Obama's illusions of cost-control By J. son

[Guest guest]

Obama's illusions of cost-control By J. son

Monday, March 15, 2010; A15

" What we need from the next president is somebody who will not just tell you

what they think you want to hear but will tell you what you need to hear. " --

Barack Obama, Feb. 27, 2008

One job of presidents is to educate Americans about crucial national problems.

On health care, Barack Obama has failed. Almost everything you think you know

about health care is probably wrong or, at least, half wrong. Great simplicities

and distortions have been peddled in the name of achieving " universal health

coverage. " The miseducation has worsened as the debate approaches its climax.

There's a parallel here: housing. Most Americans favor homeownership, but

uncritical pro-homeownership policies (lax lending standards, puny down

payments, hefty housing subsidies) helped cause the financial crisis. The same

thing is happening with health care. The appeal of universal insurance -- who,

by the way, wants to be uninsured? -- justifies half-truths and dubious

policies. That the process is repeating itself suggests that our political

leaders don't learn even from proximate calamities.

How often, for example, have you heard the emergency-room argument? The

uninsured, it's said, use emergency rooms for primary care. That's expensive and

ineffective. Once they're insured, they'll have regular doctors. Care will

improve; costs will decline. Everyone wins. Great argument. Unfortunately, it's

untrue.

A study by the Wood Foundation found that the insured accounted

for 83 percent of emergency-room visits, reflecting their share of the

population. After Massachusetts adopted universal insurance, emergency-room use

remained higher than the national average, an Urban Institute study found. More

than two-fifths of visits represented non-emergencies. Of those, a majority of

adult respondents to a survey said it was " more convenient " to go to the

emergency room or they couldn't " get [a doctor's] appointment as soon as

needed. " If universal coverage makes appointments harder to get, emergency-room

use may increase.

You probably think that insuring the uninsured will dramatically improve the

nation's health. The uninsured don't get care or don't get it soon enough. With

insurance, they won't be shortchanged; they'll be healthier. Simple.

Think again. I've written before that expanding health insurance would result,

at best, in modest health gains. Studies of insurance's effects on health are

hard to perform. Some find benefits; others don't. Medicare's introduction in

1966 produced no reduction in mortality; some studies of extensions of Medicaid

for children didn't find gains. In the Atlantic recently, economics writer

McArdle examined the literature and emerged skeptical. Claims that the uninsured

suffer tens of thousands of premature deaths are " open to question. "

Conceivably, the " lack of health insurance has no more impact on your health

than lack of flood insurance, " she writes.

How could this be? No one knows, but possible explanations include: (a) many

uninsured are fairly healthy -- about two-fifths are age 18 to 34; ( some are

too sick to be helped or have problems rooted in personal behaviors -- smoking,

diet, drinking or drug abuse; and © the uninsured already receive 50 to 70

percent of the care of the insured from hospitals, clinics and doctors,

estimates the Congressional Budget Office.

Though it seems compelling, covering the uninsured is not the health-care

system's major problem. The big problem is uncontrolled spending, which prices

people out of the market and burdens government budgets. Obama claims his

proposal checks spending. Just the opposite. When people get insurance, they use

more health services. Spending rises. By the government's latest forecast,

health spending goes from 17 percent of the economy in 2009 to 19 percent in

2019. Health " reform " would probably increase that.

Unless we change the fee-for-service system, costs will remain hard to control

because providers are paid more for doing more. Obama might have attempted that

by proposing health-care vouchers (limited amounts to be spent on insurance),

which would force a restructuring of delivery systems to compete on quality and

cost. Doctors, hospitals and drug companies would have to reorganize care. Obama

refrained from that fight and instead cast insurance companies as the villains.

He's telling people what they want to hear, not what they need to know. Whatever

their sins, insurers are mainly intermediaries; they pass along the costs of the

delivery system. In 2009, the largest 14 insurers had profits of roughly $9

billion; that approached 0.4 percent of total health spending of $2.472

trillion. This hardly explains high health costs. What people need to know is

that Obama's plan evades health care's major problems and would worsen the

budget outlook. It's a big new spending program when government hasn't paid for

the spending programs it already has.

" If not now, when? If not us, who? " Obama asks. The answer is: It's not now, and

it's not " us. " Pass or not, Obama's proposal is the illusion of " reform, " not

the real thing.

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/14/AR2010031401389.\

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