Obama’s impossible healthcare reform promises
June 20, 2009 – 10:24 am by JohnAnother excellent column by Sheldon Richman. He quotes Obama:
If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.
Then Richman explains how this cannot remain true under any medical-insurance plan like Obama’s:
Obama will not be able to keep his promise if he gets the “reform” he wants. He favors a “public option,” which is a euphemism for a government insurance plan. Obama says a government plan will keep private insurers “honest” through competition. But what will keep it from being a predatory competitor? After all, it will have a guaranteed source of revenue that no private insurer has: captive taxpayers. So the public option would be able to price its policies below market level and put the squeeze on the private companies.
…government is the only entity that can truly price predatorily because it can hold down explicit prices to consumers while recouping its costs implicitly through taxation or Fed-monetized debt.
Let’s not forget that Obama favors having a government bureau define the contents of the basic insurance coverage—that is, the state will dictate to insurers what services they must sell to their customers. Plus, the emerging reform plan would outlaw a premium schedule based on risk or existing illness. People who are sick or more likely to get sick could not be charged more than healthy people. (By that logic, the owner of a simple wooden house would pay the same fire-insurance premium as the owner of a brick house.)
Moreover, people would be compelled to have insurance (and then pay taxes on their employer-originated coverage). This will give the government the incentive to impose price controls—“guidelines,” no doubt—to keep insurance “affordable” and “universal.”
If the private insurers protest that these terms make profitable operations impossible, Obama and his allies will accuse them of profiteering and proclaim that the free market has once again failed to deliver medical care.
At that point insurers may choose to leave the medical policy market. Meanwhile, when reimbursements to doctors and other providers shrink in the name of cost-cutting and red tape mounts, doctors may choose to take early retirement or find other ways to make a living. (Some doctors have stopped accepting Medicare patients.)
Obama says the public option is needed to “inject competition into the health care market so that [we can] force waste out of the system and keep the insurance companies honest.” But who is limiting insurance competition today?
Government, of course.
Interstate competition in medical insurance is illegal. There is no national market. Americans living in Texas are not free to buy coverage from a firm operating in Maine. …
One reason interstate competition is not allowed is that states throughout the country, to different degrees, force insurers to provide coverage for all kinds of services that most people might never buy on their own. Mandated coverage results from service providers’ lobbying state legislatures – a truly corrupt rent-seeking system. (See John Seiler’s Freeman article here.) Interstate competition could nullify the mandate system, as people bought policies from companies in states with fewer requirements. Opponents of interstate competition say this would set off a race to the bottom. What they mean is that it would permit people the freedom to tailor policies to their personal requirements.
[...]
When Obama promises to make health care and insurance “affordable,” he means he will impose price controls, overt and covert, on providers and insurers. Promises of cost-cutting should get the same credit as past such promises: exactly none. Cost-cutting is not a bureaucracy’s strong suit.We know where price controls lead: to shortages, decline in quality, queues, rationing, and regimentation. Welcome to healthcare reform.
It scares me. Socialized medicine and increasingly State-run banking systems will be the major forces that turn the United States into a second-class society. I wish it scared more people.
One Response to “Obama’s impossible healthcare reform promises”
What upsets me the most about the debate on universal healthcare is that there are small easy modifications we can make that would improve the cost of healthcare pretty much overnight.
An obvious one is the FDA. If you are going to charge them with the impossible task of over-regulating the whole drug industry – the merits of which are highly debatable in itself – then you might as well give them the resources the do their job. They literally add decades to the process, & much of it is in delayed admin work. But the problem is that as they get bigger they somewhat get slower. There’s always a chance that any approved drug will prove dangerous. But in the meanwhile, it shouldn’t be that complex: Does a drug meet the designated endpoint? Does it have negative side-effects or contraindications? There’s no reason to linger around for years answering these questions, particularly *after* the data is in.
Second is medical training. It shouldn’t be harder to get an MD than a PhD, b/c there’s a huge demand for MD’s. The AMA is practically solely to blame for this. By keeping medical schools overly selective & expensive, they’ve made medicine a diseconomy of scale. It wouldn’t be that hard redo medical education standards, or at least pump more gov’t funding into training more dr’s, rather than pumping those funds into paying the few old ones that still exist.
Third are laws that make worker’s comp tax-exempt, which further separate payers from buyers.
Anyway, sorry to go off, but debate is too focused on who should pay healthcare’s high price rather than on how we can lower the price. & the point is that you can easily lower the latter w/o overhauling everything.
By kerrjac on Jun 20, 2009