Barack Obama gleefully shakes Hugo Chavez's hand, after a surprisingly chummy Mr. Chavez provided Mr. Obama with the outline for the Democrats' health-care plan last summer.
ATLANTA— The Obama Administration is now highlighting recent health insurance premium increases in California as an example of why more federal government involvement in controlling health-care is required. Left to their own devices, the Administration assumes, profit-seeking, greedy insurance companies will exploit market conditions and drive premiums unnecessarily through the roof. If you are watching this without having given much thought to the economics behind it, this type of reasoning may make some sense to you. But in reality, it is the same logic that Hugo Chavez has used in recent months to nationalize various industries in socialist Venezuela.
Venezuela, like the health care market in the United States, is facing crippling price inflation brought on by poor economic policies. Rather than address the underlying root causes of those problems, Hugo Chavez has reverted to populism in announcing price controls in recent months – in effect treating the symptom (higher prices) without treating the cause (unchecked deficit spending, stifling economic regulation, etc.). In Mr. Chavez’s case, price controls have come in the form of nationalizing any business or industry that raises prices. This policy has done little to help Venezuela. Predictably, as a result of this policy, the country is suffering massive supply shortages in a variety of industries, covering food, electricity, and other areas.
Likewise, Barack Obama’s health insurance plan frequently attacks symptoms (higher insurance premiums) without doing enough to go after root causes (spiraling medical costs). In the case of California, the primary reason they have faced premium increases is that younger, healthier individuals are dropping their insurance coverage in order to save money in the economic downturn. This reduces the number of healthy people paying in to the insurance pool, resulting in an insurance pool covering increasingly an increasingly smaller population of less-healthy individuals. Consequently, insurers need to raise premiums to cover the costs associated with those left in the pool. Leftists and progressives, like Mr. Obama, prefer to assert that these companies are simply profiteering in a down economy- but the reality is that they wisely increasing premiums to insure the sustainability of their operations. (You will note that the progressives favorite program, MediCare, has $37 trillion in unfunded obligations and will likely be bankrupt by the end of the next decade- sustainability is something progressives are not prone to consider).
Near-term premium increases brought on by economic recession are painful, but can be temporary as well. If the economy turns, more people will reenter the insurance pool, and competition should drive premiums back down. To focus so singularly on this California event is misleading.
The broader issues driving up insurance premiums over the long-term are primarily the steady increases in medical costs. The Democrats’ health care proposals do little to address this. Cost reduction under their plan hinges on experimental comparative effectiveness research, performed by various new health bureaucracies created under the legislation. The purpose of this is to research effective, efficient care provided in one region of the country and then to mandate that other regions of the country adopt those practices. While this sounds like a nice idea, there is no guarantee it can work efficiently and effectively. More importantly, it reduces or eliminates market incentives to experiment with new treatments as mandates will be handed top-down to doctors and hospitals and any deviation from the mandates will likely be punished through reduced reimbursement rates, etc. Such a command-and-control health care system will be discouraging to health care providers and I am convinced will drive older doctors and providers into early retirement, diminishing supply and further driving up costs.
If we are to stop the trend of rising costs, we need to introduce more rational reforms, which involve creating greater pricing transparency to markets. Most of us have no idea what the full price is for an emergency room visit for a cold, for a bottle of medicine, for heart surgery, or for treatment of a broken bone. Our insurance companies cover a huge chunk of these costs, with us left to pick up only a small portion. We often don’t know the cost until well after the fact. Liberals and progressives believe it is inhumane for us to know- that such things should be provided by the government (for free, as they would say). In reality, if we did know and if we shared a greater personal responsibility for such costs, we would be incentivized to research such things in advance and make more cost-effective choices when accessing care. Clearly, researching prices in the midst of a heart-attack is unlikely, but if markets had access to price information, it’s likely many of us would know which providers in our area provide care for recovery from heart-attacks at the cheapest, most efficient manner.
