Wednesday, September 9, 2009

Obama's Speech on Health Care

The infuriating aspect of Obama's speech last night was the claim that health care reform is either free, because we can find hundreds of billions of dollars of bad medicine, fraud, and abuse in Medicare and Medicaid, or something we can just impose on health insurance companies, at no cost to consumers.

If the administration can make Medicare and Medicaid less expensive and more effiective - the same quantity and quality of care for less money - that is great, and everyone should sign on. But we know that is a pipe dream; if such a free lunch were available, someone would have eaten it already. It is trivial to make Medicare and Medicaid less expensive, of course: offer them to fewer people, or raise co-pays and deductibles, or reduce the amount of care they cover. But these adjustments involve real tradeoffs between winners and losers; they are not win-wins for everyone.

Paying for more government health care by imposing fees on health insurance companies is also not a free lunch: it means higher insurance premiums for those already covered, while federal subsidies make coverage cheaper for those newly covered. Thus again the plan involves winners and losers, not the same or more for everyone.

The health care proposals from Obama and Congress are not about making the health care system better, despite all claims to the contrary. They are about giving more health care to some people, and having other people pay for it. That is, they are about redistributing income, plain and simple.

If advocates for these proposals want to argue for this kind of redistribution, that is their privelege. But no one should mistake the fact that this is what is really going on.

16 comments:

Anonymous said...

Reminiscent of the economist aphorism (paraphrased from memory): "If you see a dollar lying in the street, don't pick it up because if it were real someone would have picked it up already." The problem is that perhaps no one has seen it yet, or, more likely, people miss things that are right in front of them all the time.

I of course agree with Dr. Miron that the best way to cut Medicare/Medicaid costs are to reduce coverage and increase co-pays and deductibles. But lets be realistic: there's NO chance that such a plan will be proposed, from either side of the aisle. So, given the actually available options, it seems to me that examining the programs for blatant inefficiencies is an ok idea. Just because things are easy to fix doesn't mean they already have been. I'd also tend to trust the people actually spending their work weeks examining the issue (Peter Orszag and others) about whether cost savings are possible. Dr. Miron's free lunch quip sounds nice, but there are free lunches that people pass up all the time. Let's not dismiss the possibility that health care reform is one of those cases.

Jessica McFarland said...

Even if the lunch is free to you, someone's paying for it - the cafeteria who bought the food, or the supplier who sold it, or the farmer who grew it. Money is finite - if you find billions of dollars in inefficiencies, well, where was that money going? And do the people who were getting it really think of it as an inefficiency? I agree that it's always a good idea to police people to make sure that the money is going to where it needs to be going, and if it isn't, to fix those problems. However, to pretend like there's just a big pit of Medicaid waste money somewhere in Washington that has yet to be discovered is misleading at best.

Anonymous said...

Jessica, what's your point? If we judge something to be an inefficiency, then the person benefitting from that inefficiency doesn't deserve to continue to be compensated for it.

It would be like if I fired some guy who was producing literally NOTHING for me and described the move as cleaning up inefficiencies, then you come in and say that I'm misleading you for not considering the effect on the guy I fired? I get it, he's not happy, but that's not the relevant consideration.

The Professor said...

speaking of relevency, that last little tid bit you wrote is incredibly irrelevent

America: From Freedom to Facism. Just ask Ron Paul.

Anonymous said...

LOL... are you serious? The point is that when something is inefficient, we are by definition improving the situation when we fix it. Over-emphasizing the effects on those who were benefitting from the inefficiency is misleading, as we've already judged that the benefits outweigh the costs.

The 'ideal' libertarian should probably promote cutting Medicare spending as Dr. Miron proposes, and I agree with him. What Jessica seems to be hinting at - that we should be careful with reforms because there will be losers - is not anywhere near libertarian. I guess you don't grasp that though, "Professor."

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