Reason Writers Around Town: Shikha Dalmia on Obama's Health Care Snake Oil

June 17, 2009

President Barack Obama bizarrely argues that a Medicare-style insurance option open to everyone will cure our health care woes. But in her latest Forbes column, Shikha Dalmia argues that just as President George W. Bush concocted the connection between al-Qaida and Saddam Hussein to justify the Iraq invasion, Obama is concocting an equally fantastical theory to justify a de facto government takeover of health care.

She writes:

Despite Medicare's dismal record, Obama and his comrades hold Medicare up as an example for the private sector. Why? Because between 1997 and 2006, Medicare's health spending per enrollee grew 4.6% annually while that of private plans grew 7.3%. By tapping this 2.7% difference, they argue that they can perform the triple miracle of reining in escalating health care costs, and at the same time extending health insurance to the 46 million uninsured without imposing any extra cost on the economy.

But this is 21st century snake oil...

Read the whole thing here.

Comments

|6.17.09 @ 2:49PM|#

Someone name one thing besides killing people (the military mostly) that the government does more efficiently than the private sector?

Wicks Cherrycoke|6.17.09 @ 2:51PM|#

"Someone name one thing besides killing people (the military mostly) that the government does more efficiently than the private sector?"

1. Perpetuating its own existence.
2. Spending money. (I mean actually spending it, not spending it for good effect).
3. Blaming others for its own mistakes.

robc|6.17.09 @ 2:54PM|#

Spending money. (I mean actually spending it, not spending it for good effect).

They are not even good at that. They have barely touched their stimulus money.

The private sector would have bought shit with the stimulus money.

robc|6.17.09 @ 2:56PM|#

Someone name one thing besides killing people (the military mostly) that the government does more efficiently than the private sector?

Im not even sure the government is efficient at that.

Given equal budgets, you saying a merc org couldnt beat the US Military?

|6.17.09 @ 2:58PM|#

Isn't it basically impossible to insure 46,000,000 people without imposing cost on the economy?

24AheadDotCom|6.17.09 @ 2:59PM|#

This post is hilariously ironic, specifically the part referring to the "46 million uninsured". What Shikha Dalmia of Reason isn't telling you is that millions of that number are foreign citizens, including millions who shouldn't be here in the first place. Those who think like Reason (but who, unlike Reason, have influence) have played a role in giving more power to the Dems and increasing the numbers of uninsured. Now, Reason is fighting a Quixotic battle against those who have much, much more PoliticalPower than they do, and part of that power was obtained thanks to those who think like Reason.

On a sidenote, CNS recently had a round-up of those who've lied about the 45-47 million here ; I first spotted similar lies in September 2007.

|6.17.09 @ 2:59PM|#

"Given equal budgets, you saying a merc org couldnt beat the US Military?"


The mercs would get their ass kicked. To run a proper military you have to be able to throw people in jail as dicipline. Merc orgs can't do that. You can do it with small groups of special ops types but not with a big Army. Big Armies require dicipline. And a Special Ops troop doesn't stand a chance against a big Army.

|6.17.09 @ 3:01PM|#

On a related note, my electric bill is 50 bucks a month more than last year. I am only paying last years amount. That's how I save money on electricity.

|6.17.09 @ 3:02PM|#

"Isn't it basically impossible to insure 46,000,000 people without imposing cost on the economy?"

Yes it is. But of course we are not turning these people down for care. Insurance doesn't reduce costs it just shifts it. As it is, the uninsured get medical care and the hospitals and doctors eat the cost which is in turn passed on to the rest of us. Under Obama care, they will get care and the taxpayers pick up the tab. The only difference is that Obamacare gives lots of power to government bureaucrats and also requires the hiring of lots of Dem voters to administer it. All features in the Obamasiah's eyes.

Mike Laursen|6.17.09 @ 3:03PM|#

Isn't it basically impossible to insure 46,000,000 people without imposing cost on the economy?

Depends on how generous and prompt the insurance is going to be when paying out claims. And, as I'm finding out with my aging mother and MediCal, depends on what degree they seize on and exhaust the patient's assets before paying claims.

Fascitis Necrotizante|6.17.09 @ 3:03PM|#

There is a rich literature testifying to this phenomenon. A study last December by Milliman Inc., an independent consulting firm, commissioned by America's Health Insurance Plans, found that underpayment by Medicare and Medicaid accounted for nearly an 11% increase in the health care costs of private plans.

MNG HOW CAN THIS BE WTF?!?!

