice Samuel Alito

Same-sex marriage is very new. I think it was first adopted in The Netherlands in 2000. So there isn't a lot of data about its effect. And it may turn out to be a — a good thing; it may turn out not to be a good thing, as the supporters of Proposition 8 apparently believe.

But you want us to step in and render a decision based on an assessment of the effects of this institution which is newer than cell phones or the Internet? I mean we — we are not — we do not have the ability to see the future.

On a question like that, of such fundamental importance, why should it not be left for the people, either acting through initiatives and referendums or through their elected public officials?

Justice Antonin Scalia

When did it become unconstitutional to exclude homosexual couples from marriage? 1791? 1868?  When the 14th Amendment was adopted?

What is really important to remember here is that there is a U.S. Constitution and that document has a mechanism that allows it to be amended if it is necessary. In that Constitution there is also the power of the Congress to change the Defense of Marriage Act.

There is absolutely no way that the U.S. Supreme Court should be overturning a constitutional provision of the State of California (which, by the way, was passed by a vote of the people after the California Supreme Court had miraculously found a right to gay "marriage" in the state constitution that no one else had found for over 150 years.)

What is so wrong with following the Constitution? I wrote about all of this in 2011 in "Making Amends With The Constitution". There is a process in place in our Constitution if we want to change the rules. It is not easy but it was not supposed to be easy if we were to carefully protect the rights of the majority and also assure that minority rights are also respected. It is instructive to look at what I wrote at that time.

Article I, Section 8 of the Constitution provides that Congress has the power to lay and collect taxes.  Nevertheless, the income tax law of 1892 was ruled unconstitutional because it was considered outside the power of Congress.  The 16th Amendment was ratified in 1913 to allow it.

There was nothing in the Constitution signed by the framers that precluded women from voting.  All references in the document were to people, not men.  However, the culture and custom was generally for only males to vote.  Nevertheless, it took the 19th Amendment in 1920 before it became the law of the land.  Interestingly, 15 states (beginning with Wyoming in 1870) granted women the right to vote before adoption of the 19th Amendment.  Since voter eligibility was an issue left to the states (in that it was not specifically enumerated in the Constitution by the Framers) women in these states voted in both state and federal elections before 1920.

The point here is pretty clear to me. There was a time when the Constitution meant something. It was respected for what it was. So were the limitations that were carefully crafted into the document by the Framers. Even when there was pretty compelling language in the Constitution to bend it to the "current times" it was ruled out of bounds. Has something been lost?

Was it designed to change with time? Of course. That is what the amendment process is for (Article V). The Framers in their wisdom also considered this carefully. They did not want it amended for some passing fancy. Nor did they want a small majority to change the key foundations of the governing document to the detriment of a significant minority. Therefore, 2/3 of both the House and Senate can come together and propose any amendment. They do not even need the President to concur. Alternatively, 2/3 of the states can come together and call a convention to propose their own amendments and bypass Congress completely. If the amendment is ratified by 3/4 of the states it is adopted as part of the Constitution.

If the American people want a federal government with expansive power they can have it. They can allow gay marriage. Or ban it in all 50 states. They can require everyone to buy health insurance or anything else.  They can ban assault weapons or ban abortions from coast to coast.  There is a way to do it.

It just does not seem that these types of powers exist with the President or Congress with any reasonable reading of the Constitution. At least, this has been the interpretation for most of our history. Nor does it seem to be within the power of a handful of judges to suddenly discover fundamental rights that have somehow been hidden in the Constitution for over 200 years and start applying them to 308 million citizens by fiat.

That is why there is an amendment process to the Constitution. It is hard and it was meant to be hard.

Look at this map and tell me if there is any way that the federal judiciary or the federal government should be doing anything about the subject of gay "marriage"?  This issue should be completely out of bounds for the federal government right now.  Each state can decide.  That also allows us to see the effects of gay "marriage" on society.  If it truly adds value, time will tell. However, the risk is too big should it devalue an institution that has been the cornerstone of successful societies for thousands of years.

I am all for equal rights.  I have no problem with domestic partner legislation on the subjects of transfer of property, hospital visitation rights and the like.  However, when it goes beyond "rights" and moves into "benefits" it is a different issue.  

