Monday, March 15, 2010

The Illusion of Reform

Robert Samuelson nails it in his column today, here are some excerpts:

WASHINGTON -- "One job of presidents is to educate Americans about crucial national problems. On health care, Barack Obama has failed. Almost everything you think you know about health care is probably wrong or, at least, half wrong. Great simplicities and distortions have been peddled in the name of achieving "universal health coverage." The miseducation has worsened as the debate approaches its climax.

Though it seems compelling, covering the uninsured is not the health care system's major problem. The big problem is uncontrolled spending, which prices people out of the market and burdens government budgets. Obama claims his proposal checks spending. Just the opposite. When people get insurance, they use more health services. Spending rises. By the government's latest forecast, health spending goes from 17% of the economy in 2009 to 19% in 2019. Health "reform" would likely increase that.

Obama's telling people what they want to hear, not what they need to know. Whatever their sins, insurers are mainly intermediaries; they pass along the costs of the delivery system. In 2009, the largest 14 insurers had profits of roughly $9 billion; that approached 0.4 percent of total health spending of $2.472 trillion. This hardly explains high health costs. What people need to know is that Obama's plan evades health care's major problems and would worsen the budget outlook. It's a big new spending program when government hasn't paid for the spending programs it already has."

MP: If total health spending is $2.472 trillion per year, that's about $6.8 billion per day and $283 million per hour. So the profits from last year of $9 billion of the 14 largest insurers account for about 32 hours of annual spending on health care or less than two days of the total spending. It's then all of the other costs that account for the rest of the 99.6% of spending and the other 363 days.


As I pointed out in a previous CD post, insurance companies are the messengers of higher health care costs, not the source of higher costs. Focusing on health insurance profits as a source of higher health care costs is a diversion from the real factors that lead to higher costs.

19 Comments:

At 3/15/2010 9:51 AM, Anonymous Anonymous said...

The reason there's not a lot of "educating" going on about health care reform is that to the democrats, ignorance is an asset.

If they really set forth to explain their policies (overall and health care) to their constituency, they run the risk of alienating voters.

Their platform is one of "if it sounds good, let's make it happen" rather than "this makes fiscal sense and is a program that is sustainable; let's make it happen."

It's all about getting votes, now and in the future, from voters who make their decisions on pure marketing and greed, rather than facts.

 
At 3/15/2010 10:20 AM, Blogger Eric said...

I guess I am not the expert on Obama's health care plan, but is it all targeting on insurance industry?

I think we need to ask the question that "Is basic health care, like basic education, a government responsibility for citizens? Some other countries think so.

The comment suggesting Obama is all wrong on health care reform by citing insurance industry is not productive.

 
At 3/15/2010 10:33 AM, Blogger bix1951 said...

It is all about money.
It is all about making poviders of health care richer.
Doctors, hospitals, medical supply companies, etc.
But overspending cannot go on forever. How it will end is anybody's guess.
hyperinflation?
financial collapse?
dictatorship?
or maybe we just muddle through with a gradually lower standard of living

 
At 3/15/2010 10:40 AM, Anonymous John said...

When the consumer does not directly pay for what he "purchases" he will usually be more careless about what it costs. This is a large part of the problem with the current system, and Obamacare would actually make it even worse, not better.

 
At 3/15/2010 11:03 AM, Anonymous Anonymous said...

They don't pass along the costs of th edelivvery ssytem, just those portions of the osts that they cover.

Their profits relative to total costs are irrelevant, but their profits relative to the costs they cover are relevant, and a lot greater than 0.4% such a statistic is misleading.

Hydra

 
At 3/15/2010 11:55 AM, Anonymous Anonymous said...

Is basic health care, like basic education, a government responsibility for citizens? Some other countries think so.



If "basic health care" and "basic education" are government responsibilities, then how could food and housing not be? And if food and housing are government responsibilities, then how could clothing and transportation not be? And of course we should all be treated "equally" in regard to these things, even if that means we all wear sack cloths and eat grass - excluding the ruling class, of course.

Welcome to the United Soviet States of America.

No thanks, that's why we have the Second Amendment.

 
At 3/15/2010 11:57 AM, Anonymous Benny The Man said...

Remember the morons who wanted to kep Terri Schiavo "alive" forever?

Think about that situation, multiplied by the millions. The Republicans held a special session of Congress, and President Bush cancelled a vacation (!!!!!) to try to keep a vegetable on the tubes.

That is the US healthcare system.


I see no private-sector solution, as long as the public sectopr mandates coverage, and keeping old or braindead people alive for as long as possible.

 
At 3/15/2010 12:03 PM, Anonymous Machiavelli999 said...

