Obama's honesty on health care

From Obama's speech was amazing. Obama claimed: "These are the facts. Nobody disputes them."

Some of people's concerns have grown out of bogus claims spread by those whose only agenda is to kill reform at any cost. The best example is the claim, made not just by radio and cable talk show hosts, but prominent politicians, that we plan to set up panels of bureaucrats with the power to kill off senior citizens. Such a charge would be laughable if it weren't so cynical and irresponsible. It is a lie, plain and simple. . . .

Of course, Obama has used this type of rhetoric about others lying before (Aug. 19: ""there has been a lot of misinformation in this debate, and there are some folks out there who are frankly bearing false witness"). Here are just some of the discussions about rationing in the legislation. It is also strange given that Obama has incorrectly claimed that the private insurance system rations care.

As usual President Obama claims: "nothing in our plan requires you to change what you have." He then gives the answer for why everything will change:

What this plan will do is to make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition. . . . . We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies - because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives. . . .

Just take the first point and see how it is operationalized in the Baucus plan. There is one sure way to eliminate insurance is in all the Democratic health care plans -- prohibiting insurance companies from charging moreto those with pre-existing conditions before they bought insurance. There is a tax for those who don't buy insurance, ranging from $750 for the poorest single people to as high as $3,800 a year for families. Even without unlimited insurance benefits, the average insurance cost today is much higher: in 2008, it was on average $4,704 for individuals and $12,682 for families. But with no penalty for having a pre-existing condition, people will pay the tax and wait to buy insurance once they get sick. If people only buy insurance once they are already sick, insurance premiums will soar dramatically. In short order there will be no insurance.

And one more misunderstanding I want to clear up - under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place. . . . .

Well, even Factcheck.org found problems with this claim:

The NRLC’s Johnson said "the bill backed by the White House (H.R. 3200) explicitly authorizes the government plan to cover all elective abortions." And our analysis shows that Johnson’s statement is correct. Though we of course take no position on whether the legislation should allow or not allow coverage for abortions, the House bill does just that.
The House leadership’s bill (H.R. 3200) actually made no mention of abortion when it was introduced. Johnson refers to an amendment to the bill adopted by the House Energy and Commerce Committee July 30. Abortion rights proponents characterize it as a compromise, but it hasn’t satisfied the anti-abortion side. Offered by Democratic Rep. Lois Capps of California, the amendment was approved narrowly by the committee, 30 - 28, with most but not all Democrats voting in favor and no Republicans backing it. The Capps amendment states that some abortions "shall" be covered by the "public option" plan, specifically those types of abortions that Congress allows to be covered under Medicaid, under the so-called "Hyde Amendment," which has been attached regularly to appropriations bills for many years. These are abortions performed in cases or rape or incest, or to save the life of the mother.
As for other types of abortions, the Capps amendment leaves it to the secretary of Health and Human Services to decide whether or not they will be covered. It says, "Nothing in this Act shall be construed as preventing the public health insurance option from providing" abortion services that would not be legal for Medicaid coverage. Says the NRLC’s Johnson: "The Capps Amendment MANDATES that the public plan cover any Medicaid-fundable abortions, and AUTHORIZES the secretary to cover all other abortions. … [F]rom day one, she [Secretary Kathleen Sebelius] is authorized to pay for them all. And, she will."

How about Obama's claim: "There are also those who claim that our reform effort will insure illegal immigrants. This, too, is false - the reforms I'm proposing would not apply to those who are here illegally."

ABC News summarizes the Congressional Research Service:

Could the House bill expand emergency Medicaid laws as they already exist, perhaps – perhaps -- expanding coverage for illegal immigrants in keeping with current law?

According to CRS: Yes.

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Blogger Dan said...

I'm not an economist, so it's nice to read the thoughts of someone who is. This helps a lot.

So on the grand scheme, a public option is unsustainable as a nation. However, is the current system sustainable? At some point, insurance will be too expensive for everyone, right? Or am I wrong? I'm interested in your thoughts if you have time.

9/10/2009 10:50 AM  
Blogger John Lott said...

Thanks, Dan. Whatever the problems people believe with the current system in terms of costs they will be worse with government running things. Profits aren't just an extra cost that you add on top of all the other costs, they give a real incentive to reduce costs and improve quality.


I also disagree that costs are "too high." People like to live longer. Wealthier countries are willing to pay more to achieve it. I am working on another couple of pieces that will go through that issue. Hopefully they will be up next week.

9/10/2009 3:41 PM  
Blogger Dan said...

Well, my dad isn't one of those people (LOL!), but I look forward to reading more about this in the future.

9/10/2009 3:51 PM  
Blogger Zundfolge said...

Dan, its impossible for insurance to ever become too expensive for everyone. If it becomes too expensive for a large enough percentage of the people then people stop buying it. If people stop buying it the insurance companies die. They want that even less than you do.

If it does become more expensive then that will create an incentive for someone to come along and do it cheaper and better.

Profit is good, profit is what gets people out of their beds in the morning to go to work. Profit is what makes people want to give their customers more for their money so their customers will use them instead of their competition.

Government control eliminates profit which eliminates any incentive to do anything better.

In addition to reading John's excellent book Freedomnomics (which I'm going through again as an audio book), I would also recommend Thomas Sowell's Basic Economics , Adam Smith's The Wealth of Nations and Friedrich Hayek's The Road to Surfdom as those books will do a lot more to explain the role of profit in a free market economy and more important the role of a free market economy in a free and prosperous world.

9/10/2009 4:20 PM  
Blogger Dan said...

Well, again, I'm no economist and couldn't be if I wanted to, but we're not talking about full on communism, just a health care system, right? Do you really think doctors and researchers will stop thinking of new drugs if the public option became a reality?

And if profit is the key and goal, wouldn't a public option spur insurance companies to do better? Then they would have to compete, right? Right now, it doesn't seem like they have to do that.

Besides, what innovations have come from the insurance field anyway? We're talking about medical science, not insurance. The public option would pay doctors, who would still be wanting money, and therefore do better work/more efficient work to keep the contracts coming in.

Ok, I know I'm heavily outclassed by you guys, so I'll stop now, but it's just honest curiousity, I promise. I'm in the Navy, so really my healthcare is already covered. I'm just concerned for my kids once they are no longer under my care.

9/10/2009 4:57 PM  
Blogger Zundfolge said...

I'm no economist either, I'm just a Graphic Designer in Colorado.

However, to answer your question; YES if you eliminate or reduce their ability to profit from their work than doctors and researchers will produce less.

Aside from their own personal desire for profit, if the companies they work for make less money they will have less money to pay doctors and researchers (or build labs or pay for electricity or hire lawyers to help them navigate the byzantine maze of paperwork and regulations required to bring a new drug to market). So the potential of profit is what drives people (even doctors) to do their jobs.

Dan, you don't work for free, you work at a job to make more money than it costs you to get up in the morning and go to work because you wish to use the profits you make on your labor to better your own life. If your boss cut your pay a little bit you might stay on (but you'd be less motivated to go above and beyond), but if he cut it too much you'd just leave the job. I know I would.

Allowing people to keep the profit from their labor and ideas is the best way to insure that most people continue to work hard and thus contribute to society.

As for the public option "spurring them to do better because of the competition", the answer is NO. A government run option would not have the same constraints that private industry does, therefore they could not actually compete with the government run option since the government run option has no need to make a profit. If a private company runs at a loss it goes out of business and is replaced by a company that is better, if the government runs at a loss they just take more money from you and me and continue doing things poorly.

9/10/2009 6:00 PM  

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