If the Journal is Right on This Health Care Move, Obama is Beyond Redemption « naked capitalism

Monday, January 25, 2010

If the Journal is Right on This Health Care Move, Obama is Beyond Redemption

This in tonight’s Wall Street Journal, “Narrower Targets Set for Health Overhaul“:

As Democrats regroup on plans to overhaul the health-care system after a Republican win in last week’s Massachusetts Senate election, comments Sunday indicated that any revamped legislation would likely focus on the least-controversial elements of earlier proposals.

White House officials notably didn’t emphasize that any revised legislation should include a major expansion of health insurance. Expanding coverage to the uninsured was the key plank of the separate health bills passed by the House and Senate last year, but such efforts largely accounted for the about $1 trillion cost of the bills, and Republicans decried them as too costly.

Yves here. In case you missed it, let me translate: Obama is willing to give up on extending coverage to the uninsured.

What is the bloody point of the bill if he drops that? As we discussed earlier, the claim that the bill eliminates insurers denying coverage for pre-existing conditions is a canard. The bill preserves an out for fraud or intentional misrepresentation, and fraud is so liberally defined under current law that is the reason insurers use NOW to deny coverage.

So all that is left is the transfer of wealth to the insurers (recall that some younger people now choose to play the odds and not buy insurance; they’d face penalties under the new bill if they continued to do so, and to improve optics, there will no doubt be a smoke-and-mirrors plan to cover the currently uninsured) and the bennies to Big Pharma, such as restrictions on the reimportation of drugs.

More on this topic (What's this?)

What the Government Isn’t Telling You About the New Healthcare Bill (Money Morning, 12/23/09)

Healthcare Stock Watch: My Short List of Booming (and Busting) Companies (Investment U, 1/20/10)

The Winners and Losers from a New U.S. Healthcare Reform Bill (Investment U, 12/16/09)

Read more on Pharma & Healthcare, Obama's Presidential Policy at Wikinvest

20 Comments:

Ronald Pires says:

January 25, 2010 at 3:15 am

The entire health insurance system has been slowly collapsing from unrestrained medical inflation for 35 years. At first, they responded with HMOs. Didn’t work. Then they responded with all sorts of provider networking. Didn’t work. The last ten years they’ve been flailing around with recisions, denials of service, zombie deductible plans, you name it. Not working either.

I know health insurers are easy to hate, but the fact of the matter is that as bad as they have become (and they have become very bad), they are as much the victim of unrestrained medical inflation as the rest of us are. No, there is no longer room for them because of this, but even if we were to toss them out tomorrow, we’d only be buying ourselves two or three years before we were in the exact same place again with things once getting worse.

The industry, in spite of its profits, is collapsing, as they have lost all control of their pricing. If there is no bill this year, or if whatever passes does not stop the underlying inflation problem, these companies will start going out of business in maybe five years. People are simply not going to keep paying for the kind of garbage they are now putting out. Congress will have to act by then or face pitchforks in the streets.

All of this was quite predictable, by the way. I know, because as an employee of one of the majors, I told them this exact thing in 1978. It was obvious even then.

Yves Smith says:

January 25, 2010 at 3:36 am

Ronald,

Agree with you completely that the big problem is medical costs and the other is the uninsured, and they are not completely unrelated (as in emergency rooms are a very high cost way to provide care to the uninsured who do get care, massively inefficient).

Fee for service American-style leads to overprovision of services. I can’t tell you how many times I’ve argued against doctors re overtesting and overtreatment for years (for instance, an orthopedic surgeon who was keen to operate on my knee when the MRI report was ambiuous. A second radiological opinion. this with a team looking at it, deemed my knee to be “perfectly normal”), One of many general examples: the US is the only advanced economy where everyone at age 50 is told to have a colonoscopy. Everywhere else, they are recommended only for high risk groups. And we’ve also trained consumers to expect unnecessarily aggressive testing and treatment, witness the negative reactions from women on the new recommendations re mammograms (that they start later than in the past, and be administered less frequently than previously recommended).

