Thursday, September 10, 2009

Obama promises what can't be true: Good politics or strategic blunder?

Does candor work in politics? By any measure, the President's speech on health care last night was chock full of misleading statements, misrepresentations and dubious speculation. We won't require you to change your existing policy even though millions of you will lose it. Mandating preventive care will save money even though studies show that it won't. I somehow won't cut medicare even as I reduce spending on medicare dramatically.

Now before you go all pot and kettle on me, I am fully aware that it wouldn't take long for someone to find a speech by a GOP leader that is similarly misleading. Health Savings Accounts are a a good idea but they are not the panacea that some on my side of the debate seem to think they are. I also understand that some people will believe that, even after you sort out what the facts really are, something like what Obama wants to do remains a good idea.

The problem is that politicians want to prevent that major changes can be painless. Think about this. Jim Geraghty sums up what the President wants to do:

keep everything the same for those who have health insurance through their jobs, Medicare, Medicaid, or the VA; mandate coverage of pre-existing conditions; ban caps on coverage; mandate coverage of routine checkups and preventive care, like mammograms and colonoscopies; offer health insurance to 30 million uninsured; provide tax credits for small businesses; painlessly mandate coverage for the young healthy uninsured; provide hardship waivers; provide choice and competition; keep insurance companies honest; avoid taxpayer subsidies for public option plans; keep out illegal immigrants; not pay for abortions; and not deny care to the elderly because of cost-benefit analyses, all while not adding one dime to our deficits – either now or in the future.

This will supposedly cost only $ 900 billion over ten years. I don't believe that. In fact, I don't see how you can even cover 45 million Americans for that. Even if all the money were dedicated to that single purpose, this would mean that those folks can be covered for $2000/year. The type of coverage that the President wants to provide will cost several times that.

I understand that this figure is net of new taxes but that is misleading. New taxes are part of the cost.

But we'll have cost savings! Cost savings that won't cause anyone to give up anything that they want except those nasty old excess profits earned by insurance companies, drug companies and health care providers.

It is implausible to the point of being ridiculous. People don't believe it because they shouldn't. But its seen as essential to the passage of a massive new entitlement. In a moment of candor, Robert Reich, argues that misleading the public as to its cost is essential. Reviewing a book on the politics of health care, he notes:

Blumenthal and Morone’s most provocative finding is that presidents who have been most successful in moving the country toward universal health coverage have disregarded or overruled their economic advisers. Plans to expand coverage have consistently drawn cautions or condemnations from economic teams in every administration, from Harry Truman’s down to George W. Bush’s. An exasperated Lyndon Johnson groused to Ted Kennedy that “the fools had to go to projecting” Medicare costs “down the road five or six years.” Such long-term projections meant political headaches. “The first thing, Senator Dick Russell comes running in, says, ‘My God, you’ve got a one billion dollar [estimate] for next year on health. Therefore I’m against any of it now.” Johnson rejected his advisers’ estimates and intentionally lowballed the cost. “I’ll spend the goddamn money.” An honest economic forecast would most likely have sunk Medicare.

Reich is not bothered by this. He notes that Johnson's economic advisors were right about Medicare, conceding that it "is well on its way to bankrupting the nation." But the economists must still be kept "at bay."

Is this good strategy? It may be the conventional wisdom, but I wonder if it works here. By making claims that are so blatantly false, Obama provides the GOP with a target rich environment.


Anonymous said...

The only way Obama plan would work if every single dollar from every plan in the nation goes into one pot. That would include Medicare, Medicaid, Workers Comp, State Programs, Employer insurance, employee share, individual policies, cash payments and anything else that might be out there.

The one stop shopping would be convenient, would probably save a lot of money but would put some people out of work.

I know Obama moved some people last night but I thought it was very disappointing. We’re probably going to get stuck with what we have now that is getting worse.

Anonymous said...

Caring for the sick costs money, and I for one am sick of my hard-earned dollars going to welfare ne'er do-wells. Let 'em die. I've got insurance. Up by the bootstraps, folks.

For that matter, Ronald Reagan was right when he foresaw that Medicare was the camel's nose of socialism in our time. Now we see it. Medicare is bankrupting this country, as even Robert Reich acknowledges. Time to scrap it. If Grandma wasn't prudent enough to save for her retirement, shame on her. It's past high time to privatize Medicare. We can privatize it by saying, bye-bye old folks! I'm sick of working to support the unproductive elements of society.

Rick, you da man. Health care is a cost of living. It's not my job to underwrite other folks' lives. That's their job. And, as Rick aptly points out, it costs a lot.

If people can't pay for their own health care, they should just go die quietly somewhere. At least I got mine.

Anonymous said...

How refreshing to see folks on the right expressing healthy skepticism about costs associated with government start-up projects. It seems like only yesterday these same voices of reason were embracing the "Iraq War will pay for itself" and "tax cuts for rich people will create jobs" canards.

Anonymous said...

Shark, why don't you just yell "You Lie".

Billiam said...

Anon 1:58"seems like only yesterday these same voices of reason were embracing the "Iraq War will pay for itself"

The Democrats ran in '06 on ENDING the Iraq war. Since the Democrats won control of BOTH houses, as well as the national purse. Did they end the War? No. They used the troops as pawns. I don't hear many Dems screaming about that. Democrats use of the costs of the War with regards to health care ring hollow due to their lack of action.

