ObamaCare: Far worse than economically ignorant

In a news conference yesterday, Barack Obama demonstrated a remarkable ignorance of and antipathy for free markets and free enterprise when speaking about the possibility of a “public option” as part of “health care reform.” It’s not easy for Obama to surprise me but the vacuousness of his statements combined with their casual disregard for the power of government when “competing” with private companies was truly shocking. According to an AP article about the news conference, Obama said that “A government-run health insurance option is needed ‘to discipline insurance companies.’” Let’s get this straight: 1300 insurance companies aren’t enough to have competition? We need 1301 to suddenly make it all OK? Obama complains that insurance companies care about profits…implying that a government-run program won’t. And that raises at least two huge problems: First, if the government plan won’t care about operating efficiently, then Obama’s clearly lying when he says that private health insurance companies “should be able to compete.” And second, if the government plan won’t care about a profit, that means it will run at a loss and become a permanent leech, sucking taxpayer dollars year after year, adding to the collection of such leeches on a body politic that President Obama believes is a never-ending supply for his essentially fascist economic plans (though to be clear, his vision for health care is more socialist than fascist.). The following paragraph from the AP article emphasizes Obama’s economic idiocy:
"Why would it drive private insurance out of business?" he said of the proposed public option. If private insurers "tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical."
Does President Obama really think that a government-run plan will in any sense be on an equal footing with private plans? Does he not think that people will rationally switch from private plans to a “free lunch” even if it’s not the tastiest lunch, just as is already happening in states’ SCHIP (children’s health insurance) programs where somewhere between 1/3 and 2/3 of new enrollees drop private coverage to get on the government plan? (There is a higher level of “crowd out”, i.e. people dropping private coverage, as states increase the income levels of families which are eligible for the programs.) And does he really think that the fact that government “can’t run anything” will keep government from putting private companies out of business? I’ve always thought that Obama didn’t understand economics very well. But I underestimated how ignorant he is. Indeed, he’s closer to delusional than ignorant based on his words yesterday. As is typical for a liberal, he thinks people are stupid as he downplayed the fact that “up to 80 percent of people ‘are satisfied with the health insurance that they currently have.’” The solution to rising health care costs is much simpler than a massive government take-over of our medical system. It is to allow competition into the system, to let people buy policies across state lines and let states compete in terms of the mandates which they’ll require for policies sold by insurers in their states. So someone from California could buy a policy in Idaho at half the cost because it doesn’t have mandatory coverage for in vitro fertilization and hair plugs. Also, allowing people to get together in groups for purposes of buying insurance would be a good step. While I oppose Medicare Part D, the prescription drug benefit, there is nevertheless an important lesson in that program’s relative success. In an excellent article, Mort Kondracke notes that the private competition created in Part D has the program coming in dramatically under cost estimates, where no other part of Medicare is doing anything but busting every budget estimate ever made. Even a government program can, if allowed to, prove that competition works. But Obama’s conception is, despite all his flowery rhetoric, NOT about real competition. It’s about putting private health insurers out of business and turning our health care system into something like England’s or Canada’s, where people can’t get state of the art medicine or treatments, where surgery has waiting lists of months or years, and where anyone who can afford to comes here for any life-and-death procedure, or any quality of life procedure which can be done here in weeks rather than waiting months or years at home. It would also help costs if legislation to curtail frivolous lawsuits and outrageous judgments were passed, but the Democrats are so in debt to the trial lawyers that they won't engage in any serious tort reform. Indeed, Barack Obama said that to the AMA just last week. Finally, a point I’ve made before and will keep making: The game here is not just about a socialist vision of taking over health care. It’s about relieving unions of much or all of their financial responsibility for their members’ and retirees’ health care. After all, if the UAW were suddenly not to need to spend the $20 billion they’re getting from GM on health care, imagine how many Democrats they could get elected with that money suddenly turning into the world’s largest political slush fund.
  • gstaff
    Comment from: gstaff
    06/24/09 @ 06:30:27 am

    A good example of how private health insurance companies will be affected can actually be found here in Texas with home insurance near the coast. Private insurers were raising their rates dramatically in coastal areas beginning about 2002, because even relatively small storms were resulting in huge losses. Homeowners were outraged at the cost of premiums. Texas stepped in with the “Texas Fair Plan”. From the Fair Plan Website: “[The] Texas Insurance Commissioner has responded to the lack of availability of Homeowners Insurance [Note: Insurance was available, it was just very expensive. GS] by enacting a Fair Access to Insurance Requirements (FAIR) Plan in Texas. This new alternative market is a residual market of last resort and is not intended to compete with the standard property insurance market. The Texas FAIR Plan Association (TFPA) will write policies only through licensed Texas agents. TFPA does not write business directly with policyholders.” Also, “Consumers who have been declined residential property insurance by at least two insurance companies licensed to write and actually writing residential property insurance in Texas may apply for coverage.” Agents get licensed through The FAIR plan, and then any huge losses are at least in part covered by the State. Hurricane Ike completely wiped out the FAIR plan funds. Of course, since claims under the Fair plan are backed by the State, the FAIR rates are lower. Private companies have all but completely quit writing insurance for coastal areas, because the government policy is cheaper. Because it is no problem to find two insurers who will not write a coastal policy, the so stated insurer of last resort has effectively become the only insurer. Look for the same scenario with private health insurers trying to compete with the government.

  • kjdiamond
    Comment from: kjdiamond
    06/24/09 @ 12:31:22 pm

    If this bill is passed, Obamacare will expand the union powerbase into healthcare as the public option will be the only option, and we proceed to a single provider system. At that point, all healthcare employees will fall into the hands of public unions that will shower them with benefits beyond what will be provided to US citizens. Don't believe me? Well, within the current bill, the current government systems have the legal right and option to opt out of the new "public" plan without penalties. This will be extended to employees of the new single provider system with the public getting inferior service and footing the bill. This is just like the pension insurance that the government provides for both public and private plans, i.e. unionized pensions. Where the public has to take risks and assume losses, the US government guarantees and provides support for these plans to pay for votes. And we pay for it. Its coming if this passes. More Union power and more government control of the GDP...if there is any left.

  • The Freak
    Comment from: The Freak
    06/25/09 @ 10:54:58 pm

    You know, I lived in the UK, Greece, and Italy. In each of these countries, the government provides public plans for health care. Interestingly, in each of these, there is also a thriving private health industry. Even more intriguing is the fact that all the employers I worked for provided private policies that allowed us to utilize the private system. In fact, when I had a parotid tumor, my coverage paid for care in the US (where the unpleasant side effect of facial paralysis following parotidectomy is half the rate it is in Italy, even in the private system). 18 months ago I interviewed for an executive position in Canada. When I asked about health care, the HR rep told me that the company provides private insurance so their executives "dont' have to be subjected to the provincial health system." Go figure.