Obama's Health Care Plan: Put Up and Shut Up

More broken promises from the candidate of change

Shikha Dalmia | September 14, 2009

For several months now, the American people—as if exhorted by the ghost of William F. Buckley (no particular hero of mine)—have been standing athwart the Democratic agenda of socialized medicine, yelling, "Stop!" But President Barack Obama showed them the policy equivalent of the middle finger Wednesday night.

If there was anything bipartisan about the speech it was that he embraced every bad big-government idea from both sides. If he prevails, the American public won't get "choice and competition" as he proclaimed, but a one-size-fits-all government-prescribed health care plan that it dare not refuse and dare not challenge.

Perhaps the most striking—and disturbing—thing about the speech was the unblinking confidence Obama exuded while breaking key campaign promises he made to voters. He had raked poor Hillary Clinton over the coals for admitting that her road to universal coverage was paved with an individual mandate. "Everyone would be forced to buy coverage, even if you can't afford it," warned Obama in an ad. "You pay a penalty if you don't."

Yet, there he was last night scolding "individuals who can afford coverage but game the system by avoiding responsibility." Never mind that the prime gamers are not the uninsured (whose unpaid bills cost "the system" less than $40 billion every year) but the underinsured covered by Medicare and Medicaid (whom private insurers cross-subsidize to the tune of over $90 billion annually because the government refuses to pay the full cost of their care). Still, he hectored: "Improving our health care system works only if everybody does their part."

Obama didn't say exactly how he would make "everyone do their part"—a question he posed repeatedly to Hillary. But his buddy Sen. Max Baucus (D-Mont.), has some rather well-developed ideas on that score. Baucus has proposed a bill that would force the uninsured to pay fines on a sliding scale of income, with those making 300 percent of the poverty level having to cough up as much as $3,800 a year. In short, Americans would have to pay Uncle Sam for the privilege of remaining uninsured. If there were truth-in-labeling laws for Congress, it would be required to call this bill TonySopranoCare.

Which brings us to the second promise Obama broke Wednesday night: That he would impose no new taxes on anyone making less than $250,000. The penalties that the uninsured—all of whom, I would wager my grandma's life support, make under $250,000—would face are certainly a tax.

He also endorsed a business tax—err, fee—on employers who don't provide adequate coverage that, under a House bill, would be about 8 % of payroll. They will pass this on to their employees in lower wages. And he signed up for an excise tax on high-end insurance plans—many of which are enjoyed by plain union folk, not those rich and famous making over $250,000. Under the Baucus bill, this tax would be as much as 35 percent of the cost of the plan. One would have thought that if the shame of breaking an explicit promise didn't prevent Obama from imposing this last tax, then the logical absurdity of trying to reduce soaring insurance costs by taxing insurance plans would.

It gets worse. In exchange for these bitter tax pills, Obama promised Americans would get eternal health care "security and stability." To deliver that, he would of course ban insurance companies from denying coverage to those with pre-existing conditions—tantamount to forcing fire insurance companies to write coverage on a burning building. He would also prohibit insurers from putting any limits on the coverage they offer and cap what they can require patients to pay out-of-pocket.

In other words, Obama would encourage unlimited health care consumption by patients while eliminating the last vestige of price consciousness. But the reason America is facing unsustainable health care cost increases is precisely because its third-party system of insurance doesn't encourage prudent consumption by patients. Indeed, if Obama really can tame health care costs by making patients even less cost-conscious, I have an even better idea for him: Simply pass a law banning anyone from falling sick and mandate good health for all. If he can suspend the laws of economics, perhaps he can also transcend the laws of physiology.

The fact of the matter is that not too many health care underwriters will survive such crippling mandates. Many of them will fold, causing further consolidation in the insurance marketplace—not more competition and choice. Last night the president declared—in the spirit of grand compromise—that he would be willing to wait a few years to give private insurers a chance to make more affordable plans available to all Americans. Only if they fail would the so-called public option, the government-run insurance plan so beloved of the left, be triggered. But that's a rigged deal: The same legislation that sets up the trigger is putting in place the conditions that will eventually pull it. Obama is not backing off on his goal of eliminating private insurance—only offering a brief deferment.

The one Republican idea that Obama did endorse—caps on medical malpractice awards or tort reform—will actually hurt rather than help patient choice. Big medicine has long blamed the unnecessary tests and procedures these awards encourage for rising health care costs. But several studies have shown that this so-called practice of defensive medicine is a smaller driver of costs than excess physician salaries. By capping these awards, Obama will leave patients even less recourse against physician negligence—hardly the American way.

Obama lambasted the critics who claim his reform plan amounts to a government takeover of the health care system. But the plan he laid out Wednesday night will control every aspect of the medical transaction. It will tell patients when, what and how much coverage they must buy; it will tell sellers when, what and how much coverage they must sell. This is not a government takeover of health care? Then Tony Soprano is just a decent, hard-working businessman.

Shikha Dalmia is a senior analyst at Reason Foundation and a biweekly columnist at Forbes, where this column first appeared.

Comments

Maureen Dowd|9.14.09 @ 4:53PM|#

"President Barack Obama showed them the policy equivalent of the middle finger"

Gang signs? Racist!

Smeagol|9.14.09 @ 4:57PM|#

President Barack Obama showed them the policy equivalent of the middle finger last week with his health care speech.

And a bare majority of the American people lapped it up and begged for more.

|9.14.09 @ 5:04PM|#

Shikha Dalmia is a racist - Maureen Dowd heard voices in her head that told her so.

@ |9.14.09 @ 5:13PM|#

Obama's lackeys in the press and leftosphere are pining for those post-inauguration days, when everyone was afraid to criticize the Negro in Chief. Now that the gloves are finally off (and they always do come off, for every president) his devotees are crying foul. Their outrage (and strategy for dealing with the criticism) is comically transparent. They engage in the collectivist tactic of applying the actions of a few genuine neurotics to an entire class of disaffected citizens. And they insult us by thinking we won't notice.