Anonymous said...

"We did not come to fear the future. We came here to shape it. I still believe we can act even when it's hard. I still believe we can replace acrimony with civility, and gridlock with progress. I still believe we can do great things, and that here and now we will meet history's test. Because that is who we are. That is our calling. That is our character."

Dubious speculation, Rick?

AnotherTosaVoter said...

I agree that what Obama promised is too good to be true, and with Democrats I'll believe there will be offsetting spending cuts once they actually happen.

But I have a question about your alternative.

It says, in order to not ration care, you're going to subsidize health insurance. That means millions of new customers expecting the same instant access to high technology we insured people receive. I believe your alternative includes bands on recissions and exemptions for pre-existing conditions as well.

If these things are true, then won't costs also rise sharply? If care isn't going to be rationed, as you folks are warning us against with Obama's plan, that's a lot of new service for all those new customers who can't afford to pay.

I also question your assumption that medical innovation reduces costs. I'm pretty sure medical technology has improved almost exponentially in the past few decades, yet prices have also risen quickly. So, my question is, at what point does all this innovation pay off with lower prices?

Oh and by the way, totally off topic so forgive me, not sure if you've heard but the divorce rate in Massachusetts has dropped in the past few years since gay marriage was made legal, and it still has the lowest divorce rate in the U.S. I know this is a limited sample, but what does this fact do to your assumptions about its impact?

Billiam said...

Tosa ,
Another question begs to be asked. Adding so many uninsured to the rolls will have a detrimental effect on the doctor to patient ratio. Will this alone not result in longer waits, and possibly a certain amount of rationing?

Anonymous said...

Let's take a close look at some of the misleading statements and dubious speculation in your post. You say a Government insurance plan couldn't possibly offer health insurance for $2000 a person a year ($90 billion a year divided by 45 million people). Well, you start with the wrong numbers. As we've learned in the last few days, and as you yourself acknowledge in a quote, the proposal is to cover 30 million people. (The rest, evidently, are illegal aliens, and heaven forbid we treat their illnesses!) So the figure is $3000 per person. Still too cheap to be feasible? Let's take a look at some Gummint-run health insurance that we have right here in the State of Wisconsin. The Student Health Insurance Plan at the University of Wisconsin, for example. An individual policy will set you back $1,476 a year, if you are under age 25, or $2,184 a year if you are over age 25. Don't believe me? Google it. This plan is not administered by any insurance company. It's administered by University Health Services. No profit component is built in; and its administrator undoubtedly doesn't make $100-plus million a year, like the head of United Health Care.

Well, those are young, healthy students, you may complain. An unrepresentative sample. (Of course, many of the uninsured in this country are also young, healthy people.) Surely older, sicker populations would cost more than $3000 a person a year!

Let's take a look at HIRSP, the State of Wisconsin health insurance plan of last resort. For the uninsurable -- people who do not have employer-provided health insurance, and who cannot find it in the private market. It offers several different plans. The quarterly premiums for a female age 40-44 range between $840 and $1,962 -- in other words, from $3360 a year to $7848 a year. These are the rates paid by the UNINSURABLE! And that's before the premium subsidies available for low income persons. Those are the unsubsidized rates!

Can the Government offer health insurance to 30 million uninsured for $90 billion a year? We haven't even yet factored in the cost savings that will result from eliminating the cross-subsidization of what is now free emergency room care for the uninsured. Yes we can!

And preventive care? Yes, some studies do show that it's costlier, in a ten-year projection. But other scholars point out that, if you look at longer-term payback, say 25 years, you begin to reap more dividends. Interestingly, one study of people with high-deductible plans and HSA's showed that, when people are spending their own money, they are more rather than less inclined to spend money on preventive care. The authors of the study found this contrary to their expectations. But maybe an ounce of prevention is cheaper than a pound of cure, after all, and people realize this when they are spending their own bucks!

Comprehensive health care this year? Yes we can! A great speech. Quit your misinformed speculation, Shark.

AnotherTosaVoter said...

Billiam, your question is redundant - I asked the same thing in my post.

Your blog helps remind me of why I gave up on religion, by the way.

Have a nice weekend.

AnotherTosaVoter said...

This thread is dead, and this is hardly related to the main point, but this is emblamatic of why I will probably never vote Republican again.

Locke said...

AnotherTosaVoter"This thread is dead"

I think you mean that thread is brain dead. Another string of liberals ranting about what is wrong with conservatives and describing how conservatives think. I hate when either side does that - it sure is easier to defeat an argument when you make both sides by mischaracterizing everyone who disagrees with you.

Anonymous said...

"It is implausible to the point of being ridiculous."

It's just a projection, but the CBO analysis today makes this statement a bit outlandish, at best, along with your strident claims that the president was making blatantly false statements.

Anonymous said...

I truly believe that we have reached the point where technology has become one with our lives, and I am 99% certain that we have passed the point of no return in our relationship with technology.

I don't mean this in a bad way, of course! Societal concerns aside... I just hope that as the price of memory decreases, the possibility of copying our memories onto a digital medium becomes a true reality. It's a fantasy that I dream about all the time.

(Posted on Nintendo DS running [url=]R4i[/url] DS SurfV3)

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