I’ve been making my objections over a series of posts, and so the focus on insurers may seem excessive, and I probably should have reiterated the point made elsewhere: that not only does the bill not contain costs, it set about to enrich potential opponents to get them to play ball. That is contrary to the direction we need to go in.

attempter says:

January 25, 2010 at 3:20 am

This is simply another step on the exact same logical path Obama and his hacks have followed from day one.

The moment they unilaterally ruled out single payer, for no reason that made any sense at all if they ever actually wanted real reform, and committed themselves to the vile, wretched path of “a bill, any bill, as long as we can fraudulently slap the word ‘reform’ on it”, some miserable end like this was inevitable.

And yet he still digs in, still won’t give up (and I imagine hacks like Krugman will still dig in as well).

It’s long been apparent that with these people there’s literally no level of substantive worthlessness and wickedness this bill could contain where they wouldn’t continue to support it and insult our intelligence by calling it “reform”.

This is such a case study in cognitive dissonance and historical folly that it would be hard to swallow in a work of fiction. Even by Democrat standards this is insane.

And it’s amazing how few people learned a lesson and pulled themselves out of the mire along the way.

jbmoore says:

January 25, 2010 at 3:32 am

Mr. Pires’s argument is bogus. If it were true every other national healthcare system on the planet would be going bankrupt, but they are not. Some countries do better in containing costs than others while holding overall mortality down. We are not in the top thirty countries when it comes to providing healthcare for our people, but we spend twice as much per person than any other people. We have plenty of models and plans to choose from, and yet, Congress and the President come up with this putrid, odious reform bill that can’t even be called edible legislative sausage. It gets more putrid and inedible every day. Maybe in committee it can be made edible again, but it just seems to be mostly sawdust and putrid scraps at this point.

Expat says:

January 25, 2010 at 3:47 am

Mr. Pires, the creation of the HMO system was not a response to rising medical costs, it was instigated by Kaiser Permanente and John Erlichman. Nixon touted it because he was assured that it was corporation-friendly and designed to generate big profits.

In any case, this health care “debate” and the ensuing legislation shows that our rulers are starting to give up all efforts at pretense. At least they keep lying to us about the bailout of Wall Street, assuring us that they acted in our interest and are making money on the deals.

The health care debacle could be improved by scrapping the proposed legislation and simply handing over two trillion dollars a year directly to the health care industry. This would save a lot of money in bureaucracy and inefficiencies and do nothing to change the level of health care. Furthermore, by simply handing free money over, the government may at least make noises about costs and possibly limit them to only double inflation for a few years.

Our leaders are probably no worse than those that sacked our nation during the Harding Administration or invaded any country without nukes during the reigns of Eisenhower, Kennedy, Nixon, Ford, Carter, Reagan, Bush, Clinton and Bush. Unfortunately, thanks to the internet and cable, we are now aware of everything. Gee, and we thought all this free press would control those animals! Ha!

roz lund says:

January 25, 2010 at 4:21 am

Have you guys all become commies? What is it with health care and lefties? Where are the capitalists on this site? Its not a “right” for heaven’s sake. For those to whom everything under the sun is a “right”, you have a right to make enough money to afford health care. If you can’t, then too bad. It’s that simple. Haven’t you ever heard the saying “the road to hell is paved with good intentions?” Providing for all is a sure-fire way to kill incentive, personal responsibility, and to destroy forever whatever economic potential our great nation still possesses. Instead, we should be talking about canceling outright the programs of Medicare, Medicaid and Social Security. And outlawing unions in the public sector. For our children, grandchildren and the future viability of this great nation. Have we become completely mad?

Walt says:

January 25, 2010 at 4:43 am

You want to cancel Social Security outright, and you call us mad? Uh, okay.
Yves Smith says:

January 25, 2010 at 4:56 am

No one is holding a gun to your head to visit this blog. If you don’t like the content, go somewhere else.

