Healthy Skepticism on Health Care Reform

President Obama is remarkably comfortable with the big lie. The lie as big as a house and with balloons attached. The Administration is now telling us that health care reform (meaning a big new government run insurance program) will save us all a lot of money. I am not making that up. From the Washington Post:

Slowing the growth in health-care spending from 6 percent a year to 4.5 percent would have enormous benefits for the nation's economy, creating as many as 500,000 jobs a year and increasing annual income for the average family of four by $2,600 over the next decade, the president's chief economic advisers said yesterday.

Wow. That's a pretty amazing policy the President is promising. We get more and better health care, only most of us don't have to pay for it. In fact, the new CEO of GM is going to pay us! And he'll hire us! If you call right now, he will also throw in this amazing sponge cloth!

Pardon me if I'm suspicious. It's my nature. The basic argument in favor of health care reform usually begins with those Americans who are uninsured. Why is that bad? Well, obviously because they aren't getting the health care they need and/or what they are getting is ruinously expensive for them. In fact neither thing is obvious. But if you are really going to extend more health care to more people, and charge a lot of them less for it, well, that's going to cost someone a lot of money, isn't it?

But the Administration has turned from the save the poor argument to the save the budget argument. Health care reform will cut the annual growth of health care spending by 1.5% per year. That figure is the foundation of the 500,000 jobs and twenty six hundred smackers promise. It is also a fib. It is based on a supposed agreement with a lot of big heath care organizations. Here is the real story, from The Politico.

[American Hospital Association] President Richard Umbdenstock told 230 member organizations that the agreement had been misrepresented. The groups, he said, had agreed to gradually ramp up to the 1.5 percentage-point target over 10 years — not to reduce spending by that much in each of the 10 years

Okay, so who is telling the truth?

The comments from Umbdenstock cap a week in which some in the Washington health care world struggled to make sense of the surprise White House announcement Monday. The group of six organizations with a major stake in health care — the Service Employees International Union, the American Medical Association, America's Health Insurance Plan, Pharmaceutical Research and Manufacturers Association, the American Hospital Association and Advanced Medical Technology Association — had been working in secret for several weeks on a savings plan.

The fact sheet they distributed at the time offered general categories from which the savings would come but few specifics on how they would be achieved. But when the day came to announce the offer, representatives from all six organizations were lined up next to the president as he announced

So there is a general promise to reduce costs by 1.5% a year, or over ten years (who's counting?), but no idea at all how this is to be done. Either way you cut it, the President is promising something he has no idea how to deliver.

The Washington Post piece makes the same point:

The [Council of Economic Advisors] report contains few details about how those ambitious goals would be achieved, however, and does not address any increased federal spending needed to implement health reform. And the White House economists acknowledge that shaving 1.5 percentage points off the rate of growth in health spending would be extraordinarily difficult -- "probably near the upper bound of what is feasible."

"The kind of reform that will bring about these economic rewards will not be easy. It will require truly game-changing innovations in many areas," the report says. "But, if we can bring about such changes, there will be substantial benefits to American households, businesses, and the economy as a whole."

Let's step out of this flurry of fibs and vast projects based on half-vast plans, and ask how health care costs can be reduced. More expensive medical technology is becoming available all the time. No? And an aging population needs more and more of it. No? So the major technological and demographic trends are toward more health care spending.

I see only ways of reducing health care expenditures. One is rationing. Every system does this. But that means less health care for somebody. Uncle Roy? That's exactly the opposite of the original promise. And if you are going to extend health care to a new subpopulation and at the same time reduce costs, you are really going to have to put the screws to Uncle Roy. Can President Obama really do this? Let me give you a hint: no. He is smart enough not to mention it. 

The only other way to reduce costs is to make the system more efficient. It is always easy to imagine that enormous gains in efficiency are possible. Sometimes they are, but it is never wise to count on them. I am guessing that gains in health care would be modest even if you had a way of favoring more over less efficient policies.

Private business can achieve this, because it has to make a profit. Government run health care will be beholden to countless interest groups, each of which wants a little more for a little less. Look at the history of Social Security and Medicare if you don't believe me. Government run health care will be less efficient than what we have now.

Maybe there is a way to reduce health care costs while delivering more and better care to more and more people. I have no idea what that way is. Neither does the President. The difference is, I'm not lying about it.

Comments

[Mac]

Well KB, first you have to have proof (actual proof, not your assumptions or feelings or latest theory)before you can insinuate the President is lying or you have no credibility yourself.

[Miranda]

I disagree, Mac. If the president has no idea how his own plan will work, then it is he who lacks credibility. Dr. Blanchard has every right to call a spade a spade, and I think you'll find people on both sides of the aisle who will vouch for his credibility.

[Erik]

Mr. Blanchard,
Why do you use the phrase "Big Lie" in your opening paragraph? Is that a reference to Dr. Joseph Goebbels and his propaganda machine?
Thanks,
Erik

[KB]

Mac: The facts I point out leave no doubt. %1.5 over ten years is not %1.5 per year for ten years; not even in Clintonspeak. Saying your plan will save people X amount of money per year, when you have no plan, is lying.

Erik: I certainly did not have Goebbels or any other Nazi in mind. I just wanted to indicate that the President was being dishonest with big numbers.