IT Guy|9.14.09 @ 5:17PM|#

Now we'll find out whether Carter 2.0 has the same bugs as Carter 1.0.

classwarrior|9.14.09 @ 5:17PM|#

Sikha, please explain "..Medicare and Medicaid (whom private insurers cross-subsidize to the tune of over $90 billion annually because the government refuses to pay the full cost of their care." and
"...a smaller driver of costs than excess physician salaries."

It seems to me that if physician pay is excessive then the government is quite right to pay less than private insurers. It's not as if they're going to give up their jobs to work at McDonald's you know. Or any other work, as their salaries top the income scale (Wall St. CEOs excepted of course).

Then again- "...ban insurance companies from denying coverage to those with pre-existing conditions-tantamount to forcing fire insurance companies to write coverage on a burning building." Indeed, that's why private insurance is so problematic for dealing with providing health care to the masses. That's why in every other industrial country the government takes care of it or forces private insurers to cover without regard to preexisting conditions.

Kevin|9.14.09 @ 5:20PM|#

The picture with the post reminds me of those before/after shots of how fast presidents age in office. Look at those frown lines. At this rate he's going to look like Barbara Bush next November.

CrockPot|9.14.09 @ 5:26PM|#

"Now we'll find out whether Carter 2.0 has the same bugs as Carter 1.0."

I miss the old days when the only things presidents were screwing were interns and movie stars.

|9.14.09 @ 5:28PM|#

It gets worse. In exchange for these bitter tax pills, Obama promised Americans would get eternal health care "security and stability." To deliver that, he would of course ban insurance companies from denying coverage to those with pre-existing conditions-tantamount to forcing fire insurance companies to write coverage on a burning building. He would also prohibit insurers from putting any limits on the coverage they offer and cap what they can require patients to pay out-of-pocket.

Doesn't anyone notice how the two most cited explanations for insurance market failure, adverse selection and moral hazard, are required under Obamacare? If you're going to outlaw the two major ways that insurance companies use to avoid business failure, then you are guaranteeing their failure and the government plan as the only option. And if you apply these rules to the government plan as well, all you will have is a government plan that will have out of control costs or we are doomed to be at the mercy of a monopoly rationer.

Gilbert Martin|9.14.09 @ 5:34PM|#

"Doesn't anyone notice how the two most cited explanations for insurance market failure, adverse selection and moral hazard, are required under Obamacare? If you're going to outlaw the two major ways that insurance companies use to avoid business failure, then you are guaranteeing their failure and the government plan as the only option."

Of course.

Real insurance is not an entitlement program.

What Obama is setting up is one.

It is not "healthcare" reform or "health insurance" reform.

It is a welfare/entitlement program.

They just don't want to call it that.

|9.14.09 @ 5:39PM|#

Obama tried to lose the Brown vote, James the Godfather died, and then Obama tried to lose the election to Joe the Plumber, but he lost Prop.8 in Cali and Janet's Arizona.

Seen her at DHS and foreshadowed, by Tyne Daly in Dirty Harry: The Enforcer? PLANET JANET went around, and now it is coming back around.

Reconstitute Mr.Nose from President Crackhead, by putting a magic mirror under Bam Margeram's powdered honker, with the magic mole on right.

Bammie Leader has a mole, on the LEFT, see Goldwater Girl Hillary, heard of Bill who shoulda, already? Lame ducks in 2011 lose altitude, when they need to get down and look for that missing blonde, in the Atlantic Trench, heard of her?

Look out, Obama's DDs cannot fly, but they incited riot in Oakland, Oscar Grant, Lovelle Mixon, and four OPD all dead and one wounded, but had only a beer at the White House, as required notice, to all courts, affected.

Wonky, wonky President! Yeah, have some health, when NO TRANSACTION is legal, and you do not hear Bowie's backups, singing ALL RIOT, in the course of your young American fantasy.

Chad|9.14.09 @ 5:45PM|#

Doesn't anyone notice how the two most cited explanations for insurance market failure, adverse selection and moral hazard, are required under Obamacare? If you're going to outlaw the two major ways that insurance companies use to avoid business failure, then you are guaranteeing their failure and the government plan as the only option. And if you apply these rules to the government plan as well, all you will have is a government plan that will have out of control costs or we are doomed to be at the mercy of a monopoly rationer.

The reason our system is an epic failure relative to every other system in the first world is most people are privately insured by companies that spend over thirty percent of their revenue on bureaucracy, profit, and advertising. Most other nations either skip these companies entirely, or regulate them like utilities, either of which can sucessfully reduce overhead costs to less than five percent as as low as two percent (see Taiwan or our own Medicare system for examples).

Combine this with a bit of tort reform and a bitch-slap to the incomes of our overpaid specialists, and you have pretty much put our costs in line with everyone else.

It's funny that you bring up the moral hazard market failure, which is inherent in ANY insurance system, regardless of who pays for it. Any "free market" plan will suffer this failure as well, and your only proposed solution to it is to essentially keep weakening the level at which people are insured until they finally break.

A true national insurance scheme eliminates the adverse selection / asymetric information market failures.

The Angry Optimist|9.14.09 @ 5:59PM|#

As usual, every single thing Chad just wrote is a total, complete, baldfaced lie. I'd appeal to your sense of shame, Chad, if I thought you had any.

|9.14.09 @ 6:10PM|#

Chad

Insurance is treated like a public utility int the United States as well. I assume you have never checked what your state's Insurance Commisssioner (or equivalent) does.

|9.14.09 @ 6:18PM|#

I'm not convinced by the Forbes link on defensive medicine and malpractice costs. As if defensive medicine is the only cost of out of sight damage awards. The article claims doctor salaries are the main driver of cost increases. Sure, when an obstetrician pays $200,000 a year in insurance, he's going to need a decent salary to pay for it.