There simply is no "right" to government benefits or money.  The government discriminates on this subject all the time.  For example, ExxonMobil and Solyndra both produced energy (or at least Solyndra attempted to.)  However, the federal government decided there were greater benefits to society from "green" energy than with fossil fuels.  Solyndra and other solar and wind companies got benefits that ExxonMobil did not.  That was discriminatory.  Lehman Brothers went bankrupt and the Bank of America was bailed out.  That was discriminatory. The same goes with the Internal Revenue Code.  There is line after line where one person or corporation gets a benefit that someone else does not.  The rationale is that there is a governmental or societal benefit in doing so.  It is discriminatory to those that don't get the benefit but there is supposed to be a larger public purpose.

My view is that before gay unions are to be provided government benefits it must be shown that there are demonstrated benefits to society in order to justify these additional costs.  We are not there yet from everything I have seen.  If you look at the map of the United States this is also the overwhelming opinion of the vast, vast majority of the states in this country.

My personal opinion is that I am doubtful that a beneficial case will ever be made for gay "marriage" if if we look at the lessons of history.  Any society that has openly adopted homosexuality has inevitably fallen apart.  However, I am always open to new information and new facts.  Just show me the facts before you expect to see any government benefits or money.

In the meantime, allow each state's citizens to decide.  Not the courts.  That means that California's ban on gay marriage should be allowed to stand.  If the citizens want to amend that out of their Constitution and replace it with a new right, let them do it.  At the same time, if a group wants to attempt to ban gay marriage in the United States then there is a way to do that as well through Constitutional Amendment. That is what America is all about.  It is not supposed to be about nine Supreme Court justices finding things in the Constitution that no one else has found in over 220 years.

The Unaffordable Care Act

Does your homeowner's insurance pay if the water heater needs to be replaced?

Does your car insurance pay for oil changes?

Of course not.  If these things were covered by insurance the costs of these insurance coverages would be astronomical.  People buy insurance for large, unexpected costs to protect their assets and savings.  The basic principle of insurance is that it allows a large number of individuals to pool and share risks so as to protect the group from unexpected losses that only some would likely incur in any one period.

Therefore, homeowner's  insurance is there to protect you from the catastrophic impacts of a fire or tornado that could totally destroy your home.  It is not designed to pay for a furnace that needs to be repaired or replaced.  The same is true for auto insurace.  It is there to pay for damage caused by a hailstorm or being rearended on the freeway but it does not pay to repair or replace a transmission.

When health insurance was first introduced it followed the same general principles of all insurance.  In fact, most early versions of health insurance were actually called hospitalization insurance.  Coverage only was provided if you ended up in the hospital and were exposed to the risk of the high costs associated with a hospital stay.  Doctor visits, x-rays, drugs and the like were not considered within the purview of health insurance.

Those were much simpler times.  Health care costs were also much cheaper.  In 1965, the average cost of a one day stay in the hospital was about $45.  Yes, you read that right-$45! By 2002, that cost had increased over 28-fold to $1,289.  Today that cost is around $4,000 per day. 

Inflation since 1965 has pushed prices up by about 6.4 times.  Therefore, adjusted for inflation, a day in the hospital should only cost about $288 today.

Should you not believe how much hospitalization costs have changed here is a copy of the hospital bill for the birth of my wife.  The total bill was $82.56 for four days in the hospital for mother and daughter in 1952.

First and foremost, health insurance costs have increased dramatically because underlying healthcare costs have increased.  You can see from the above what has happened with hospital costs.  New technology, drugs, tests and treatments also have also pushed up costs over the years.

In addition, there has been a continuing trend in using health insurance to cover more and more and more costs.  Routine doctor visits, physical therapy, mental health visits and the list goes on.  The end result is that health insurance looks less like the traditional model of insurance, which is to protect people from catastrophic loss, and has become nothing more than a model designed to transfer costs to a third party.   Health insurance today has little to do with sharing the risks of the people in the insurance pool.  It really is about creating a pool where the risks and costs are transferred to a third party (an employer or the federal government) that is completely removed from the process.

It probably should not come as a surprise that the explosion in health care costs in this country began in 1965-the year that Medicare and Medicaid took effect.  This is when the traditional health insurance model began to break down and the third-party pay system took over.  This chart shows health care spending in the United States from 1900-2012.

We were told when Barack Obama first ran for President that he was going to do something to make health care more affordable.  I remember something about reducing the average family's cost of health care by $2,500 per year.  I also remember something he signed into law called "The Affordable Care Act".  You might know it as Obamacare.

Obamacare is upon us and it will largely take effect in 2014.  The non-partisan Society of Actuaries released a report this week on what we can expect to happen to health care premiums as a result of Obamacare. The news is not good for most Americans.  This independent group of actuaries predicts that Obamacare-driven changes could drive up underlying health care costs by an average of 32% due to mandated benefits, increased use of medical services and other provisions in the law.  My state of Ohio is expected to see an 81% increase in costs!

