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I really am not in the mood for hand-wringing about the ObamaCare legislation. It happened. People actually wanted it – despite what the polls say. Politicians actually wanted it. In the meantime, it makes sense to continue to educate people about how our health care system really works.

I happen to think the current system sucks. It is not anything resembling a private market, nor is it anything resembling government control. And to be honest, as skeptical as I am about what the government does, I really don’t believe that medical provision would be much worse than it is if the government actually took it over. I am not using that as an endorsement of course. I am not all that upset with the current bill that has been signed. What I am upset with is the utter lack of understanding by both politicians and their constituents about how health care works, and the utter lack of respect for process – both democratic and market. This ignores the impact of medical delivery reform on what the drug companies are doing, and so forth. It is really, really tiring trying to read a website story and glancing at comments like, “we have a right to health care, or what good is the first amendment right to life if we die from having no insurance … and so on …” I no longer try to speak to those things. They are infantile, uninformed arguments. In regard to the manner in which this thing got passed? Well, I think it is evident how much of a joke the political process is. It is about power, plain and simple. And what we witnessed was par for the course. I am not shocked – that is what we have observed here for over 100 years. I am shocked that people are shocked. All I would add is that it is appropriately nauseating having to listen to these crooks in Congress parade around proclaiming that some great national interest has been served, that their intentions were noble, and that they have saved America. For one, being intelligent people, I sure do not think these people believe what they are saying. Thus, what are we to make of their actions? I’ll leave it for you to think about.

In any case, my brief observations on the bill and health care in general (there is obviously much more to say than this):

  1. If the goal of the bill was to get people insurance who currently do not have it – this was an awfully contrived and convoluted way to do it. Why not offer cash subsidies to people who wish to purchase insurance? Of course the reason is that we don’t think people are mature enough to make decisions for themselves. Another reason is that we utterly disdain the idea of possibly freeing up the medical insurance and medical delivery market. Without substantially deregulating, it is a hard sell to simply give people subsidies to purchase insurance. Heck, I think I would have approved of a universal employer mandate. In other words, just mandate that if people want to work for a firm, and firms wish to hire workers, that some portion of their compensation HAS to be dedicated to the purchase of health insurance. It is not infeasible to do this – we already do it on the first dollar of earnings for payroll taxes. Again, I am not advocating this plan – but as compared to what we got, it would be far more efficient, fair and transparent.
  2. You ought not point to this bill and say, “look, the insurance companies and doctors will make a windfall from it,” as a way to say “it’s really not government involvement in the health system like a single-payer would be.” The purpose of this bill, like many other bills that have been passed in the past 30 years, is to further establish the corporate-state as the economic model for our country. In short, we live in a modern version of the Fascist state. There is a cozy relationship between unions, corporations and governments each making sure competition is limited, and that each agrees to the policies that ultimately get passed. This is a way of having socialism without the government actually taking ownership of the firms in question. So, if you wish to celebrate the Mussolinization of America, then by all means rely on these arguments.
  3. Don’t pee on my back and tell me it’s raining. This bill is expensive – but if that is what Americans want, then let’s be honest about it. And don’t tell me this bill is about bending the cost curve down – it is not. This utter hypocrisy is one reason for the unpopularity of the measure.
  4. Remember that this exact system failed (is failing) in Massachusetts. And Massachusetts is richer, healthier and has fewer uninsured than the US at large.
  5. The bill is a blatant act of class warfare. To think this can be funded (actually or even morally) by further taxes on “those people” that make over $200,000 (with a 3.8% surtax on capital gains income) is fantasy at best. These folks have the best ability to shelter themselves from these taxes. We, those making far less, will end up paying higher premiums, and when that does not do the trick, perhaps higher taxes – though they will not be called that.
  6. This bill literally does nothing to address all of the things that are driving up medical expenditures (costs are a different question). It does nothing about the doctor and AMA cartel – in fact it more firmly establishes their power. It does nothing about the cost of the FDA. It does nothing about competition for insurance across state lines. It does nothing about guaranteed issue (in fact, it makes this problem worse). It does nothing about community rating (in fact, it makes this problem worse). It eliminates caps on lifetime insurance payments, which again makes the cost problem worse. It will be eliminating or reducing the impact of high-deductible, catastrophic insurance policies – again, which will severely drive up costs (see below). In fact, I have a high-deductible HSA right now. I put $200 per month into a savings account which I can use to pay for my out-of-pocket medical expense. Every dollar I do not use stays in a stock fund and grows over time. Hence, I have a really strong incentive to ask doctors what things cost, and to shop wisely for our medical services. The reason my HSA plan sucks is because the doctors are utterly incapable and uninterested in functioning as true businesspeople. Of course, we are further insulating doctors from having to behave like businessmen in this new bill. The bill does nothing about the tax advantaged treatment employer provided plans get (though I have not seen how the state exchanges will actually end up working come 2014). The bill does nothing about mandated insurance benefits – it makes this worse. In other words, the bill does not allow me to buy bare bones insurance – it will force all of us to have insurance that provides “minimum” levels of coverage for things that we likely do not want. For example, in Massachusetts, my health insurance HAD to cover things like accupuncture. If you think that this will not open the door to a Caligula-esque rent-seeking party in DC by special interests deeming their procedures and treatments MUST be part of essential coverage, well, then, you have been partying with Caligula too long. The bill does nothing about the use and spread of high-technology, high-cost, but arguably low benefit procedures. The bill does nothing to help us make better choices about spending in our (unknowable, of course) last year of life. The bill does nothing to make it easier for retail medical clinics to compete for business – this hurts the poorest among us. The bill does nothing to make it easier for me to … ok, I’ll stop now – I hope you get the point.
  7. I’ve never in my life turned anyone down that has sincerely asked for much needed help. If neighbors needed help securing medical coverage or food or childcare … I would help. I know many people who would help. This is yet another program we are instituting where help becomes an entitlement. I actually would have voted for this bill if it included in it a provision that those people collecting subsidies and getting free insurance had to publicly ask for help and explain why they needed it, perhaps. That wouldn’t ever fly though.
  8. One thing that would have both bent the cost curve down and shifted it down would be to pay attention to the results of the RAND Health Insurance experiments of the 1970s. One implication is that if everyone in the US actually had a real health insurance policy, rather than a policy where everyone else pays for everyone else’s medical procedures – expected and otherwise – our health care spending would fall by about 30%. In other words, if we are spending 16% of GDP on health care right now, we would be spending only 11% if we all had real insurance. You know – the kind you buy when you want to protect yourself from large, unexpected, expenses. The deductibles on these policies would not be exceedingly high (certainly less than $5,000) and if we were worried about the poor, we could subsidize their deductibles with the medical equivalent of food stamps. This is astonishing. Because not only would costs shift down – the fact that consumers would have more skin in the game would put pressure on spending for the least valuable health items – ones that have been shown to provide no or little bang for the bucks. It is somewhat surprising that the Progressives did not jump on this – because one of their primary arguments for health reform is that “we spend double what any other nation spends on health care and we get no better outcomes.” If I agreed with that statement, and I do to an extent, then it should follow that allowing consumers to choose where to cut back will both save money AND improve outcomes. Yet the very essence of this current bill is to move in a direction precisely opposite this.