If you are trying to denigrate readers by calling them “commies” (not that a misguided broadside would bother anyone, but it appears you mean this as a slur) I must inform you that that is an ad hominem attack and against comments policy here.

As for “communist” you have it backwards. Every advanced economy, all of them democracies, save the US, treats health care as a right. By contrast, neither communist China nor communist Vietnam treat health care as a right. So US practice is in line with that of communist countries.
Kevin de Bruxelles says:

January 25, 2010 at 5:05 am

Yeah these lefties are nuts. It seems this idea of a “right” to health care is similar to the Bush Administration’s idea that Americans had a ”right” to national defence and therefore they refused to dismantle the socialized military. Instead they actually increased the number of socialized enlisted soldiers and the number of socialized officers (I think there was even a 10% increase in the number of socialized generals!). As a result you saw the debacles in Iraq and Afghanistan where our socialized military has proven how inefficient public funding for defence is. For you and I both know that the only people who have a right to defence are those who can afford to pay for private militias or naval armadas, just like in the medieval times. Creating a standing Soviet-style socialist army financed by taxpayers only kills incentive, personal responsibility and punishes those citizens who act responsibly on the international arena while subsidizes the bad habits of others. Why Bush and Company could not just realize that if they left national defence to the private sector we would be much safer and secure? The large corporations, small businesses, and freedom loving individuals, if just freed from the shackles of government, could protect us much better than any group of government bureaucrats. Instead we have rationed defence, waiting lists for countries to invade, chronic shortfalls, bad morale, and a huge deficit caused by defence spending. And it just sickens me that some countries, Somalia for example, are so way ahead of us in privatizing their military.

And so given the example of the socialized military, which of course has socialized medicine for its socialized warriors, it is small wonder that some lefties (not the current Obama Administration thank god) want socialized medicine. Just look at the aforementioned example of Somalia; since they don’t have socialized military, they sure don’t have socialized medicine, and the population are that much because of these wise policies enacted by the Somali leadership. I’m with man, why can’t America just be more like Somalia?
Francois T says:

January 25, 2010 at 5:45 am

Of course universal health care is not a “right”!
It is…are you ready?…an investment!

Yes, an investment!

Since you declare yourself a capitalist, here’s your assignment for today:

1) Discuss why is it an investment.
2) Compare and contrast this hypothesis with the “right”.
3) Provide the two main rationales that explain why UHC intrinsically bends the rise in the cost curve while preserving quality of care.
4) What is the main contribution of the Dartmouth Research Project on HC policy?
5) What are the 5 most costly diseases to treat in the US?

Thou shall be graded. A failure means 50 lashes with a 9-tails whip.

Be gone now!
Toby says:

January 25, 2010 at 7:23 am

Hi roz lund,

I think you’re very funny. Such a silly post with apparent sincerity wrapped around the imbecility. That takes some skill. I do want to pick you up on “paved with good intentions” though. I hate that expression. It means we shouldn’t have good intentions, which means we ought to try to have bad ones, or perhaps none. Is therefore the road to heaven is paved with bad intentions? Can that be? Sounds silly to me.
mo says:

January 25, 2010 at 11:31 am

This was so over the top, I thought it was sarcasm.

jsmith says:

January 25, 2010 at 4:25 am

If the goal is to help the uninsured working poor why not simply expand Medicaid? And/or better yet – expand public health care systems? Americans might find this less objectionable than a Rube-Goldberg contraption.

To bring down costs, America should go on a succesful diet.

Rob P says:

January 25, 2010 at 10:15 am

Y’no, I’ve never understood why they didn’t just make this a whole lot simpler. Politicians are masters of passing the buck, so they should have passed it along the states. The whole bill would basically be this:

“We (the federal government) promise to pay half of any state single-payer health care plan that has a public option.”