What does HHS Secretary Kathleen Sebelius have to say about the increases?

"Some of these folks," Sebelius said, referring to those hit by ObamaCare's price spikes, "have very high catastrophic plans that don't pay for anything unless you get hit by a bus. They're really mortgage protection plans, not health insurance."

Investor's Business Daily says it better than I can.  Obamacare is the exact opposite of what is needed to   control health care costs and make it more affordable.

Sebelius has it exactly wrong. It's precisely those catastrophic plans that are real insurance, which in case anyone has forgotten is supposed to protect against unforeseen costly events, not pay $20 doctor visits.

What Obama and company are trying to force down everyone's throats isn't insurance, it's massively expensive prepaid health care.

Too bad for those who'd rather buy real insurance and spend their money on something else.

The problem is that ObamaCare's push toward comprehensive "insurance" coverage will only fuel health care cost inflation.

Back in 1960, people paid almost half the nation's health care tab out of pocket. By last year, that figure had dropped to just over 10%, with the rest paid by government health programs or increasingly generous, tax-subsidized workplace health benefits.

That, in turn, has pushed up health spending, since it looks to consumers like they're getting something for virtually nothing.

By driving out-of-pocket spending for health care down even further, ObamaCare will only succeed in driving up costs for everyone.

Perhaps we should stop calling it Obamacare and just start referring to it as "The Unaffordable Care Act".

A Relatively Short Post

One of my favorite quotes is by Samuel Clemens (Mark Twain) who wrote to a friend...

"I didn't have the time to write a short letter, so I wrote a long one instead."

He was so right.  It is much more challenging to write or say something in a succinct and concise manner than in long form.

That is why I enjoy good quotes when I can find them.  The really good ones convey a lot in just a few words.  You don't need volumes to impart wisdom if it is done right.

From my experience the best quotes seem to come from what I consider to be some of the smartest people in history.  Perhaps that is why they were considered so smart.  They conveyed a lot in a few words.  People like Jefferson, Franklin, Edison, Churchill and Einstein.

These are a few quotes from Albert Einstein I came across this week that demonstrate that he was much more than a great scientist.

Consider these quotes which would all qualify for my Quotation Hall of Fame.

"What is right is not always popular and what is popular is not always right."

"We can't solve our problems by using the same kind of thinking we used when we created them."

"If you can't explain it to a six-year old, you don't understand it yourself."  

"Strive not to be a success, but rather to be of value." 

"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe." 

"The hardest thing to understand in the world is the income tax." 

"When the solution is simple, God is answering."  

Credit: Time Magazine

One more on the theory of relativity as explained by Einstein...

"When you are courting a nice girl an hour seems like a second.  When you sit on a red-hot cinder a second seems like an hour.  That's relativity."

I hope that it seems like only a second ago that you started reading this BeeLine post.

The United States Bank Deposits Tax

The  bank deposit tax that the European Central Bank (ECB) wants Cyprus to levy on its bank depositors in return for a financial bailout of its banks has sparked a lot of outrage.  The proposal would have resulted in a 9.9% tax on large deposits (over 100,000 euros) and a 6.5% tax on smaller deposits (less than 100,000 euros). It has also raised the question as to whether such a tax could ever be initiated in the United States.  Most say it could not happen here. 

The fact is that we already effectively have a United States Bank Deposits Tax.  It is the Zero Interest Rate Policy (ZIRP) of the Federal Reserve.

In Cyprus, depositors have recently been getting an interest rate of 4.66% on their equivalent of a one-year certificate of deposit.  That compares to a .26% average annual yield that U.S banks are currently paying on a one-year CD.

The average rate for CD's in the United States since 1984 is 4.09% which is not far off of the current Cyprus rate.  This chart gives you an historical perspective of CD rates since 1984.

What I find interesting is the almost universal outrage about the ECB's attempt to tax the Cyprus bank depositors to pay for the bail out of their banks while the same thing has been going on in the United States with the ZIRP policy with nary a peep from anyone.

The bank depositors in Cyprus have been earning what historically has been considered a fair return on their savings and now the ECB wants to impose a tax on the savings deposits.  In Cyprus, depositors have had the ability to make a return on their savings of almost 5% before the tax is imposed.  In the United States, due to the Fed's ZIRP, the depositors are getting almost nothing.  There is no need for the deposit tax because, in effect, bank depoistors have already been paying for the bailout of the U.S. banks with the foregone interest on their savings.