Chad|9.14.09 @ 6:20PM|#

How is a lie, angry. We spend about 50% more than most other nations (~15% of GDP vs ~10%). That means we would need to cut our costs by about a third to be on par with everyone else.

I have seen numbers ranging anywhere from the high teens (generally for non-profits such as Blue Cross) to upwards of forty percent for the total administrative costs of private plans. Let's use the numbers here, though.

http://www.citizen.org/pressroom/release.cfm?ID=1623

I suppose you accept peer-reviewed data from the Harvard Medical School, correct? They find that we blew ~$400 billion on overhead in 2003, over 2/3 of which was waste. That would provide enough savings to cover everyone.

Just think about those vaunted HSAs libertarians keep calling for. Every time you buy a damned aspirin, there is paper work. How can that NOT be ridiculously expensive?

|9.14.09 @ 6:20PM|#

But Tony Soprano IS just a hard-working businessman! You will still have a choice: government health-care or getting fucked by the system.

Chad|9.14.09 @ 6:21PM|#

Isaac Bartram | September 14, 2009, 6:10pm | #
Chad

Insurance is treated like a public utility int the United States as well. I assume you have never checked what your state's Insurance Commisssioner (or equivalent) does.

I am sure he does not regulate their profits, and that is the key.

The Angry Optimist|9.14.09 @ 6:25PM|#

They find that we blew ~$400 billion on overhead in 2003, over 2/3 of which was waste. That would provide enough savings to cover everyone.

When you define "waste" as "profits", I guess you get data to fit your convenient little airheaded theory.

Sorry, Chad, but I am not playing with you today. Everything you have said is categorically false, but you're just going to repeat it and find specious definitions for "waste" until you're "right".

|9.14.09 @ 6:34PM|#

Chad,

The reason our system is an epic failure relative to every other system in the first world is most people are privately insured by companies that spend over thirty percent of their revenue on bureaucracy, profit [sic], and advertising.

I don't understand how that amount of overhead (even if true) translates to the market failure you are alleging. Also, if I remember correctly from my finance classes and my economic classes (and all the reading I have done on the subject, and all those lemonade stands I set up in my youth), profits are not an expense or part of expenses.

Most other nations either skip these companies entirely, or regulate them like utilities, either of which can sucessfully reduce overhead costs to less than five percent as as low as two percent (see Taiwan or our own Medicare system for examples).

I believe your knowledge of finance or economics is a wee rusty - you claim other countries make their insurance companies spend no more than 5% on overhead - against what, exactly? Total revenue? EBIDTA? Gross Profits?

Combine this with a bit of tort reform and a bitch-slap to the incomes of our overpaid specialists

You beg the question here - "overpaid" compared to what?

and you have pretty much put our costs in line with everyone else.

Who's "everyone else"?

It's funny that you bring up the moral hazard market failure, which is inherent in ANY insurance system, regardless of who pays for it.

Why is it inherent? You are your asserting this is so.

Any "free market" plan will suffer this failure as well,

Why?

...and your only proposed solution to it is to essentially keep weakening the level at which people are insured until they finally break.

Why do you conclude this? Where is one think leading to the conclusion? This is a non sequitur.

A true national insurance scheme eliminates the adverse selection / asymetric information market failures.


The so-called asymmetry of the market (the unknown variables) is just a fact of life - it is what gives entrepreneurs the opportunity to enter the picture and reduce the asymmetries, but they cannot ever go away - people are not omniscient. I do not know how a national insurance system would eliminate this asymmetry - you would have to explain that.

|9.14.09 @ 6:37PM|#

I am sure he does not regulate their profits, and that is the key.

And, upon what, exactly do you base that gem. I can make wildass unfounded assertions all day long too. They do absolutely nothing to advance the discussion.

Incidentally I'm not here to defend insurance company's profits or anything else. Insurance regulation is a giant clusterfuck. And Insurance companies are among the major rent seeking entities around. And nothing in any of the propoals is going to change that one iota.

Chad, name one country in the world that is the size of the the United States that has a national health program. Hell, Callifornia's bigger thamn most of them, Florida's bigger than a bunch of them.

Actually I'll go further. Explain exactly how you'fd go about establishing a National Health Plan, single payer or otherwise, in this country.

List what new taxes you'd create, which ones you'd cut etc.

List the legal and constitutional changes you'd make. Remember, the federal government of the US cannot pass legislation binding on the states the way Canada can. Or France can on it's Departments, or Italy on it's Regiones.

Al of those countries handle their "national health" by decentralizing to local, regional or provicial governments. Even England does. And both Scotland and Wales are tiny population wise. At least ten US states have more people IIRC.

You see these countries don't have national health plans, they have national legislation which is administered, with varying results by local authorities. I wonder how most US state governors would react if Washington tried to impose something like Canada's Medicare on them.

In other words, Chad, let's get over this talking past each other and you propose exactly how you envision universal health care being implemented in the USA.

Remember we've already listed all kinds of proposals that we think will improve (unlike you we not into creating utopia, we accept human's imperfection and are prepared to live with most of the bad outcomes that result therefrom) things. And they've been serious and concrete, quite within the realm of the politically possible.

So, go ahead, Chad. Let's hear it.

|9.14.09 @ 6:40PM|#

Sorry Angry, but at least Chad makes arguments using substance. Your counter to his points is nothing but the ether of ideology.

|9.14.09 @ 6:50PM|#

The reason our system is an epic failure relative to every other system in the first world is most people are privately insured by companies that spend over thirty percent of their revenue on bureaucracy, profit, and advertising.