Then they could have just sat in Washington and let the individual states fight the issue out on the state level and claimed victory to one and all while essentially doing little. In many states the corporate influences would have kept such legislation from getting through anyways, so there would have been minimal cost involved for feds as well!

mo says:

January 25, 2010 at 11:35 am

Check out the article in today’s NYT re: United Health Care and the Continuum Hospital Group in NYC. UHC wants to cut its reimbursement rate by 50% if the hospital doesn’t notify them of a patient’s admission within 24 hours.

Talk about scorched earth policies – there is no other way for UHC to work with hospitals to reduce costs?

Ronald Pires says:

January 25, 2010 at 7:35 pm

Answers to criticisms:

§ Yes, the HMO concept was around before the 80s, but it was then that they really took hold. I was there for this, and I can assure you, it was quite definitely in response to cost escallations that set in during the inflationary 70s.

§ I have only tracked medical inflation in the US, and it has been well over general inflation for 35 years. If healthcare were any other market, people would just stop buying, but healthcare isn’t. People (and their employers) will buy it as it consumes a greater and greater percentage of their income until they can’t possibly buy it anymore. This is why the numbers of uninsured are rising so rapidly now (even before the crash), and why these zombie deductible plans (which really aren’t insurance for most people) are becoming more and more common.

§ Yes, our system is very good at encouraging inefficiency. No doubt some of this inflation is caused by that.

§ To “roz lund” ~ When the grocery clerk buys a car, he helps pay for the healthcare of the auto worker. When buying food however, the auto worker does not help pay for the grocery clerk’s healthcare. When the waitress goes to the hospital, she helps pay for the healthcare of the nurse. When the nurse dines out however, she does not help pay for the waitress’s healthcare. I call this phenomenon “free riding”. — So who helps pay for your healthcare, roz? Who are you free riding on?

Raving says:

February 11, 2010 at 5:21 am

“roz lund” knows how to make a buck. (S)h(it)(e) visits Canada and pleads poverty when (s)h(it)(e) gets ill.

Publius says:

January 25, 2010 at 8:04 pm

Take me. 53 this April. In decent health. No junk foodie, nor a drunkie, nor a druggie. I do wear corrective glasses.
I earn nothing. It is absurd but that is how it is. Now I checked for a health care plan, Dad died from a stroke so I am incentivized, but you know, I have rent to pay. I am not able to pay say $350 per month for medical coverage from Kaiser or Aetna. Nor am I able to afford a $50 co-pay if I went in for care, nor can I afford a $1,500 deductible to knock my health care costs $100 lower each month. I live near Chinatown, so when I am sick, I see a TCM doctor and buy herbs. I am not going to buy Federal forced healthcare either. I will go underground.

Latest Obama-nation: President Defends Bankster Pay « naked capitalism says:

February 10, 2010 at 7:44 pm

[...] Obama is beyond redemption. [...]

Malcolm McIntyre says:

February 12, 2010 at 6:48 pm

Hi. Great site. But come on fellas: K de B’s comments are so obviously a joke; very funny.
On another subject: Have you ever had the thought that understanding current events/politics would be easier if you had some knowledge of likely future events and the PTB’s desired outcomes?
Maybe not so crazy. Have a look at a bloke called Boris Chikvashvili at antisopitalist.net and his live chat at borisc.blogspot.com His tools are self-invented and all mind-boggling to a pleb like me, but the quantum-based YBR or Yellow Brick Road is the one that really gets me: a predictive tool that is derived without any reference to the fundamentals of the market (SPX) it is predicting – and it works. Have a look for yourself at the latest demonstration of the YBR’s performance at his blog.
Earlier examples are at safehaven.com/article-7106.htm and then http://borisc.blogspot.com/2007/08/october-21-again.html
Suspicion of my motives here would be natural, but I’m not on retainer . My interest is in putting in touch, people fighting the good fight in their different ways who might be unaware of one another.
Best wishes to all.

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