As I pointed out in a previous CD post, insurance companies are the messengers of higher health care costs, not the source of higher costs.

You are right. Insurance companies are not totally at fault and costs coming from providers must be checked. But Obama did propose a lot of cost cutting measures in his bill.

You guys don't remember them? Well, that's because you called it rationing, death panels and cutting Medicare.

 
At 3/15/2010 12:10 PM, Anonymous Anonymous said...

Socialism is slavery. Slavery of the productive to the parasitic. The Democrats have always been the pro-slavery party. We fought one bloody civil war to end race slavery. We may have to fight another to end state slavery.

 
At 3/15/2010 12:16 PM, Anonymous Anonymous said...

Remember the morons who wanted to kep Terri Schiavo "alive" forever?

Based on the quality of your posts, I am certain that Terri Schaivo, even in her compromised state, was higher functioning than you are.

But your analogy is not without merit, since leftist losers constantly seek to attach themselves to the "life support" of the state. It's time to pull their plug.

 
At 3/15/2010 12:31 PM, Blogger Greg Nyberg said...

Not sure it is fair to compare insurance industry profits with total healthcare spending. Profits are net of all the paperpushers and managers and non-value-added steps in the health-insurance business, including advertising.

I'd be curious to know what fraction of total healthcare spending the total insurance industry revenues represented...

 
At 3/15/2010 12:37 PM, Anonymous Zaq.Hack said...

If government run healthcare would make us healthier ...

Why doesn't the EPA make the environment cleaner?

Why doesn't the department of education improve our high school dropout rate or literacy?

Why did the FBI, CIA, NSA, and dozens of other "A's" not prevent 9/11?

The government sucks at nearly everything it does. You want it in charge of your very health? You want it telling your doctor what he/she can and cannot do for you?

Seriously?

I'm not that suicidal.

 
At 3/15/2010 12:39 PM, Anonymous Anonymous said...

The socialist Ponzi schemes of Social Security and Medicare are on the verge of collapse. The ratio of workers has fallen from 41:1 in 1942 to only 3:1 today. All this bill does in hasten the day of reckoning. Soon the panic will set in, the Democrats, having bankrupt the government, will seek massive tax increases in a desperate effort to keep the lie of state socialism alive. But they cannot raise taxes enough to cover the future obligations of the current welfare state, estimated at more than 100 trillion dollars. The end of their delusions will bring economic pain and hardship, resulting in a drastically reduced standard of living for the "millennial" generation, or as Samuelson has christened them "generation chump". Indoctrinated in an education system controlled by leftists, they cheered, supported and adored Obama. He has returned the favor by mortgaging their futures and using that money to enrich his political cronies.

 
At 3/15/2010 6:02 PM, Blogger Craig said...

bix1951 said:

It is all about making poviders of health care richer.

No, no one will grow richer from Obamacare except government bureaucrats. Now, it is true that we'll pay more for insurance, but that does not mean that their profits will increase.

Indeed, it's probably the opposite.

 
At 3/15/2010 6:49 PM, Blogger PeakTrader said...

Eric, it's much more productive to bash Republicans and praise Democrats a thousand different ways. The question should be how can we continue the failed "basic health care" and "basic education" programs without losing government control.

 
At 3/15/2010 11:39 PM, Anonymous Anonymous said...

The best option is to open the Federal Employees Medical Insurance program to anyone who will pay the full premium. If a slight majority can force federal takeover of healthcare, a slight majority can remake the entire government in 2013 after winning the white house and congress.

The free market is going to rescue us from all of this government spending. This craziness will not go on forever.

Interest rates are going up to 10-15%, unemployment will stay above 10% and high inflation is going to return. Average workers will pay half of their earnings to federal, state and local governments. Wealthy workers will pay 70%.

After 5 to 10 years of severe pain, voters will be ready to cut the size of government.

 
At 3/16/2010 10:12 AM, Blogger juandos said...

"You guys don't remember them? Well, that's because you called it rationing, death panels and cutting Medicare"...

People do remember them but maybe you don't want to remember why mach999 the supposed cuts by your questionably educated President is seeming clueless about the constitutionality of ObamaCare...

 
At 3/16/2010 12:54 PM, Blogger misterjosh said...

One simple fact. American doctors receive twice the salary of European doctors.

 
At 3/17/2010 6:18 AM, Blogger juandos said...

"One simple fact. American doctors receive twice the salary of European doctors"...

What's your source?

Consider this Economix posting: How Much Do Doctors in Other Countries Make?

July 15, 2009, 5:10 pm

How does that compare to your source misterjosh?

The other cost I don't see mentioned in the Economix posting is overhead of government mandated paperwork...

 

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