Companies "spend their revenue" on profit? This is kind of confusing, Chad. Where is the profit store? Profit is just the difference between revenues and costs. Profit can only be increased by adding revenue or cutting costs, not subtracting it by "spending" it. Advertising costs? Really? Only an unrepentant socialist or a perfectly-competitive market Walrasian complain about "wasteful" advertising. In the real world, companies need to advertise to inform consumers about their product. It's not only a "problem" for insurance companies, it's a "problem" for all companies. So is your solution to nationalize all companies in an effort to rid the world of wasteful advertising? Maybe it is. As for bureaucracy, what profit-mongering company would spend $1 on a bureaucratic position to get less than $1 worth of cost savings or new revenue generation? Even non-profits deal with the same cost-benefit trade-off in assessing the size of their bureaucracy.

It's funny that you bring up the moral hazard market failure, which is inherent in ANY insurance system, regardless of who pays for it. Any "free market" plan will suffer this failure as well, and your only proposed solution to it is to essentially keep weakening the level at which people are insured until they finally break.

Yes, I know its inherent in ANY insurance system, hence why I wrote "two most cited explanations for insurance market failure, adverse selection and moral hazard..." and didn't qualify it by saying the health insurance market. You think you're so smart in playing a gotcha game with me that you fail to read what I actually wrote. As for your second statement, I have three ideas for you: underwriting, insurance payout caps, and claims investigators. These are the weapons used by insurance companies to combat freeloaders, and they shouldn't be vilified for trying to run a business that people try to use as an bottom-less lottery. Without the insurance companies, people would always have to pay the full amount of their medical treatment out-of-pocket. At least these companies take some of the brunt off of their consumers when they get sick. If you have a problem with an insurance company, either refrain from patronizing their services or sue them for breach of contract if they deny a valid claim.

A true national insurance scheme eliminates the adverse selection / asymetric information market failures.

Yes, it eliminates it by first eliminating the market and then either taking on the outrageous costs itself (solving nothing) or eliminating the cost of the freeloaders through denial of coverage.

Bruce|9.14.09 @ 6:51PM|#

You could get more than a middle finger. Someone just poured a bottle of aspirin down Blagojevich aide Chris Kelly's throat a few days before he had to appear in court, where he may have told us whether any Obama regime apparatchiks tried to buy the Illinois Senate seat. It was a "suicide" by Bayer.

http://www.facebook.com/group.php?gid=133689582011&ref=mf

|9.14.09 @ 6:53PM|#

"I am sure he does not regulate their profits, and that is the key."

I'm certain that "he" does.

Any women holding positions of responsibility in your little world, Chad?

|9.14.09 @ 6:55PM|#

Cypher,

Sorry Angry, but at least Chad makes arguments using substance.

Confusing Profit with Costs is not an example of showing substance. Better return to eating your steak with Agent Smith...

The Angry Optimist|9.14.09 @ 7:01PM|#

Sorry Angry, but at least Chad makes arguments using substance. Your counter to his points is nothing but the ether of ideology.

Unfortunately, not all of us have time to repeat the counter arguments to Chad, over and over again. A brief rundown, though:

1. Chad dishonestly lumps "profits" in with "overhead".

2. Chad's own source admits that bureaucratic overhead increased with Medicare Part D (as it should have, really), but then seems to think that capturing a ton of private companies and administering them on a scale that would dwarf Medicare will somehow be more "efficient". This, too, is a lie.

3. Chad and others like him elide the fact that the profits in the medical industry are what drives innovation. When faced with this, we get lame arguments about NASA.

4. When faced with the fact that insurance companies are treated like state utilities, Chad handwaves and says "nu uh".

Now you know why I don't bother. Because no amount of "facts" have convinced Chad before, and none will after. His position is borne from laziness - Chad does not want to have to work for what he has, and would rather others sustain his lifestyle.

Chad|9.14.09 @ 7:14PM|#

FTG | September 14, 2009, 6:34pm | #

profits are not an expense or part of expenses.

That's simply a matter of accounting. We spend more on health care so that our companies (and doctors) can make fat profits. While this is simply a money transfer, is it one we want?

I believe your knowledge of finance or economics is a wee rusty - you claim other countries make their insurance companies spend no more than 5% on overhead - against what, exactly? Total revenue? EBIDTA? Gross Profits?

Typically those numbers are vs revenue. Government systems are usually 2% or less in administrative costs, have almost no advertising, and no profit. Almost every dollar coming in goes directly into actual care.

You beg the question here - "overpaid" compared to what?

First, it is self-evident that specilists are overpaid relative to general practicioners, which is while almost every med school student is striving to be a specialist and there is now a shortage of family doctors in many places. Now, that leaves only two possibilities: generalists are paid too little, or specialists too much. I have two solid lines of reasoning why it is the latter. The first is simple international comparisions. If you look overseas, our family doctors' have fairly normal incomes (relative to the average American), but our specialists have much higher incomes compared with their international counterparts. The second line of reasoning is to compare doctors' wages with a different but similar field - one where salaries are deterimined by the market rather than an AMA cartel and Medicare reimbursement tables. Fortunately, there is such a career field: science. PhD scientists have a similar amount of training and similar smarts as doctors. A typical PhD scientist starts out around 80k and can expect 115k mid career as a typical income. A doctor would need about an additional ~30k per year to pay off his ~200k loan, and an additional ~15k per year to cover any extra years he spent training for his speciality (typically 2-3 years). Family doctors do indeed make in this range, making their career earnings similar to that of a scientist. It is specialists that make too much.

Who's "everyone else"?

Pretty much any OECD nation you can think of. Japan, France, Britain, Canada, Sweden, Germany, Denmark...all have spending of around ~10% of GDP, to our ~15%.

Why is it inherent? You are your asserting this is so.

Please describe a form of insurance which does NOT cause the moral hazard. In some cases it is worse than others, but insurance, by its very definition, protects the insured from the costs of his actions, and thereby encourages risk taking.

Why do you conclude this? Where is one think leading to the conclusion? This is a non sequitur.

HSAs, "catastrophic plans", high deductible plans...no matter how you exactly organize it, what you are essentially doing is "uninsuring" some fraction of medical spending. The only way to get rid of the moral hazard is to get rid of the insurance.

