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What is the state of health care insurance in the U.S. today? We hear the statistic that there are 45 million uninsured "Americans". This figure cries out for analysis.

According to the Census Bureau, about 10 million of the 45 million are non-citizen aliens, many of whom are here illegally. Four in 10 are young people between the ages of 18 and 34 who are healthy and can afford health care. In addition there are 17 million who have incomes of $50,000 a year or more. They choose not to cover themselves. Seven in 10 will get coverage within one year.

Fourteen million qualify for existing programs, but for whatever reason choose not to apply. There is no coverage crisis. It is a manufactured hysteria designed to stampede the public into a government health care program.

The president's health insurance proposal promises to cover these folks at a reduced cost. If one reduces expenditures, but increases the demand for services, then rationing becomes a necessity. How else do you allocate scarce resources? Do you treat a 65-year-old with cancer or a 21-year-old? Rationally, one treats the 21-year-old because he has a greater potential to contribute to society. The 21-year-old has most of his life in front of him while the 65-year-old does not.

You have the issue of the type of illness. A patient is afflicted with a rare disease with no political constituency to push research. You have a bizarre allocation of resources. A good example is AIDS and cancer. Many more people die of cancer than AIDS. Yet spending on AIDS is higher, because the groups that represent people with HIV are much more active and influential.

As for choice and the "government option," it is claimed that it will just expand the choice of carriers. History tells us otherwise. In 1965, the federal government enacted Medicare. When it was passed, it was promised that Medicare would just supplement the existing private coverage for seniors. Forty-five years later, Medicare has displaced the private market for folks 65 and over. It is not just a quirk of that program. The statistics for State Children's Health Insurance Program (SCHIP) show a trend toward similar displacement on the other end of the age spectrum.

The reason for this displacement is simple. The government heavily subsidizes both Medicare and SCHIP. The out of pocket expense to the consumer is lower. What the consumer does not see is the subsidy taken out of his pocket through reduced choice, reduced standards of care, taxes, inflation, and interest on the increased debt.

There are plenty of potential competitors. About 1,300 private insurance carriers provide health insurance in this country. Where there is restriction, it is in how the market is structured. There is no national market for health insurance. There are 50 state markets. Each state has its own mandates. Some require more coverage, some less. Policies are much cheaper in Utah than in New Jersey.

While part of that has to do with the relative health of the population of the two states, New Jersey mandates more coverage, community rating, and mandatory coverage. All of this adds to cost. The health plan I initially had was quite reasonable: I had my choice of physicians, no referrals, and a low premium. When New Jersey enacted its "reforms," my premium shot up 500 percent over three years. If I could buy a Utah policy, my coverage would be cheaper.

The Obama policy and rhetoric is interesting. During the campaign, the Obama campaign pilloried Sen. John McCain for proposing taxation of healthcare benefits. The new national healthcare proposal calls for just that. By eliminating the deduction, one increases the cost and pushes employers to drop plans.

As to reduced cost, how can this be if one expands the pool of covered people and subsidizes the cost of the policies? The predictions of the administration will be almost as good as its predictions about the stimulus package. The administration said that if we passed the stimulus package unemployment would peak at 8 percent. Currently, unemployment is 9.4 percent. The administration predicted a $1.8 trillion deficit this year. The economy's performance has been much worse. It is expected that the current deficit will exceed $2 trillion. Be prepared for a rude awakening if the administration's health care proposal passes. The current down payment of $634 billion will be a drop in the ocean.