Will Obama’s plan cut health care costs?

Today President Obama spoke before the American Medical Association, explaining his plans to “reform” the medical care system in the United States. You can tell I’m skeptical, because I put “reform” in quotes. I hold open the possibility that not all plans to spend huge sums of taxpayer money are actually reforms. If the health care plan actually saves money, then it should be funded entirely from the savings achieved. I’ll grant some startup costs, but after a few years money should be flowing into either the Treasury or into the pockets of taxpayers. That, however, is not a part of the plan.

The President said that reform is necessary to make American business competitive with overseas industries whose employees receive government-paid health care. And where do those governments get the money to pay for the health care costs? No place other than higher taxes. Lower health care costs for industry, competitive advantage, are offset by higher taxes, a competitive disadvantage. If the quality of care is maintained, any advantage would have to come from government dispensing health care more efficiently than free markets. That we have not seen.

The President proposed that health care costs could be lowered by computerizing health care records. I can see that working up to a point. For example, in a world of medical specialists it would surely help to have all of a patient’s prescriptions and test results online. Keeping x-ray imagery and CAT scans online seems a doubtful improvement over passing around disks, as is now done. Someone estimated than a third of all the information online could be occupied by medical imagery.

However, insofar as medical records can be beneficially put online, it can be accomplished independent of any massive government plan to “reform” health care. It could be accomplished by having some professional society define a standard, say within a year, and then mandate that practitioners phase in use over a subsequent period. Keeping the mandate to prescriptions and test data would minimize the privacy objections.

Credit President Obama for even mentioning the costs of medical malpractice insurance. It is perhaps a third of physician costs, and for Democrats it has traditional been a subject forbidden to Democrats. By odd coincidence, trial lawyers have long been the largest class of contributors to the Democratic Party. Obama promised not to limit malpractice claims, and that changed the cheers that greeted the subject into a chorus of boos.

He did commit to take a long look at the malpractice lawsuit issues. Health care “reform” is on a short schedule, however, both according to Obama and as a matter of practical politics. If it is not rammed through quickly, it probably will not make it at all. The likely outcome is that there will be continual mumbling about “taking a deep and careful look at all the issues …” while nothing is actually written into the plan.

The centerpiece of the health care plan is for the government to offer health insurance in competition with the private sector. Because the government sets all the rules for the competition, and because the government can draw upon taxpayer money to subsidize whatever price it wants, there is not a chance that the private sector can compete successfully. You can expect that any choice except government will cost you dearly.

Obama stressed repeatedly that anyone who is satisfied with their current health coverage will be able to keep it. You may, for example, choose to keep your current plan that costs $10,000 per year, or sign on with the government for $5,000. What it actually costs the government is irrelevant, the competition is based on what is charged.

To lower costs, money now spent has to be not spent. Changing who pays does not lower costs. If it really cuts costs, then taxpayers should get money back, not put money in.

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One Comment on “Will Obama’s plan cut health care costs?”

  1. nirumi Says:

    Good blog! I

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