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Thursday, April 01, 2010

Health care "reform:,wouldn't it be nice to think so?

A recent commentary by Sheldon Richman has so many insights into what the health care bill offers,will offer and as to what it means that it must be read in its entirety. See here. All I can add is "amen".

Here are some of the major issues he raises.

Richman tell us that what "everyone" is provided with is not insurance at all

OPR [ stands for the Obama-Pelosi-Reid bill ] will directly subvert what is left of the insurance market and indirectly subvert what is left of the medical market. Insurance is about pooling risk in the face of an uncertain future. But OPR requires that insurance companies cover people without taking risk or even certainty (preexisting conditions) into consideration. There are no grounds for calling this insurance. Rather, it is welfare mixed with prepayment for future services. (Not that the insurers are complaining; it’s a price they’ll gladly pay for the captive customers that the mandate will deliver.)

Remember "fast,good and cheap" , pick any two. There is something similar with OPR, but I think you can pick only any one.

Adding insult to injury, OPR falsely promises that we can have government-subsidized consumption of medical services, lower prices, and freedom of choice at the same time. In fact, those three things cannot coexist. Subsidies will boost consumption, which will raise prices. If government is serious about lowering prices, it will have to curtail consumption, that is, limit freedom of choice, explicitly through rationing or implicitly through price controls and standards of practice.

And perhaps most important is that fact that no one really knows what is in the bill because much that will come out of the legislation is undefined and is to be determined by the Secretary of HHS and other panel and bureau heads.

Finally, OPR puts another nail in the coffin of government transparency. Regardless of how much or little government (if any) people want, they should at least be able to see and understand what it is up to and how much it costs them personally. In every way OPR flouts this principle. The law’s 2,700 pages of impenetrable “English” was read in its entirety by few if anyone. But that only begins to describe the offense. The law leaves much to be defined in the future by government departments, boards, and commissions. Hundreds of rules and regulations have yet to be written – and who do you think will be right there offering counsel as the new insurance rules are formulated? The same insurance companies whom last week were said to be the devil incarnate. (And Organized Medicine and Big Pharma too.) That’s how the Washington game is played. And we’re the losers.

I agree,organized medicine (at least the AMA and ACP) were on hand to "offer council" but while Pharma may have made out OK ( I say" may" because all of the fall out has not begun to fall ) organized medicine,IMHO, didn't get much to show for their lobbying efforts.The small dollops to physicians are more illusory than real and a very small price to approve giving massive power to the Secretary of HHS.

1 comment:

Andrew_M_Garland said...

Say Fred lives in a $100K house (replacement cost) and Mike lives in a $400K house. If the chance of fire is 1/400 each year, then Fred pays $250 fire insurance yearly, and Mike pays $1000. Ignore administrative costs.

As a matter of "fairness", the government rules that there will be "community rating". Fred and Mike will pay equal amounts. Now, each pays $625.

Fred is upset: "Why should I pay for the higher costs of my neighbor?"
Mike is happy: "We are all in this together".

Fred observes correctly that this government "fairness" policy is imposing on him a hidden tax of $375 and giving it to Mike.

This is what the government is doing now in health care. The Democrats are saying that it is everyone's moral obligation to buy the new health insurance, and are imposing fines on those who don't. The fines are relatively small now, but eventually will have to be close to the implied tax in order to guarantee "voluntary" compliance. Young adults who pay a fine rather than buy this new insurance will be opposing the new tax, not acting immorally to avoid their "fair" contribution.

As the insurance companies fail, or the fines are increased, the government will say that people must be forced to do the right thing through complete government control, because insurance doesn't work.

Our current health care mess is due to applying a "soak the insurance company" policy to pay for current health care subsidies. The costs of people who can't be billed are being paid by the people who have insurance, and a large hidden tax is flowing from the insured to the uninsured through emergency rooms and hospital charges. Doctors and hospitals have a socialist outlook. They want to treat everyone, so they don't mind shifting costs onto the insured.

The hidden taxes are distorting healthcare, producing the $20 hospital aspirin. Explicit subsidies (parallel to food stamps) would not distort health care markets, but people would see the costs and refuse to pay them all. Also, Obama would have to admit that his plans require a large tax on the middle class, not just the wealthy.

The Medicare Tomato Market

This is an analogy and explanation of Medicare economics. Say that tomatoes were declared vital to life and made available free through the Medicare National Tomato Bank. This translates the story of the healthcare to the tomato market.