A true national insurance scheme eliminates the adverse selection / asymetric information market failures.

I do not know how a national insurance system would eliminate this asymmetry - you would have to explain that.

If everyone is insured, there is no "selection", adverse or otherwise.

Chad|9.14.09 @ 7:29PM|#

Isaac Bartram | September 14, 2009, 6:37pm | #

Chad, name one country in the world that is the size of the the United States that has a national health program.

Well, there is no nation our size or larger that is developed yet. The next largest developed nation is Japan, and yes, they do have an excellent national insurance plan. It costs half what ours does, despite the fact they have far more elderly people and go to the doctor five times as often as we do. They also have more high-tech medical gadgets than we do (per capita), similar survival rates for cancers and heart attacks, much better infant mortality rates, and the longest lifespans, lifespan after sixty five, and disability-adjusted lifespans on earth. Oh, and did I mention that anyone in Japan can just walk into any doctor's office (including a specialist) any time, anywhere, with no permission, no networks, and no appointment...and probably get taken care of that day?

And our system is better because.....our doctors can afford bigger McMansions?

Actually, you should look into their system. It is quite similar to what HR3200 (the current house bill) aspires to be, assuming a public option is included.


Actually I'll go further. Explain exactly how you'fd go about establishing a National Health Plan, single payer or otherwise, in this country.

Write the names of every other OECD country on little slips of paper. Put them in a hat. Chose one randomly. Copy their system. We would be much better off no matter which one came up.

List what new taxes you'd create, which ones you'd cut etc.

Japan manages to cover everyone with an 8% tax. Considering you already pay 5% now just for FICA, that's a steal!

List the legal and constitutional changes you'd make.

I'd justify it the same way we do Medicare. If any state objects (*poke* Pawlenty), then we simply point out that logical inconsistency is against our principles, so therefore we must cut Medicare for everyone in their state.

All of those countries handle their "national health" by decentralizing to local, regional or provicial governments. Even England does.

Japan doesn't. Prices are strictly controlled at the national level, and are highly transparent.

juris imprudent|9.14.09 @ 7:35PM|#

That's simply a matter of accounting.

That's simply a breathtakingly stupid assertion.

Is that par or a birdie for chad?

|9.14.09 @ 7:44PM|#

Chad,

Japan is almost totally homogeneous racialy and culturally and the people accept a whole lot more regimentation into their lives than any American ever would (including you). Try again.

Write the names of every other OECD country on little slips of paper. Put them in a hat. Chose one randomly.

No, you choose one specifically and explain to us exactly how you would implement it in this country.

Keeping in mind that those countries are also more racially and culturally homogeneous (though not nearly as much as Japan). And that also racial and ethnic minorities that do exist have an awfully inconsiderate habit of falling through the "social safety net" and embarassing their governments when they're discovered.

Chad|9.14.09 @ 7:50PM|#

Chad,

Japan is almost totally homogeneous racialy and culturally and the people accept a whole lot more regimentation into their lives than any American ever would (including you). Try again.

Really? Please tell me more about Japan. I bet you know far more than me (considering I have lived there, can speak the language passably, and am in a relationship with one).

How is being able to go to any doctor you wish, at any time, with no appointment and minimal paperwork a form of "regimentation"? What we have here is far more regimented, despite your stereotypes.

How exactly we execute the national plan depends on which model we pick. HR3200 is closer to something that Japan has, but I would prefer a true single payer plan...essentially Medicare for all.

juris imprudent|9.14.09 @ 7:57PM|#

Oh, was Bob channeling Lewis Carroll?

Just back from Burning Man and my reality meter is still a little off.

Cal Lipigian|9.14.09 @ 8:18PM|#

Japan sounds awesome!

|9.14.09 @ 8:19PM|#

Chad, I do know that Japanese doctors are subject to a severe price controls which sounds an awful lot like regimentation to me. But since you are probably just fine with that, we'll let it drop. I suspect we just have quite different levels of acceptable regimentation. But guess what so do most Americans, which is something you'll find out as thsi thing proceeds and some Democrats find some of their oxen are going to get gored.

So good luck there.

SEE here's, the larger point, Chad. It's not about whether or not I'm in favor of any particular healthcare scheme or not. What I'm telling you is that no Canadian style, no French style no any style copied from anywhere is going to pass. What will pass will be a uniquely American style clusterfuck. It will be so larded up with special-interest privilege and corporate welfare that it will sink under it's own weight so badly the Democrats won't even want to take credit for it in tem years.

Why, because that's what Politicianus Americanus does. And there are so many conflicting interests in the body politic that nobody know what he wants but the politicos will try to give it to them anyway.
Yes, it's too bad we don't get to be ruled by political elites that know what's best. But them's the breaks.

Or maybe those other places aren't that great and you've developed too rosy a scenario.

|9.14.09 @ 8:25PM|#

Thanks for that link, Cal. I found several links that showed Japan's system in a less than favorable light too, but just a Chad will respond to any criticism of Obama with "Bush did it too!" he will respond to anything you show with "it happens here too!"

And, of course, he's mostly right. There are bad outcomes everywhere. But see Chad (and Obama) reveal themselves when they tell us they can solve all the problems.

Beware, utopians are dangerous.

