Jonah Goldberg sums up the contradictions of Obamacare beautifully:
Imagine you’re in charge of bringing pie to a company picnic. You’re planning to provide dessert for 100 people. Then, your boss says you need to hand out pie to 150. Fine, you say, I’ll make more pies. But — oh no! — you can’t because you’ve also been told costs must go down. OK, then you can cut slices of the existing pies smaller so everyone can have a piece. Wait! You can’t do that either because you’re not allowed to ration (i.e., give less to more).
According to Obama, the health-care pie will be sliced into more pieces, of equal or greater size than available now, for less money — all because government is so much better than the private sector at managing large projects.
Blatant “all things to all people” dishonesty worked wonders for Obama as a candidate, so it’s not surprising he’s continued it as President. But he’s finding out that while promising people magical healthcare unicorns is easy enough, actually producing them is a bit more challenging.
That’s probably why more than half the country would rather see no healthcare reform bill passed, while only a bit more than a third support the current bill.
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Jonah’s analogy is entertaining but I could poke holes in it if I wanted to.
Obama is losing this debate, and he is losing it handily. Putting Nancy Pelosi in charge of drafting the bill was a disastrous mistake, compounded by his complete disregard for the results of having Nancy in charge of the “incentive plan” and the “carbon tax.” Nancy is a hard-core ideologue and vicious partisan attack hound. It was inevitable that she would cut Republicans out of the debate and produce a hard-left blueprint for disaster.
I have to say, for someone who is supposed to be so brilliant, Obama sure seems to repeat a lot of monumentally stupid mistakes.
If only it were that simple! As I understand what’s being proposed they’ll give the same sized pieces to those who were getting pieces before and give slices to more people but the actual cost-savings will be figured out later. That’s been the history of healthcare reform. Later never comes.
Unless the plan is command pricing, which presumes that the “public option” is the 800 lb. gorilla, it’s hard to see how that will happen. And we know what happens under command pricing: shortages.
But it’s even worse than that. Healthcare providers are compensated based on fee for services. When you’re treating more people you’re performing more procedures and paying providers more. And the providers get used to that. After the newly insured are fully accommodated by the system, we’ll be at a new, higher cost basis and that basis will be used to justify future price increases. That’s what happened with Medicare and Medicaid 40 years ago. We’ve done this before.
There are a number of important points people do not seem to understand.
First personal or family health care costs are not an insurable risk. They are insurable as long as everyone in the family is health, but if one member of the family becomes seriously ill or inured, the insurance company can look at your family and see that they are going to have to spend $100K next year on health care for it, so they cannot renew the policy at any reasonable price. After they refuse to renew the policy, you will not be able to get coverage from any other company.
This is not because health insurance companies are evil, it is because they are doing their job. The job of a insurance company is to estimate the risk of writing a policy and charge a little more so they make a profit. When the look at your family and they know it will need $100K in expenses, they can no longer write a policy at any reasonable price. It would be like trying to buy fire insurance for your house after it catches fire. It is just not an insurable risk.
The reason health insurance sort of works in the US is that for the most part individuals do not buy health insurance. Their employers buy the health insurance. The employer gets a price from the health insurance company to cover all the employees. They know there are some seriously ill people in the families of the employees, but they can come up with a reasonable price for the whole pool.
This system is slowly coming apart and becoming increasing dysfunctional, because fewer and fewer people have access to health insurance through their employers. This is partially because of structural changes in the economy (fewer people working for big manufacturing companies), and it is partially because of increasing costs being too much for small employers. If nothing is done, this will simply continue to get worse.
Of course, people who do not have health insurance still have some access to health care regardless of their ability to pay. Unfortunately, this is usually restricted to emergency rooms and ICUs, where their health care is far more expensive. Who pays for that health care when the patient cannot? We all do. Part of the expenses are covered by tax payers, usually at the state, county or city level. Part of the expenses are covered by hospitals overcharging other people, including insurance companies. By some estimates I’ve seen 10% of what you pay for health insurance goes to provide treatment to people who do not have health insurance. Getting everyone covered may not increase costs all that much, although it is very hard to quantify how much getting everyone covered would reduce individual health insurances costs.
One of the proposals in the current bill would require insurance to be community and age priced, but not based on any pre-existing conditions. This would effectively form all the people in a state or county into a single group, like a companies employees. Insurance companies would price the risk of insuring the whole group, rather than individuals. This would address the real concern about losing your health insurance because you lose your job or change to a job that does not provide health care.
We desperately need this kind of reform.
We also desperately need near universal coverage of citizens and legal residents.
We don’t need universal health care for anything.
One of the driving reasons things such as hospital stays, prescription drugs, PCP visits, et al. is so high is because no one knows how much anything should actually cost because so much is covered by insurance.
Go to your PCP ask ask them how much an office visits costs. Why does it cost that? Why do blood tests cost what they do? Other tests?
Prices are so high right now because of the near-universal health insurance program we have now running in the public sector. The patient doesn’t care how much a tests costs because their insurance covers it. A doctor doesn’t care because they bill the insurance company.
No one asks, on a individual level, “Do I really need that test? Isn’t there a less expensive option?”
Government run universal health care will only exacerbate the issue. It isn’t the solution. It’s gas on the fire.
If you want to bring health costs down, well, you have to get people used to paying for tests, procedures, and drugs out of their own pocket.
That’s the only way prices will go down.
mikeca: That was an excellent comment with some good points in it that deserve a serious response.