Fascitis Necrotizante|6.17.09 @ 3:04PM|#

Callate, Lonewacko

Forty-Two|6.17.09 @ 3:10PM|#

LoneWacko logged out of the library computer, trying to stifle his gleeful grin. "Unlike Reason, have influence..." He was forced to admit to himself, this line was GENIUS! Or, rather, supra-genius! And the line about Quixotic battles... sure he'd googled the phrase a couple times to get the spelling right, but it was perfect!

Couldn't those appletini-drinking cosmo libertards see the lunacy in running a crappy blog nobody read, and fighting for causes nobody supported? Fools!

LoneWacko hurried from the library, as his brilliance was causing a stirring in his loins. He needed privacy, and soon.

Mike Laursen|6.17.09 @ 3:10PM|#

OK, let's be super generous with the statistics and say there are 10 million illegal immigrants and that none of them pay a cent in payroll or other taxes. That still means that there are three times as many people who are uninsured and legally in the U.S. Lonewacko, you might want to familiarize yourself with the concept of significance.

|6.17.09 @ 3:17PM|#

If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?

|6.17.09 @ 3:20PM|#

Insurance doesn't reduce costs it just shifts it.

Not true. First dollar coverage, or even low-deductible/copay comprehensive coverage, creates demand, and thus cost.

Invisible Finger|6.17.09 @ 3:22PM|#

Someone name one thing besides killing people (the military mostly) that the government does more efficiently than the private sector?

Citation needed.

I'm not convinced the present US military is very efficient at killing people. Iraqi insurgents seem to get more kills for the buck than our wasteful military.

|6.17.09 @ 3:24PM|#

If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?

Hospitals, at least,

(a) don't have the option of turning away anyone who shows up at the emergency room.

(b) can't pick and choose which Medicare patients they take, so to provide care that is adequately paid for, they have to provide care that is not adequately paid for.

(c) would rather take the pittance provided by Medicare/Medicaid than provide the care for no payment at all.

(d) given their high fixed costs, are better off providing care even at a loss than trying to spread their costs over a smaller base.

|6.17.09 @ 3:25PM|#

Ms. Dalmia usually does much better than this. The first paragraph undercuts her credibility. One, Bush did not originally justify the invasion of Iraq based on al-Qaeda/Hussein connections. (Instead, he fabricated WMD, a distinctly different charge.) Two, the effectiveness of the Medicare program model for providing healthcare should not be measured according to the lack of guts on the part of Congress and past Presidents not to fund it properly. Three, the use of a flawed version of the Iraq war error to characterize Obama's thinking is crude and foolish-sounding.

Most analysts can see that this new healthcare program will inevitably subsume and replace Medicare in the next 6 years. This renders the "program in trouble over the next 75 years" nonsense into irrelevant noise. As she proceeds, she rather casually contends that Doctors and suppliers make back their losses serving Medicare clients by overcharging private insurance clients. This requires some sort of statistical support as this practice represents fraud. As healthcare providers are not required to take Medicare patients, the rational person would guess that the fees must be enough. Also, the same rational person would suspect the insurance companies to sue in a heartbeat if they thought these healthcare providers were "getting well" by overcharging them.

Obama's advisers are making their claims based on the monopsonist market created by one giant national health plan. Libertarians are not big fans of monopsony anymore than they are fans of monopoly. That seems to provide a much sounder basis for attack.

rascal |6.17.09 @ 3:34PM|#

"I'm not convinced the present US military is very efficient at killing people. Iraqi insurgents seem to get more kills for the buck than our wasteful military."

Invisible Finger is Bill Maher?

|6.17.09 @ 3:34PM|#

If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?

Also, it's steady, reliable and fairly predictable cash flow. For many institutions, it generates not insignificant top line revenue. You have to count on individual payers and the gold plated plans that democrats so loathe to get much on the bottom line.

Pip|6.17.09 @ 3:36PM|#

"(Instead, he fabricated WMD, a distinctly different charge.)"

No, UN Resolution 1441. How soon the dipshits forget! How convenient!

Gilbert Martin|6.17.09 @ 3:40PM|#

"They are not even good at that. They have barely touched their stimulus money."

That's part of the plan.

It's targeted to start shoveling cash to traditional Democrat constituent groups right around the time of the 2010 elections.

You didn't think the purpose of the stimulus was actually to fix the economy did you?

|6.17.09 @ 3:41PM|#

All, please note that Medicare is NOT Medicaid, Medical, et al. The Federal Program, Medicare, is rather well regarded in health circles for minimized paperwork, prompt payment, and effective dispute resolution. Medicaid and all its variations on its name are state programs run as well or as poorly as the states run other programs.