Alice Bowie|9.14.09 @ 8:37PM|#

---------------------------------------------------------
Justification for Single Payer
---------------------------------------------------------
Cost Per Capita of Current Healthcare $6,000
Cost Multiplied by Population $1,688,228,712,000
Cost Per Worker (Yearly) $12,873
Cost Per Worker (Monthly) $1,073



----------------------------------------------------------
Assumptions
----------------------------------------------------------
Total Population in America: 281,371,452
80% of Working Population : 131,149,881
Total Cost per Capita of Healthcare $6,000

----------------------------------------------------------
Comments from the Author
----------------------------------------------------------
1. Premiums would be much lower if we eliminate the 30%
overhead of private Insurance
2. Everyone would be covered. No out of pocket cost.
3. No Dependency on your employer.
4. The 20% unemployment is taking into account the
official number plus others not counted.
5. There will still be a second tier: Doctors that don't
take national insurance…No way out of this.
6. Cost will be controlled the same way it's done today
with usual and customary rates.
7. Tort reform can be included. Eliminating Malpractice
insurance and using incident insurance.
8. For many people, $1,073 is less than what they pay
in health insurance costs and medicare taxes (6%)
combined.
9. Theres NO WAY Big Business and Big Insurance would let
this happen. I think they'd go from respectable busi-
ness men to Tony Soprano in a NY minute.

----------------------------------------------------------
References
----------------------------------------------------------
- Cost per capita I've got from GAO.
- Population info from the Census website.
- Working population was made up by ME. 80% of people
between the ages of 21-65 pay Premiums.

Gilbert Martin|9.14.09 @ 9:38PM|#

"It's funny that you bring up the moral hazard market failure, which is inherent in ANY insurance system, regardless of who pays for it."

ANY insurance system?

Really?

Explain what moral hazard exists in property insurance such as automobile collision coverage or homeowners insurace.

If you dont' have any insurance policy when you crash your car or your house burns down, no insurance company is going to pay you one cent for it.

Gilbert Martin |9.14.09 @ 9:41PM|#

"either of which can sucessfully reduce overhead costs to less than five percent as as low as two percent (see Taiwan or our own Medicare system for examples)."

Our own Medicare system, eh?

That would be the same Medicare system that Obama claims he can cut $500 B in fat out of to fund his new entitlement scheme. Doesn't sound uber-efficient to me.

Also of course, Medicare is far worse than it nominally appears because of the cost shifting from Medicare (and Medicaid) onto private health insurance.

|9.14.09 @ 10:30PM|#

Since when is a bunch of barely functional retards with teabags hanging from their hats considered the "American People"?

Chad|9.14.09 @ 11:10PM|#

Isaac Bartram | September 14, 2009, 8:19pm | #
Chad, I do know that Japanese doctors are subject to a severe price controls which sounds an awful lot like regimentation to me.
But since you are probably just fine with that, we'll let it drop.

I am not just fine with that, but advocating it. This is exactly how we are going to control prices. You need not worry about doctors. Like anything else, we will pay them enough that we have as many as we need at that price.


What will pass will be a uniquely American style clusterfuck.

That is likely true, because we can't pass a simple, clean bill without at least some blue dog/Republican vote. Instead, we have to laden it up with pork to buy a few of their votes. The same thing is true with the climate change bill, actually. If the left were in control, the bills would be a lot smaller and a lot of that crap would be cut out.

I am surprised libertarians just won't concede that we never ever ever never ever never never have a "free market" health care system, and that a hybrid system such as we currently have IS a cluster bomb. Therefore, single payer simple works better than any option on the table. It is irrelevant if "free market" systems would be better in theory, because we will never have one.

Chad|9.14.09 @ 11:13PM|#

Gilbert Martin | September 14, 2009, 9:38pm

Explain what moral hazard exists in property insurance such as automobile collision coverage or homeowners insurace.

I think you are confused. There are obvious moral hazards in auto and home owner's insurance. Surely, few people would build homes on flood plains and barrier islands if they had to suck up the whole cost if the place was destroyed. Likewise, auto insurance allows one to be a bit less cautious about how you drive and where you park.

However, the moral hazards are smaller for homes and cars than they are in health care...which is a big part of why health insurance is such a cluster@#$@#.

|9.14.09 @ 11:38PM|#

Chad has had his idiotic 'arguments' completely destroyed in every single health care thread on Reason.com. Each time he gets thrashed he just waits a day and starts over from scratch in the next article discussion. Because he is a troll with no interest in working solutions.

But it doesn't matter because he's as irrelevant as the subject he fails to understand: the issue is not other countries, it is not whether or not reform is needed, it is not percentage of GDP. The issue is the fact that the 'reform' being pitched by Obama and the Democrats will not help us. It will cost MORE money than we're spending, it will bend the cost curve UP, and it will not provide more coverage to more people (expanding the rolls with the same amount of available care and less money just puts the failure elsewhere).

Nipplemancer|9.14.09 @ 11:39PM|#

"Like anything else, we will pay them enough that we have as many as we need at that price."

what is enough and how is that determined?

|9.15.09 @ 12:46AM|#

Chad wrote, "I am surprised libertarians just won't concede that we never ever ever never ever never never have a 'free market' health care system."

But we had a system that was orders of magnitude better than what we have now, within the memories of many Americans still alive. It worked. We can have that again. We just have to give up the idea that the rusted wire coat hanger antenna that came with the car our grandparents bequeathed us was the original equipment. Let's go scare up the original replacement part and see how much more clearly the signal comes through, and how sweetly the music plays. Let's actually try restoring this vehicle, instead of "pimping" it into absurdity.

|9.15.09 @ 1:29AM|#

That's simply a matter of accounting. We spend more on health care so that our companies (and doctors) can make fat profits. While this is simply a money transfer, is it one we want?

No, it is not "simply" a matter of accounting: Profits are not costs. Period.


Typically those numbers (overhead of 5%] are vs revenue.

That's absurd. I want to see what modern company can get by with 5% fixed costs (only if they work by candlelight...)


Government systems are usually 2% or less in administrative costs, have almost no advertising, and no profit.

That's also absurd - you do not know anything about costing, accounting-wise or otherwise: Government expenditure is PURE cost, because the "revenues" come from other sources (thievery, or "taxation", or through debt.)

Almost every dollar coming in goes directly into actual care. [Emphasis mine]

Another falsehood - again, you understand little of costing. Have you accounted for: Pensions, paid leave, vacations, paperwork, other overhead expenditures (like energy, mail, document printing)?