Enter Paul Ryan, a Republican, who has introduced a comprehensive budget plan that covers health-care and puts the power of making health care choices back in the hands of individuals and doctors, to ensure cost-effective, rational choices are made on a local level- versus the draconian, top-down, Bolshevik-style approach Mr. Obama proposes. Under Mr. Ryan’s comprehensive plan, our nation’s health-care entitlement programs are returned to solvency and the health-care cost curve is bent back towards a more sustainable norm. Accordingly, health insurance premium increases are moderated and quality and availability of care is maintained. (And you thought the Republican Party was the “Party of No,” devoid of ideas…)
Mr. Obama would prefer to resort to Hugo Chavez style populism to sell his health-care program –capitalizing on short-term trends in markets to promote a long-term, government-run solution that will only exacerbate the worst problems in our health care system. Unfortunately, like Mr. Chavez is learning in Venezuela (with his country spiraling towards inflationary ruin and potential famine), Mr. Obama’s health-care plan will increase costs, drive up premiums, and reduce the quality and availability of care that we currently enjoy. If he manages to shove this thing through Congress against the will of the American public, the long-term unpopularity of this program may well ruin the Democratic Party (in much the same way as it will ruin our health-care system).
As discouraging as Democratic initiatives to restart their health-care plan push are, the long-term belongs to conservatives. Only conservatives have solutions that take into account long-term fiscal viability and sustainability. Even if Democrats push this thing through and cause dramatic near-term disruption to health insurance and medical-care markets, in the long-term, the nation will ultimately learn it will need bright, forward-thinking solutions like Representative Ryan’s in order to create a program that can last for generations.
TennesseePaul
Stephen VanNuys
Brooklyn Daniel
The Freedom Thinker
The purpose of this is to research effective, efficient care provided in one region of the country and then to mandate that other regions of the country adopt those practices.
“No insuree left behind?”
Maine is unfortunate to be one of the states left to the mercies of the predatory Anthem Blue Cross/Blue Shield insurance provider and has seen continuous lobbying for large premium increases for over a decade. Our previous Blue Cross/Blue Shield provider was non-profit, but Legislative meddling resulted in Anthem’s taking over that organization and things have gone downhill ever since. Additional “fine tuning” by our Democratic controlled state government induced other health insurance providers to flee the state in droves, leaving Anthem as pretty much the sole source. An attempt by Maine government to provide subsidized health care (the Dirigo Health Insurance Plan) has proved an even more expensive alternative. In this instance, leaving control up to state government resulted in disastrous results.
The Far Left is not going to allow our callow excuse for a national leader to give up on pushing through their Holy Grail of state-run health care (or, as Rush Limbaugh recently referred to it – with a bow to “The Lord of the Rings” trilogy – “The Precious”). Indeed, the Left’s fixation on demanding that their monstrous and unwanted entitlement be inflicted upon the American public shows a questionable and tenuous link with reality.
Alternative approaches such as Rep. Ryan’s plan should be getting massive publicity, but of course we cannot count on the mainstream media to work for the good of the public. The Republicans have a tremendous opportunity to shine here – if only their leadership can identify and discredit the destructive advice of the Progressives who have infiltrated their ranks and who control much of the agenda for the Democrats.
In this instance, leaving control up to state government resulted in disastrous results.
That is a shame, but even still I’d continue it should be left to the States. I don’t think the problems found within Tennessee had a similar disaster with its TennCare program. A promise for insurance for all, which resulted in crippling the state and ending the “dream” of insurance for all.
Now the reason I think leaving it up to the state is multifaceted. I don’t believe the Federal Government has the right, or power, to implement such policies. As to the state itself, if it fails, it doesn’t take the entire country down with it. Each state is unique requiring different solutions. (Much like school systems shouldn’t burdened with one-size-fits-all requirements as each area has a different set of needs). State level control, minus federal level control, theoretically invites creative solutions for the problems found within that state. Tennessee and Maine’s insurance crisis are not going to be improved if they were applied to the nation as a whole.
What you are left with is documented evidence that that course of action does not work. Unfortunately proof of failure doesn’t seem to matter too much these days.