That’s it for now. They’ll be lots to say about it in the coming months.

3 Responses to “Shifting and Bending Over … The Cost Curve of Course”

  1. Michael says:

    One of my random thoughts today, which I’ll state is made out of a lot of ignorance of the current situation and things involved with this bill, is if a state really wanted to undercut this bill, what if it applied the healthcare law and rules only to AMA certified doctors while legalizing non-AMA doctors to function soley on cash payments? In other words, can we just allow a free market system to exist legally while letting the regulated one to die on its own accord? It would probably mean giving up the war on drugs and really increase some snake-oil risk (in short-run), but in due time, I beleive that other systems of verifying quality of drugs and doctors.

  2. Harry says:

    Wintercow, I could not get past your clause, “People wanted it.” As they say, it all depends on what the word “it” is.

    Tonight I’m foregoing reading the rest of your analysis, and this all goes back to Socrates — whether anyone will do evil voluntarily.

    What was passed was a big mess, and I am concerned whether we will ever recover.

    What passed is a few thousand pages of federal law that are a mere outline, each page to be passed to a government employee who may have tens or hundreds of employees under his or her charge, all with the task of issuing regulations. Just take your cheap calculator and multiply 3,000 pages times 20,000 people times 2,000 manhours, times $126.50 per manhour just to get the regulations written. My calculator yielded $E75.900000. Help me with that number. Then there are the agencies, you guess how many and how they will be populated, times X hours to review and decide about how many decisions have to be made?

    These “jobs” will be counted as “jobs created” the same as the job created to hire someone to drive your tractor to plant your corn, or for someone to prepare your taxes while you attend to other details, like buying your corn seed and fertilizer.

    Meanwhile, while people are planting corn there is a huge army out there to advise you from the USDA. And then, should you injure yourself, there is another huge army of lawyers out there to sue the federal government should your federal benefits be denied by the folks in the paragraphs above, who don’t want to pay a doctor more per hour than a gardener or a free-lance painter.

    The only figure in this drama who did anything productive was the guy who took a chance on planting corn, and the people he hired. The rest was overhead. Overhead never mattered to medieval kings, but then they never got very far, either.

  3. Kevin says:


    Read up… this ought to turn the nausea into pure vomit. I guess people were sleeping during their 108 classes where they learned that wealth inequality can actually be a good thing… or rather, that the lack thereof is a bad thing.

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