First, it is self-evident that specilists are overpaid relative to general practitioners,

It is not self evident - you do not understand the term. A specialist is paid exactly what the market is willing to pay for his services. The comparison you make is silly: Of course, a specialist will command a better income than a normal practitioner, but the same is true if you compare a nurse with an internist, or a paramedic with a general medicine practitioner. The reason is the demand that exists for a specialty compared to the available supply, and not with some sort of conspiracy.

Now, that leaves only two possibilities: generalists are paid too little, or specialists too much.

This is a false dichotomy - a third alternative is that they are paid exactly what the market prefers, given the number of specialists vis a vis generalists.


I have two solid lines of reasoning why it is the latter. The first is simple international comparisons. If you look overseas, our family doctors' [sic] have fairly normal incomes (relative to the average American), but our specialists have much higher incomes compared with their international counterparts.

Why are you making this comparison? It is silly. I can tell you, the local plumber in my community makes a crap load of money compared to a plumber in Mexico City, but since I am living in a US town and it would be much more expensive to bring into the US a plumber from Mexico City, what the local plumber charges me looks now more reasonable.

The second line of reasoning is to compare doctors' wages with a different but similar field - one where salaries are deterimined by the market rather than an AMA cartel and Medicare reimbursement tables.

Well, you are now mixing together different issues, and unwittingly destroyed your previous "market failure" canard by now comparing the troublesome incomes with those that exist in an open market! The solution to the problem is right in front of you!

I agree the market is subject to restrictions by government's licensing laws, but the problem then is with the laws themselves, not the market. Take away the restrictions imposed by government, and the market CAN provide health care cheaply, by bringing more entrepreneurs and competition.

Fortunately, there is such a career field: science. PhD scientists have a similar amount of training and similar smarts as doctors.

Again, you make improper comparisons. While it may be true that a medical doctor could be just as smart than a PhD in (let's say) the physical sciences, this in itself is meaningless, since what the market seeks is not a big brain but a specific service. I could say that my karate trainer is just as smart than a PhD in the Geological sciences, yet the training I seek comes from the years of practice and experience the trainer has endured.


Pretty much any OECD nation you can think of. Japan, France, Britain, Canada, Sweden, Germany, Denmark...all have spending of around ~10% of GDP, to our ~15%.

You do not take into account the tax burden upon each individual in each different country (which is pretty hefty). Second, the fact that these countries spend less of their production capability in medical care may tell more about how care is rationed rather than about the level of customer satisfaction achieved. If I use 15% of my income to receive care, I would not really care as long as I got what I paid for. If instead I received mediocre care and was told that only 10% of the total GDP went into it, I would feel cheated.

The difference between care in the US and other countries is that I still control who will receive my money, whereas in countries with socialized medicine I would be at the mercy of the system, totally.


Please describe a form of insurance which does NOT cause the moral hazard.

Sure: Life Insurance. I buy it yet I do not go around thinking I am Superman.

Thus your argument that moral hazard is INHERENT in the market is not cogent.

In some cases it is worse than others, but insurance, by its very definition, protects the insured from the costs of his actions, and thereby encourages risk taking.

This is entirely false, you do not understand what Insurance is for. Insurance does NOT protect me from my actions (for example, there is no insurance for gambling in Vegas). What it does is hedge my risk for NORMAL activities that may carry SOME SORT of unforeseeable event, like for example: if driving, collisions; if transporting, theft, collision, natural disasters; there can be catastrophic medical emergencies, fire, theft. Insurance companies determine the likeliness (the probability) of these events and offer to insure a customer in case they happen. I may have insurance to protect myself in case of collision, but I have not changed my driving one bit. Thus, in itself, insurance does not generate moral hazard, especially if insurance companies are not in the business of giving money away like a sister of charity.


The only way to get rid of the moral hazard is to get rid of the insurance.

That cannot be the conclusion. As I have shown, there is no moral hazard inherent in the insurance industry. The problem lays with something else which has to do more with government interventionism.

If everyone is insured, there is no "selection", adverse or otherwise.

You mean, if there were no choice. Because you part from a false premise: That the lack of insurance generates the asymmetry. This is ridiculous and false. If that were the case, then the lack of a motorcycle places me in an asymmetrical position compared to people WITH motorcycles. However, if I do not want to HAVE a motorcycle in the first place, where is the asymmetry?

|9.15.09 @ 5:54AM|#

Shox FSM
Shox Dendara
Shox 45
Shox Legend Trainer

Chad|9.15.09 @ 6:46AM|#

James Anderson Merritt | September 15, 2009, 12:46am | #

But we had a system that was orders of magnitude better than what we have now, within the memories of many Americans still alive.

And it worked great in the days when if you got cancer, your treatment was some morphine and a hospice bed. The crux of the problem is that we have learned to do so many things that we cannot do everything possible for everyone. I don't really think you would want to go back to the system of the 50's, nor could we put the genie back in the bottle anyway.

Chad|9.15.09 @ 6:49AM|#

FTG | September 15, 2009, 1:29am | #

The difference between care in the US and other countries is that I still control who will receive my money, whereas in countries with socialized medicine I would be at the mercy of the system, totally.

In Japan, the government takes 8% of your income and covers everyone.

In the US, the government takes 5% of your income to cover just seniors, and your employer then gives you 1-2 choices of identical insurance companies where you must put another 10%.

CLEARLY, the latter system is better. Just LOOK at all the freedom you have in the states!

Gilbert Martin|9.15.09 @ 9:19AM|#

"I think you are confused. There are obvious moral hazards in auto and home owner's insurance. Surely, few people would build homes on flood plains and barrier islands if they had to suck up the whole cost if the place was destroyed. Likewise, auto insurance allows one to be a bit less cautious about how you drive and where you park."

The only one confused is you - or maybe you just think you are clever - in which case you are deluded rather than confused.