The things you raised are why I earlier said that I would be willing to entertain health insurance/care reform, if it were truly bipartisan and truly worked towards a common, understandable goal.
There is a very similar argument to be made about social security and the need to reform social security. But when Bush tried to address that, the Left used that as a club to beat him senseless. Which is one reason I find today’s Leftist whining about the “unreasonable” or “ignorant” opponents of their desires so hilarious. At least Bush truly tried for a bipartisan effort, as opposed to Obama’s “I won, so you have to do what I want” approach.
We do indeed need to look at our system and find the problem areas and work to solve them. This bill is not it. This process is not it.
In something as malformed and bloated as the current set of bills floating around, there are no doubt some good things you can find, but the cost is too high.
When Obama, Pelosi and Reid want to truly address health care in a reasonable, adult manner, and invite people who disagree with them to have a meaningful role in the conversation, we might make some progress.
But right now this bill (and the incentive and carbon tax bills) have been nothing but partisan bullying.
I’ll believe your side wants to seriously do something about it when they start acting like adults.
Kevin: What you’re suggesting is a fundamental overhaul of the existing system, simply in the opposite direction as Obama–to see less people covered, and to see people paying more out of their own pockets directly for health care.
I believe you will find that to be a political non-starter. Wouldn’t even get on the docket.
Meanwhile, one of the many reasons why the insurance companies were on board with this reform was precisely because they wanted to see more direct billing, and less of this nonsense with $50 aspirins and unnecessary tests ordered purely because doctors were afraid to get sued.
Alas, no reform means return to the status quo, because there is no way you’re going to get even a third of the electorate to agree to simply paying out of pocket for routine medical costs. All those folks who are anti-reform right now because they’re afraid Obama’s going to destroy their current health plan? They’ll eat you alive.
I guess this is just how politics works. What was the Chesterton line? “Its the job of progressives to mess things up, and the job of conservatives to keep them from getting fixed….”
Dean:
I say again that nothing will be done on ANY of our major problems as long as both parties are locked in a death struggle with each other.
It takes actual desire to work together and sincere appreciation of the benefit of doing so to solve problems like this, and we have not seen that in decades. Of course I blame democrats, starting probably with the Bork mess, but both parties are guilty. And the result is that we can’t solve critical social problems because both parties are more interested in power than in solutions.
Insurance companies (and other special interests) were “on board with this thing” because they have been blackmailed by Obama who says “I can make it a lot worse for you if you don’t play ball.”
A large fraction of participants are willing to pay essentially any price for essential health care. On the other hand, the occurence of “pay any price” is limited, which is to say most of the time most people aren’t actually looking for essential health care.
Given that, there are a limited number of options for cutting costs:
1) Reduce the number of people willing to “pay any price”. End-of-life counseling would be one such element.
2) Reduce available options. This could be rationing. It could be obstructing development of more expensive treatments.
3) Reduce the per-patient cost.
Many of the medical treatments available today are “maintenance”, like dialysis, insulin and many cancer treatments. The market is geared towards producing them.
Individuals tend to act in ways to preserve their “rice bowls”. Private research is generally directed towards creating “cash cows”. Publicly funded research is generally aimed at creating more angles to research. Whoever is paying for health care, on the other hand, is actually paying for those rice bowls. It’s in our interest to break them, and I’m going to suggest we do just that.
Perhaps there is an opportunity to reduce costs by under-cutting existing treatments. One thing I’ve considered is something along the lines of “DARPA Challenge” or “Ansari X Prize” type bounties, with the bounties set according to potential saving from Medicare. It seems to me that there are probably several places where the potential bounties could be big money.
If we could manufacture a new liver, pancreas or kidney, how would that change the shape of the market? How much could a new liver cost and still be cheaper than on-going care?
We already manufacture pseudo-bone and cleansed marrow.
New organs are just one place we might undercut existing treatment. People who know more than me might suggest others. The question is, whether can we achieve as good or better results for less with a technology the market (public or private) has little incentive to develop? Those things are worth paying for.
Instead of worrying about the relative sizes of pieces of pie, I’d much rather have more pie overall.
(Much of this comment I previously posted at Volokh)
First personal or family health care costs are not an insurable risk. They are insurable as long as everyone in the family is health, but if one member of the family becomes seriously ill or inured, the insurance company can look at your family and see that they are going to have to spend $100K next year on health care for it, so they cannot renew the policy at any reasonable price.
Of course it’s insurable; in fact, you can actually buy a guaranteed-renewable policy.
Everything is an insurable risk, except perhaps Armageddon.
If not for the perverse tax incentive to create employer-provided health care, guaranteed-renewable policies would be common. They were actually less rare 50 years ago.
I hate when people throw up their hands and say “well, only the government can solve this problem!” when government has actually created the problem in the first place.
Cosmic: Sorry, but I’m not buying this “the insurance companies were on board because they were afraid” nonsense. First, because they’ve been saying for years and years and YEARS they want reform, and second, because if they really feared they were about to be destroyed, they had NUMEROUS tools in their arsenal for fighting back exactly like the drug companies did (successfully I might add) just a few years ago.
The right presumption is that the insurance companies are as good as their word and really DO have massive problems with the current system, really DO want reform, and really DO want to be in Washington helping with the reform effort.
If they wanted to fight, it would have been really easy. Come out and say, “We oppose this, it’s going to destroy us and our ability to continue to deliver what our members want. Do you like your insurance? Tell President Obama to stop trying to destroy it.” And that, my friend, would have scuttled this entire effort overnight.
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