In the final analysis, there is almost no difference between what is being done with United States bank depositors compared to what is proposed in Cyprus.

What I find most interesting is the vastly different reactions to the two scenarios.  There is outrage over Cyprus but almost total acceptance in the United States (and other countries that have adopted ZIRP) of what could be considered a 4% indirect tax on bank deposits.

Why is that?

I believe the answer lies in how the human brain sees things.

It is generally very hard for the human brain to process anything but direct effects.  We have a hard time in dealing with one-offs, especially when it comes to money.  It is easy to understand when money has been taking from me directly.  It is harder to understand when I end up in the same place but the money was taken from me in an indirect way even if I end up in the same place.

The best example of this is how inflation can erode the value of money.  I cited the work of Daniel Kahneman, Richard Thaler and Jack Knetsch on this subject in my post "The Money Illusion" two years ago.  KTK did a lot of research on the subject of "fairness".  When did people think something was fair or unfair.  I think their research explains a lot about the different reactions we are seeing between Cyprus and the United States ZIRP.

One survey question in the KTK research presented these facts to individuals.

A company is making a small profit.  It is located in a community experiencing a recession with substantial unemployment but no inflation.  There are many workers anxious to work for the company.  The company decides to decrease wages and salaries 7% this year.

Notice how this meant that each worker has lost 7%.  62% of respondents deemed this unfair.

Another version of the question had the exact facts but inflation was stated to be 12% and the company was going to limit salary increases to 5%.  

This scenario puts the workers in exactly the same place.  They have lost 7% of the value of their money.  However, 78% of respondents thought this was fair.

The perception of fairness was completely different even though the end result was exactly the same.

The Cyprus bank deposit tax is yet another example of the dangerous times we live in.  Government policymakers will do almost anything to save their own hides.  They will delay, defer, deceive and disassociate all they can.  The ECB policymakers made a mistake here in that they embarked on a direct attack on depositors when they should have settled for an indirect attack.  Why did they just not force the Cyprus banks to a zero interest rate policy and get their bailout money that way?  They totally misunderstood human psychology.

I will close the same way I did two years ago in "The Money Illusion".  The Cyrpus bank deposit tax example is instructive because it shows the sharp contrast on how not to do something as a government policy maker when it is  relatively easy to steal the public blind if you just take the more indirect paths of ZIRP and inflation.

The lesson here for all of us is that we need to be very careful.  Inflation is the easiest policy option for government to solve its debt problems.  It is a lot easier to inflate the currency to wipe out its debts than to take the pain of spending restraint.  It is also the easiest way to hoodwink the public.  It just does not feel like you are losing.  Receiving a 2% social security increase when prices are rising 10% just doesn't seem to feel as bad as having your social security payment cut by 5% when inflation is 2%.   You are actually better off with the 5% cut from a buying power perspective.  However, KTK's research shows what the public will think is "fair" and "unfair".  

The same goes for ZIRP.  People don't like getting 0% on their money when they are used to getting 4%.  However, they haven't taken to the streets in outrage.  They would if they had to pay a 4% tax. It just seems worse to have to pay a 4% bank deposit tax (even if you are also earning 4% interest) than to just get 0% on your deposit.  When you pay something directly you really feel the loss.  

Beware the "Money Illusion" and policy makers who think they are magicians. Watch your wallet.

Hmmmmm, That's Interesting

I always enjoy finding little factoids or trivia that make me go "hmmmmmmmm".

I came across several items over the past week.

First, which country do you think exports the most beef and veal?

The United States, Argentina, Australia or Spain came to my mind.

Wrong.

I never would have guessed India is the world's largest exporter of beef and veal in one hundred years.  I thought that cows were considered sacred in much of India.  From looking at this data they are sacred in India but not so much if they are leaving the country for someone else's hamburger.



Source:  John Mauldin, Thoughts From The Frontline, 3/13/13

John Mauldin points out that at one time Argentina was the world's largest beef exporter.  They have fallen to  #11. Brazil now has a herd of cattle that is four times that of Argentina.  What has happened?  Argentina's socialist government has instituted a series of  price controls and export restrictions since the Peron era in a futile attempt to keep prices low for the masses.  The only result has been that fewer and fewer cattle are being raised as the rewards to the ranchers were taken away.  The only thing that has happened is the entire country has gotten poorer.