Lots of existing military-impersonating organizations are more efficient at killing, dollar for dollar than the US. Those that run up againt the US military discover that being more efficient still leaves you dead.

Mike Laursen|6.17.09 @ 3:41PM|#

This requires some sort of statistical support as this practice represents fraud.

To charge Medicare one rate and a private insurance provider another rate? One might label that practice with some other disapproving term, but how is it fraud?

|6.17.09 @ 3:42PM|#

As LoneWacko rushed from the library, his member gorging, he realized he needed to get to a bathroom with a stall, and soon. Then, suddenly, in front of him, was a possibility: Taco Del Mar. He paused, torn: how could he relieve himself, sexually, in a Mexican-themed chain restaurant? It would be so wrong.

Yet that thought alone caused his already stiff member to throb...it would be so wrong, yet so--right. After he caught a glimpse of the chica behind the counter, he realized that this was it. He had to LoneWackoff here.

Gilbert Martin|6.17.09 @ 3:45PM|#

"If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?"

Partly because they still have the ability to shift costs onto other patients with private insurance to make up the difference.

If that cost shifting abiltiy went away, then more of them would get out of the businiess altogether. No entity other than the government itself can operate at a loss forever.

|6.17.09 @ 3:47PM|#

If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?

Physicians in private practice often refuse to take such underpaying patients. It keeps Medicaid costs down if the patient can't find anyone other than emergency room docs -- who are forced by law to treat them -- to see them.

If Obama gets away with his plan, expect to see an exodus of physicians from practice, leading to socialized medicine style rationing.

Wendall|6.17.09 @ 3:53PM|#

"To charge Medicare one rate and a private insurance provider another rate? One might label that practice with some other disapproving term, but how is it fraud?"

Back in the 80's private paying residents at nursing homes were charged significantly more than their medicare roommeates.

The government said that was unfair and my private paying great-aunt got a refund for the difference, paid for by the nursing home.

|6.17.09 @ 4:02PM|#

"No, UN Resolution 1441. How soon the dipshits forget! How convenient!"

While denying the "dipshit" part, I will go with that if you want. Still proves my point tha Dalmia got it wrong, which is very careless.

Russ 2000|6.17.09 @ 4:09PM|#

If Obama gets away with his plan, expect to see an exodus of physicians from practice, leading to socialized medicine style rationing.

That's been going on for decades already. There are a lot fewer GP's today than 40 years ago, the trend is toward specialized practice and research capacities.

The irony in all of this is that doctors who want to get out of a practice and into research need additional education to get into it - and they have the same entitlement attitude that their non-paying customers had and are often in arrears on their tuition. And have as many bullshit excuses, too.

|6.17.09 @ 4:12PM|#

The Federal Program, Medicare, is rather well regarded in health circles for minimized paperwork, prompt payment, and effective dispute resolution.

Err, not my health circles (hospitals, their attorneys, medical records departments, compliance offices, and, yes, financial folks).

The new Medicare "bounty hunter" auditors ( is the current worst. idea. ever. in health care administration. They are paid on commission, up front, for "overpayments" that they find; the overpayments are taken from the hospital immediately; the appeal process takes years; and, of course, there is no penalty or other no recourse whatsoever if an auditor's findings are overturned.

What could possibly go wrong?

|6.17.09 @ 4:15PM|#

Most analysts can see that this new healthcare program will inevitably subsume and replace Medicare private insurance in the next 6 years.

Fixed that for ya, blau, although I think it will take more than 6 years.

robc|6.17.09 @ 4:28PM|#

If Medicare and Medicaid are underpaying, then why do hospitals and other providers continue to accept people insured by those plans?


More and more arent.

Its the whole question of selling to Wal-Mart. It gets you big volume sales but at very low profit. Is it worth it? Maybe yes, maybe no. Depends on the math.

If you can take the medicare volume and the lower profits and make it up by raising prices elsewhere, you might as well. Many doctors have found it doesnt make sense for them and no longer accept medicare. A very small number work on cash only and dont accept insurance at all. You want to file, do it yourself.

DADIODADDY|6.17.09 @ 5:16PM|#

"They have barely touched their stimulus money"....No desert for them

Mike Laursen|6.17.09 @ 7:49PM|#

The government said that was unfair and my private paying great-aunt got a refund for the difference, paid for by the nursing home.

OK, so the practice was determined unfair, not fraudulent?