Archive for March, 2010
Oil To Make A Break For $100? Our Best Stimulus May Go Away
Posted: March 30, 2010 in Technology and BusinessHowever, to be fair, had I loved the plan, I’m sure I would be complimenting the President for, "cutting through the b.s. and red tape."
My conflict is while I don’t like the plan, I think the President has common sense… something I think has been missing in government for a long time. I don’t think that changes overnight.
I heard something this morning that reminded me of this. I’m at the Global Technology Symposium and just heard Aneesh Chopra, CTO, White House Office of Science and Technology Policy. Much of what he talked about was the huge focus the White House has on using technology to gain cost savings. But he didn’t just talk about it, he cited a number of examples. Finally, a President who gets it.
That kind of focus comes from a bigger picture mandate… one that will hopefully include what we do in health. So, while I don’t like the current health plan… and see how it can blow up in a zillion ways… I’m willing to give the President his shot at making this work… for now.
When President Johnson led the drive to create Medicare and Medicaid, Americans saw before them a government that had won World War II, built the interstate highway system and launched an almost universally admired space program that was headed toward putting a man on the moon. The New Deal was widely considered the reason the Great Depression finally was vanquished. "Liberal" was such a coveted label for a politician that one of President Johnson’s deep worries when he took over after President John Kennedy’s assassination was that he might be seen in Kennedy circles as too conservative.
Since then, attitudes have soured. The Vietnam War went from nuisance to debacle, tarnishing for a long while the notion that the nation’s best and brightest minds were at work in Washington dealing brilliantly with difficult problems.
Later, President Ronald Reagan told us government was the problem rather than the solution, President Bill Clinton declared the era of big government was over and President George W. Bush told us the other big piece of the social safety net, Social Security, was better taken out of the government’s hands entirely and turned over to the private sector.
More recently, government experts assured the nation that Iraq had weapons of mass destruction, a mistaken conclusion with calamitous consequences. Now deficits further sow doubts about Washington.
The result has been an erosion over time in confidence in government’s competence.
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A Cost-Control Mirage
Obama is telling people what they want to hear about health care, not what they need to know.
—Barack Obama, Feb. 27, 2008
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.
There’s a parallel here: housing. Most Americans favor homeownership, but uncritical pro-homeownership policies (lax lending standards, puny down payments, hefty housing subsidies) helped cause the financial crisis. The same thing is happening with health care. The appeal of universal insurance—who, by the way, wants to be uninsured?—justifies half-truths and dubious policies. That the process is repeating itself suggests that our political leaders don’t learn even from proximate calamities.
How often, for example, have you heard the emergency-room argument? The uninsured, it’s said, use emergency rooms for primary care. That’s expensive and ineffective. Once they’re insured, they’ll have regular doctors. Care will improve; costs will decline. Everyone wins. Great argument. Unfortunately, it’s untrue.
A study by the Robert Wood Johnson Foundation found that the insured accounted for 83 percent of emergency-room visits, reflecting their share of the population. After Massachusetts adopted universal insurance, emergency-room use remained higher than the national average, an Urban Institute study found. More than two-fifths of visits represented non-emergencies. Of those, a majority of adult respondents to a survey said it was "more convenient" to go to the emergency room or they couldn’t "get [a doctor’s] appointment as soon as needed." If universal coverage makes appointments harder to get, emergency-room use may increase.
You probably think that insuring the uninsured will dramatically improve the nation’s health. The uninsured don’t get care or don’t get it soon enough. With insurance, they won’t be shortchanged; they’ll be healthier. Simple.
Think again. I’ve written before that expanding health insurance would result, at best, in modest health gains. Studies of insurance’s effects on health are hard to perform. Some find benefits; others don’t. Medicare’s introduction in 1966 produced no reduction in mortality; some studies of extensions of Medicaid for children didn’t find gains. In the Atlantic recently, economics writer Megan McArdle examined the literature and emerged skeptical. Claims that the uninsured suffer tens of thousands of premature deaths are "open to question." Conceivably, the "lack of health insurance has no more impact on your health than lack of flood insurance," she writes.
How could this be? No one knows, but possible explanations include: (a) many uninsured are fairly healthy—about two-fifths are age 18 to 34; (b) some are too sick to be helped or have problems rooted in personal behaviors—smoking, diet, drinking or drug abuse; and (c) the uninsured already receive 50 to 70 percent of the care of the insured from hospitals, clinics and doctors, estimates the Congressional Budget Office.
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 percent of the economy in 2009 to 19 percent in 2019. Health "reform" would probably increase that.
Unless we change the fee-for-service system, costs will remain hard to control because providers are paid more for doing more. Obama might have attempted that by proposing health-care vouchers (limited amounts to be spent on insurance), which would force a restructuring of delivery systems to compete on quality and cost. Doctors, hospitals and drug companies would have to reorganize care. Obama refrained from that fight and instead cast insurance companies as the villains.
He’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.
"If not now, when? If not us, who?" Obama asks. The answer is: It’s not now, and it’s not "us." Pass or not, Obama’s proposal is the illusion of "reform," not the real thing.
Robert Samuelson is also the author of The Great Inflation and Its Aftermath: The Past and Future of American Affluence and Untruth: Why the Conventional Wisdom Is (Almost Always) Wrong.
© 2010