Obama talks to the Wall
I love watching Obama trying to throw his weight around and talk tough. It is a bit like watching Bambi try to savage a hunter. I’m not talking here about the dynamic hand-wringing that he is doing over the Iran situation, I’m talking about his plans for US Healthcare reform which he tried to sell to the American Medical Association on Monday. It must have been a little like telling a pool of sharks that they really must stop chewing your legs off. Kathleen Sibelius, the new Secretary of Health also laid down the gauntlet to the health insurance companies, saying that “most Americans realize they would be better off if the industry had competition”. This is a completely nonsensical statement, as health insurance has plenty of competition. There are more than 60 insurance companies in America – not including ones that specialise in the current Medicare program.
Obama’s major proposal is a universal health insurance run by the state. It is those last four words that is going to get him into difficulties. If he just gave the money for a basic insurance package to each of the American people (in a way that it could not be spent on something else) as suggested by the MacDoctor, he would have found this relatively smooth sailing. But like any good socialist, he just has to retain control. And that is where he will clash with the hospitals, the AMA and the insurance companies.
The insurance companies have an obvious gripe about this. No matter what kind of legislation Obama puts in place, the public insurance will have an unfair competitive advantage – Tax dollars. The Public health insurance scheme can always undercut others because they have an unlimited supply of dollars from Uncle Sam. The Health insurance industry rightly pick this as a scheme to first remove the insurance competition, then, when you have a monopoly, drive medical prices down hard – part one on the way to socialised medicine.
Monopoly pricing is what scares the doctors and hospitals. Consider this. The fear of litigation drives a great deal of health care spending. In a monopoly situation (or an oligopoly) many of these tests are denied as unnecessary (you see this tactic already in the HMOs). This means that doctors and hospitals will be caught between falling incomes and rising malpractice costs. You are already seeing a steady stream of US doctors going overseas and Hospitals going bankrupt, but this will become substantially worse. Inevitably the entire system will have to be nationalised at massive expense to an already overburdened tax payer.
There is no way that any part of the current American Health System will accept this. Obama is picking a fight that he can’t possibly win, because he is picking the wrong fight. He has a privatised medical system – he must work with that, not some pipe-dream socialised one.
Otherwise he will simply be talking to the wall.
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Jun 17 09 3:48 pm
Hey Mac, excellent piece but the dear lady either laid down the LAW or THREW down the gauntlet. You must not mix your aspirin with your pseudoephefrene.
Yep. I really shouldn’t max my mitterfors…
Jun 17 09 3:49 pm
Agree with your comments.
From my discussions with Americans, one of the most underreported problems with the current US system is the treatment of people who are sole traders or work for small companies.
If you work for a large company you get healthcare with your employment. Your company has reasonable bargaining power with the insurance companies and can get a relatively good deal (the US portion of the company I work for gets health care cover for employees at a very reasonable rate – and it is top notch cover).
If you work for a small company or are a sole trader, or otherwise don’t have bargaining power, it is really hard to get a decent health policy at anything approaching this rate.
Logically in this situation you would band together with some other similar companies and get a good deal in bulk – you would be able to arbitrage the market to drive down the cost for small purchasers as well.
The anomaly is that this is expressly forbidden by the law.
You heard me right, the health industry have managed to get law written that prevents small groups of people having any bargaining power. And they use that law to absolutely screw anyone who wants a decent policy and isn’t part of a large organisation.
It is amazing what this does to their economy – it makes it unattractive or impossible to be an indepedent contractor (so they have almost no independent contractors), it is very risky to set up a small business (hard to get cover) etc etc.
Not to mention the general shamefulness of this as a law.
Yes, you are quite right. If Obama really just wanted a tussle with the insurance companies that he could win, repealing this law would have been the way to go.
Jun 18 09 10:29 am
PaulL that is extremely interesting I had no idea that was the case. Of course it makes sense, a law change would go a long way to sorting out any problems and would take away the argument for going down the road that Obama has chosen – and that is why the law will not change.