Category Archives: The Health Care Crisis
The Dietary Nanny Patrol is at it again, this time with an article in the current New England Journal of Medicine claiming that a penny-per-ounce tax on sugary soft drinks would help to reduce the nation’s bulging waistline while raising $150 billion “that governments can use for health programs” over the next decade. And cows nationwide will breathe a sigh of relief over the plunging demand for belt leather. This is another in a long line of similar ideas to paste a bull’s-eye on isolated food groups as a way to refill depleted tax coffers under the guise of public health advocacy. It always seems odd to me that the estimates of enhanced tax revenues and increased public health are so often trumpeted together, even though the achievement of one always comes as a tradeoff against the other. Such “solutions” send mixed messages and are inefficient as hell.
“(B)y making Medicare more efficient, we’ll be able to ensure that more tax dollars go directly to caring for seniors instead of enriching insurance companies. This will not only help provide today’s seniors with the benefits they’ve been promised; it will also ensure the long-term health of Medicare for tomorrow’s seniors.” President Barack Obama’s op-ed in the 8/16/9 New York Times.
Let’s see, Medicare’s total unfunded liabilities are somewhere around $65 trillion. The amount the President would like to cut in Medicare Advantage payments to those unjustly enriched insurers is about $11 billion per year. At current long-term Treasury interest rates, the savings would handily cover the interest on the interest on the interest on the debt required to make Medicare whole.
It’s a start, I guess.
I recently spent the better part of a Colorado summer Saturday reading the worst parts of something called The Affordable Health Choices Act of 2009. Purported to constitute health care reform, its thousand pages were introduced this past week by the chairmen of the three congressional House committees with jurisdiction over health policy. It is the single most egregious piece of health care legislation to cross my desk in four decades. Hillary Care (yes, I read that one too), nonsensical as it was, represented an order of magnitude more thought than this bill which is so blind to basic economics on so many levels that I marvel at the ability of the three chairmen, Speaker Pelosi, President Obama, and the AMA to praise it with straight faces.
It’s a typically cool, cloudless July 4th morning in Colorado Springs, so my mind inevitably wanders to…what else but health reform. When, oh when, will we have the market-based health care system we need so that I can move on to addressing simpler problems? Like world peace. But when better than Independence Day to ponder an important question of the day: Is health care a right?
I wish it were. It would be so much simpler if all Americans could exercise their right to medical care as they do their rights to life, liberty, and the pursuit of happiness. If health care were on a par with, say, the right to free speech, my right to medical care would not limit your access to the same thing. The supply would be free and limitless. Any question of violation of that right would be dealt with by the courts.
One of President Obama’s claims during his ABC News health care reform TV special last week was that a public health insurance option would have lower administrative costs than competing private plans. This, he claimed, would allow the public plan to offer lower premiums.
The only way that is going to happen is if the government significantly undercounts the costs it actually incurs in operating its health insurance GSE (government sponsored enterprise). Such book cooking is something that, despite the President’s pledge of a “level playing field,” is a virtual certainty.
To understand this, look no further than Medicare. It signals a dire warning that any government-run GSE’s actual administrative costs will be billions of dollars higher than will ever be reported or factored into its premiums. Despite Medicare’s published reports that it spends only about three percent on administration, that figure leaves out the costs of even more costly and necessary support services provided by other government agencies, such as the GSA and IRS. An apples-to-apples comparison shows Medicare’s administrative costs are actually about 8%, with private insurers running 16.7% (including profits). That’s still a sizable difference, but a highly deceiving one.
A key feature of President Obama’s proposed public health insurance plan is the employer pay-or-play mandate that would require America’s companies either to provide employee health insurance or to pay a penalty tax or fee to the government. The purpose is to prevent employers from dropping their health insurance and dumping their employees on the public plan. It won’t work. Companies survive by selling things for more than the cost of making them. Producing and selling things require paying employees. Long ago, an employee’s pay was whatever he took home at the end of the week. Later, employee compensation expanded to include various so-called “fringe” benefits, most notably health insurance.
Wednesday night (6/24/09) ABC News ran a special commercials marathon with frequent and brief interruptions by Charlie Gibson, Diane Sawyer, and others to ask President Obama about his health care reform plans. The commercials were more informative.
But a few points leaked out that did illuminate, however dimly, the President’s plans to reform our universally-acknowledged mess of a health care system. Among the more interesting was the pledge that his public health insurance plan would operate on a level playing field in competing against private insurers while presenting a better deal to America’s self-employed and uninsured. Among his points were these:
- As a nonprofit organization, the public plan will offer lower premiums because it won’t have to earn profits.
- The public plan will not be subsidized by the government, but will float on its own bottom with its own premiums and expenses.
- Any government subsidies will be for individuals—not the public plan—to help them buy insurance, whether they choose the public plan or private insurers.