There is no "market failure" in insurance and there is "moral hazard" either absent governmment meddling.

Absent federal disaster relief funds and government attempts of force insurance companies to provide coverage and regulate premiums , people building on barrier islands and flood plains WOULD be sucking up the whole cost because they wouldn't be able to get insurance to being with. Or they would have to pay such exorbidant premiums that only those who were super rich enough already to self insure would decide to build there.

Richard Johnston|9.15.09 @ 5:05PM|#

Logan Boettcher wrote:

If you have a problem with an insurance company, either refrain from patronizing their services or sue them for breach of contract if they deny a valid claim.

One often-overlooked and very significant problem is that your ability to sue your insurance company, if your insurance is employment-based, is impeded by the Employee Retirement Income Security Act (ERISA). ERISA affects not only health insurance coverage but also life and disability insurance - in sum any type of coverage which is employment-based.

ERISA renders any employment-based insurance coverage virtually unenforceable in court should it ever come to that. In the case of both self-funded and insured coverage, state laws regarding breach of contract, insurance bad faith, and remedies are gutted by ERISA and replaced with a scheme which very significantly stacks the deck in favor of the insurance companies and similar entities. It also limits the remedies which may be recovered - if, against the odds, the claimant is able to prevail - to a level which is utterly meaningless to the insurer. This is a major, major problem, as of course it directly impacts the behavior of insurers and plan administrators, who know full well that the coverage they issue is essentially unenforceable and that they may breach their contracts with no meaningful consequence. For one example, see this discussion at my blog about ERISA.

One of the essential underpinnings of a free market is the rule of law. ERISA undermines the rule of law, and in this sense too it must be amended if any sort of real reform is to be achieved.

Chad|9.15.09 @ 5:28PM|#

Logan Boettcher wrote:

If you have a problem with an insurance company, either refrain from patronizing their services or sue them for breach of contract if they deny a valid claim.

There are two problems with this. One is that all private insurers are substantially identical (after all, actuarial tables have been understood for centuries), so if I have a "problem" with my insurer, I'll have it with their comptetitors as well. Second, if I have a pre-existing condition, there is no way under a "free market" system that I would ever be able to switch insurers, because no insurer would ever accept a new contract with me. Your choices once you get sick are to ditch your insurance and go bankrupt, or stick with what you got, no matter how bad it is.

|9.16.09 @ 4:27AM|#

Chad

When Issac says "regimentation", I assume he's means lifestyle choices. I believe the Japanese tend to eat healthier compared to the Americans (although they eat their share of fatty western food) and avoid invasive surgeries if possible.

I don't believe it's stereotypical to say that Japan (and maybe even more so in South Korea) is racially homogenous. The Japanese don't have to deal with their equavalent of WAVES of poor Latino immigrants who flood the United States, who are often resourceful in taking advantage of government programs.

Chad|9.16.09 @ 6:46AM|#

lee | September 16, 2009, 4:27am | #
Chad

When Issac says "regimentation", I assume he's means lifestyle choices. I believe the Japanese tend to eat healthier compared to the Americans (although they eat their share of fatty western food) and avoid invasive surgeries if possible.

It takes no more "regimentation" to eat fish and rice than it does to eat Krispy Kremes and fries, but that is a big part of it. The Japanese also exercise more than we do, mostly because they have to walk ten minutes to and from the train station twice a day rather than barely being able to roll themselves into their SUV in the garage. Hell, I know Americans who ride their damned cars to the END OF THE DRIVEWAY to get the mail rather than take a two minute walk. These people should lose their insurance immediately. If they don't give 1/100th of a shit about themselves, why should anyone else? Also, such drives are attrocious for the environment (because the catalytic converter is cool), but that's another story. We should just hire people to monitor the population, looking for extreme acts of laziness, and fine them to death. I am only half kidding.

I don't believe it's stereotypical to say that Japan (and maybe even more so in South Korea) is racially homogenous. The Japanese don't have to deal with their equavalent of WAVES of poor Latino immigrants who flood the United States, who are often resourceful in taking advantage of government programs.

True, but what does that have to do with health care?

|9.16.09 @ 10:39PM|#

Chad | September 15, 2009, 6:49am | #

In Japan, the government takes 8% of your income and covers everyone.

In the US, the government takes 5% of your income to cover just seniors, and your employer then gives you 1-2 choices of identical insurance companies where you must put another 10%.

CLEARLY, the latter system is better. Just LOOK at all the freedom you have in the states!

Chad,

Since Japan covers everyone with 8% cost to salaries, and we can only cover seniors with 5%, exactly what point are you making with US Government in-efficiency? You just proved that there's no way we can cover everyone at their same cost. Their system will not work for us. You lose.

|9.17.09 @ 3:50AM|#

Chad

I'm Asian myself, and by my own obervation, we're more disciplined on what we eat compared to the Americans. Almost to a fanatical degree, depending on the individual. They're not exactly hesitant to "shame" an overweight person either, so the pressure to lose weight is always there.

I mentioned the immigrant issue, because I don't think the Japanese will overload on government services (healthcare or otherwise) like impoverished immigrants struggling to assmilate in California, who are already hooked on costly welfare programs.

I'm not trying to bash Japanese healthcare, I hear good things about their model as well as South Korea's. We do have a lot more people here (2X Japan's population at the top of my head), with most of the population already leading unhealthy lifestyle and unafraid to leech off government entitlement programs.

|9.17.09 @ 9:18AM|#

Folks, why do you keeping engaging Chad? If we actually had a free health care market in this country, it would be worth debating. The government runs most of the hospitals and pays up to 46% of the bills. We have socialized health care and it's clearly sub-par as Chad keeps pointing out. We should all be thanking him.

|9.21.09 @ 10:14AM|#

These are the people they want to put in charge of 1/6 of the US economy

http://www.jsonline.com/watchdog/watchdogreports/56121342.html