Obama’s health-care misstep costly
Written on August 20, 2009
Take the entire Canadian economy, multiply by two, and that’s roughly what America spends each year on health care. Fifteen years after the spectacular failure of Hillary Clinton’s health-care reform efforts, which cost her Democratic Party control of both houses of Congress, Obama finally sensed that the mood was right for dramatic change.
Yet, for all his reputed skills as a supersalesman, both with the public and the solons on Capitol Hill and the CEOs of the medical-industrial complex (MIC), Obama has come up short. This month was to see the peak of the White House’s campaign to sell Obama’s health-care reforms. But the president has become a lightning rod for opposition to it. So he has few health-care events scheduled this week, and next week vacations in Martha’s Vineyard. He knows that for now, at least, he is a liability.
To be sure, Obama will succeed in changing the world’s costliest health-care system for the better. The reform bill he signs later this year will require all Americans to purchase health-care coverage, including the close to 46 million Americans who have no coverage and will be subsidized by Uncle Sam to pay their premiums. And certain restrictions will be placed on private insurers, among them a prohibition against denying insurance to Americans with pre-existing medical conditions.
That will make Americans healthier, and relatively soon – a great victory for the American people. But it will also weaken the country’s finances in the absence of a single-payer system prevalent elsewhere in the industrial world.
The existing duplication of exorbitant administration costs among hundreds of U.S. health insurers will remain, along with the necessary profits that private insurers must generate for shareholders – neither of which contribute to Americans’ health.
America’s uninsured citizens, more than the population of Spain, will now become an additional financial burden for the nation. And a bonanza for the MIC, including the doctor-owned hospitals whose pay-for-service model encourages them to order unnecessary tests and procedures. And for Big Pharma, which can anticipate a windfall of new prescriptions.
The spectre of demographics will deal possibly a bigger blow, as the Baby Boom moves into the most medically costly years.
Obama has said if he was starting from scratch he would opt, as a matter of common sense, for the single-payer model Britain introduced 64 years ago car insurance. Americans recoil at that "socialized medicine," which gives its trading partners a competitive advantage while delivering better health outcomes.
So, without fanfare, Obama did include a so-called "public option" government health insurer in his reform package, but was careful not to emphasize it. He has, instead, sold his convoluted package – which, like the failed "Hillarycare," attempts to maintain a role for the costly private-insurer middlemen – chiefly as a means of staving off the Republic’s insolvency by 2030 or sooner.
But even that hasn’t worked. The MIC quickly and correctly recognized the single-payer element in Obama’s plan as a Trojan horse. As with FDR’s Social Security, denounced by critics at the time as "communistic," a new government insurer with its economies of scale and resulting cheaper prices for better coverage would almost certainly be widely embraced, and eventually force private insurers into the dustbin of history, where they belong. It would also extract from Big Pharma the volume discounts it dreads, just as U.S. Medicare, Medicaid and the Veterans Benefits Administration have long done.
No naïf in power politics, Obama nonetheless misjudged both how soon and powerfully the MIC`s lobbyists would go to work on wavering Democratic lawmakers on Capitol Hill, and how his proposed reforms would be misinterpreted by a public fearful of a government takeover of health care.
How easily scaremongering can prod Americans into acting against their best interests.
Recent weeks have seen Obama demonized as "Hitler" at sometimes violent town-hall meetings across the country. He’s now widely regarded as a power-hungry autocrat, suddenly less popular than the anonymous CEOs of private insurers that routinely renege on benefit payouts after reaping decades of premiums from a suddenly ill patient.
Americans’ false sense of self-sufficiency is that deeply embedded.
Obama had his chance to raise American health standards while stemming the upward spiral in medical costs. He miscalculated the power of the MIC, conservative Democrats on the Hill and a stubborn adherence to the status quo.
So Obama last weekend caved into the pressure and allowed that the public option is now negotiable, which is to say, D.O.A. The MIC won, yet again. And Obama, who vowed he would not kick the ball down the field for a future president to deal with, has done precisely that.
dolive@thestar.ca
Filed in: economics.