Is Health Care For All A Good Investment?
September 10, 2009 by Tisa Silver
Filed under Finance
Is healthcare for all Americans a good investment?
I’m a finance person and I typically stick to my specialty, but the ultra-heated healthcare debate got my attention last night. Previously, I opted not to pay attention to the TV reports since many of them were so outrageous!
Photo by transplanted mountaineer, courtesy of flickr
But last night, I tuned in to hear what President Obama had to say.
Aside from being disgusted with the disrespectful outburst of one congressman, I was pleased with President Obama’s speech.
It clarified some things for me, and hopefully it can lay to rest some extreme claims that had been circulating.
However, when any important issue is on the table one speech is not enough to make up my mind. I need to know more, and I am going to find out more by doing my research.
As with any investment, every investor is responsible for doing research before making a decision.
In terms of government, we elect officials to make decisions for us, but our participation should begin, and not end with voting.
Okay, enough political talk. I want to know how people really feel about healthcare for all Americans. Is it a good investment? If so, what are the rewards and what can we do to make it happen? If not, why and what makes it no good?
Here’s a link to a document I found on CNN.com, “The Obama Plan: Stability & Security for all Americans.”
Ok, I’ll take the bait, and argue a different point of view.
As the old saying goes, “Beware of any politicians bearing gifts because someone’s pocket is about to get picked.” Obama’s real genius is convincing the majority of the people it will be someone else’s pocket that gets picked to pay for their health care, not theirs.
As I listened to Obama’s speech four things came through loud and clear amid the lofty rhetoric: 1) no one knows exactly what “the plan” is, 2) no one knows what “the plan” will cost (don’t believe that $900 billion number for a second), 3) no one knows how “the plan” will be paid for (don’t believe the $500 billion in Medicare savings for a second), but 4) “the plan” will cost the taxpayers nothing and only a fool would turn down something for nothing.
Or to summarize the argument another way: the government run Medicare program, the nation’s main budget problem and forecast to eventually absorb all the government’s resources, is fraught with fraud and abuse and ever escalating costs so to fix this problem we need an even bigger, more comprehensive, more complex government run health care program that will cover millions more people, compete against for-profit insurance companies on a zero-profit basis, and eliminate the fraud, waste and abuse and slow down the cost increases of the smaller, more focused Medicare program.
Let me just say I’m a bit skeptical of the government’s ability to do this. To my thinking the plan fits Einstein’s definition of Insanity: doing the same thing over and over again and expecting different results.
I will let history do the talking for me. In 1966, Medicare cost $3 billion, at which time the politicians estimated the 1990 costs to be $12 billion. By 1990, Medicare cost topped out at $107 billion, only 9 times more than predicted by the best and the brightest. Today’s Medicare tab is rapidly approaching $500 billion. The only thing I know beyond a shadow of a doubt about the proposed health care plan is that it will cost significantly more than promised, and that within 10 years of being enacted the country will find itself in exactly the same place we are now… health care costs threatening the country with bankruptcy, but with a problem many times bigger than today.
As Milton Friedman said years ago, “We have a socialist-communist system of distributing medical care. Instead of letting people hire their own physicians and pay them, no one pays his or her own medical bills. Instead, there’s a third party payment system. It is a communist system and it has a communist result. Despite this, we’ve had numerous miracles in medical science. From the discovery of penicillin, to new surgical techniques, to MRIs and CAT scans, the last 30 or 40 years have been a period of miraculous change in medical science. On the other hand, we’ve seen costs skyrocket. Nobody is happy: physicians don’t like it, patients don’t like it. Why? Because none of them are responsible for themselves. You no longer have a situation in which a patient chooses a physician, receives a service, gets charged, and pays for it. There is no direct relation between the patient and the physician. The physician is an employee of an insurance company or an employee of the government. Today, a third party pays the bills. As a result, no one who visits the doctor asks what the charge is going to be—somebody else is going to take care of that. The end result is third party payment and, worst of all, third party treatment.”
Before going off half-cocked and creating the world’s largest bureaucracy to run the US health care system, let’s try the easy, low-risk things first, like making health insurance tax deductible for individuals, allowing insurance companies to compete across state lines, allowing individuals to use tax deductible health savings accounts, expanding use of retail clinics (http://www.time.com/time/health/article/0,8599,1919754,00.html) and nurse managed centers, and putting price point decisions back into consumer’s hands instead of third parties.
The Obama health care plan is the triumph of hope over common sense and historical experience. That is why it must be sold in very emotional terms to keep people from realizing the numbers just don’t add up, and the results will fall far short of the promise.