The second "hmmmm" moment came when I saw this article about the incoming class at New York City's Stuyvesant High School.  Admission to the city's eight most competitive high schools is decided exclusively by test results on the specialized high school admissions test (SHSAT) that 8th graders take.  28,000 took the test for just over 5,000 open spots in the Class of 2017.

What I found interesting is the demographic breakdown of the admission offers at Stuyvesant that are based solely on the results of this competitive examination.

177  white students
24    Hispanice students
9      black students
620  Asian students

The admissions at two of the other competitive high schools which are also based entirely on the results of the test were similar.

Bronx Science offered admission to 25 black students; 54 Latino students; 239 white students; 489 Asian students; and 3 American Indian/Alaskan Native students.

Brooklyn Tech offered admission to 110 black students; 134 Latino students; 451 white students; 960 Asian students; and 5 American Indian/Alaskan Native students.

To put this in context this is the demographic breakdown of the enrollment in the New York Public Schools.

14%  white
40%  Hispanic
31%  black
15%  Asian

In other words, Asian students make up 15% of the enrollment of the school district but they earned 75% of the spots in the city's most competitive high school.  Hispanics and blacks make up 71% of the enrollment in New York City but only 4% of these students will be a part of this year's entering class at Stuyvesant.  The remaining 21% are white students.

Predictably, when I researched this subject I found that last year a coaltion of educational and civil rights groups brought a federal lawsuit alleging that the SHSAT is racially discriminatory.  It is not clear to me how the test is discriminatory in that Asian students (including many who have parents who were not born in the United States and for whom English is a second language) can do so well and the other ethnic groups can do so poorly.

Might it have something to do with the fact that education is stressed in most Asian homes and these parents expect their students to do well?  See my post from 2011 on Parenting Principles Perspective in which I wrote.

Asians make up 19% of the class of 2013 at Harvard and 18% at Princeton.  By comparison Asian Americans only represent about 4% of the U.S. population.  I walked around the campus of UC Berkeley a couple of years ago and it seemed that every other student was Asian.  According to Berkeleyside, the Fall, 2010 number is 45.7%.  12% of Californians are Asian. I was not far off.

You see the same pattern of accomplishment in music.  If you see a young prodigy on the violin or piano there is a good chance you will see it is someone of Asian descent.

Why is this?

Malcolm Gladwell in his book, Outliers (which I recommend as one my best reads of 2010) attributes it to a "rice paddy" attitude.  Simply stated, tending to a rice paddy is a 360 day, 3,000 hour per year activity.  It is exacting, hard work where effort and dedication make a huge difference in results.  The peasants that tended these rice paddies may be long gone but the culture carries on in their progeny.  Gladwell makes the point that there is nothing that indicates that Asians are naturally any better at math, science or music but each requires hard work, persistence and doggedness.  It is more attitude than aptitude.

You probably have seen what I am talking about.  The other kids are goofing around on the steps to the public library or skateboarding along the sidewalk.  The Asian kids are inside the library with their parents finding another book to read.

I also referenced Amy Chua's book, The Battle Hymn of the Tiger Mother, and cited three main differences in parenting styles between Asian and Western parenting styles that she believes are important.

Western parents are too concerned about their children's self esteem. Chinese are not. Asians assume strength in their children, not fragility. Therefore, they push hard on them and hold them accountable for results.

Chinese parents believe their children owe them something. Many Americans seem to believe that since they were responsible for bringing the child into the world that they owe the child in some way.

Asians believe they know what is best for their children and override their children's own preferences and desires. Chinese parents understand that nothing is fun until you're good at it. To get good at anything you have to work, and children on their own never want to work, which is why it is crucial to override their preferences.

You may disagree with the approach but it is difficult to argue with the results when you look at the enrollment trends at our nation's most competitive schools.  It may be time for the rest of us to take a look at ourselves and start looking for more accountability in our parenting.  Of course, for many children it would be nice just to have at least one accountable parent to begin with.  Simply too many don't even have that. 

Finally, I thought it was interesting that the History Channel's mini-series The Bible attracted 13.1 million viewers and actually topped American Idol's 12.8 million viewers on Wednesday in the weekly ratings.  The Bible does spend a fair amount of time on The Ten Commandants.  What does the Second Commandment say?

“You shall not make for yourself an idol or a likeness of anything in heaven above, or in the earth beneath, or in the waters under the earth. You shall not bow down to them or serve them…” (Ex. 20:4,5a).

Hmmmm, now that is really interesting.  There still may be some hope left.