Tuesday, February 25

Health care proposal unbelievable

Government thinks that costs will somehow go down even after adding millions of people to plan

Of all the assertions made about the government’s proposals for health care, the hardest to believe is that a dramatic “overhaul” of the system would improve the economic conditions in the country.

The reason for this skepticism is that the idea itself is counterintuitive.

Unless one is motivated by the monetary gain that comes with investing in health care reform, who on earth would believe the argument that adding millions more people to a government program (and spending hundreds of billions of dollars in the process) would actually send us on the road to financial prosperity? I’m guessing not many.

Yes. This argument is counterintuitive, and yet many people still believe it. Why?

Part of the answer lies in a new book by the economist Thomas Sowell titled “Intellectuals and Society.”

In the book, Sowell posits that many of the people commonly thought of as “intellectuals” ­”“ whom he defines as people “whose end products are intangible ideas” ““ have been responsible for some of the most destructive ideas to take hold in the last century.

Due to their erudition and specialization in their respective fields, Sowell said these “intellectuals” are often chosen to fill places of power and reverence, such as in government, where their ideas gain instant credibility from a wide audience and frequently are immortalized in social policies.

According to Sowell, the same set of assumptions that led people to believe the predictions of individual “elites” ““ that the world would succumb to mass starvation by the 1970s and 1980s (See Paul Ehrlich’s book “The Population Bomb”) ““ is behind many of the misdirected policies that are in motion today.

In keeping with Sowell’s argument, part of the reason many people seem to believe that health care reform will reduce costs, rather than exploding them, is precisely because that is what people in Washington ““ i.e., intellectuals ““ would have us believe.

President Barack Obama is foremost among them.

Despite not having any medical credentials to speak of, Obama ““ a Harvard graduate, and hence, an intellectual by Western standards ““ has made himself the arbiter of the nation’s collective health and the health of all its individual citizens.

From the very beginning, Obama has vowed that his main focuses with health care reform are twofold: 1) expanding coverage and 2) bending the cost curve down.

With regard to the first point, the administration was originally guided by the premise that health care was a basic, even constitutional right ““ that is, that everyone deserved access to affordable, quality care whenever they needed it. Leaving 23 million people uninsured, however, the Senate bill fundamentally undermines itself.

Still, the greater deception lies in the notion that cost factored anywhere into the government’s equation.

Certain facts are marshaled in support of this conclusion and against the countervailing evidence. For instance, the fact that doctors’ fees will go down as a result of government intervention is taken as evidence that health costs in general will also go down. These costs do not disappear, however.

Using a clever accounting gimmick, the government simply shifts them to insurance companies, who right the imbalance by charging higher premiums. The Pandora’s box of mandates that the government would entreat insurance companies to provide ““ from mental health counseling to postnatal care ““ would send those costs soaring even higher and send us farther on the road to insolvency.

This dishonest practice of shifting costs around to obscure the bottom line is also evident in the government’s overall cost estimates. The Congressional Budget Office supposedly highlights the Senate bill’s scrupulosity by putting the overall tab for Obamacare’s first decade at “only” $871 billion ““ a figure commonly cited by Democrats.

When we scour the bill, however, we find something missing from this datum: While most of the new taxes take effect this year, all the spending commences after 2014 ““ giving the government four full years in which to collect revenues without providing any new services. The real cost of the first 10 years (2014-2023), which is seldom mentioned, is about $2.5 trillion.

A still greater act of prestidigitation is the $1 trillion in Medicare cuts the bill includes to help create the illusion of “paying for itself.”

At first, it might seem perplexing that Obama proposes ransacking a program that, by his own admission, is already going broke.

Then, we realize that this is not his intention at all. The Medicare cuts were inserted into the bill to lend a patina of fiscal responsibility, with every intention of abandoning them once the fervor died down. When push comes to shove, the government will never slash funds from a program that is on the verge of financial ruin ““ let alone from any federal program.

Even if Congress were to carry out these cuts, moreover, and tax revenues exceeded expectations, the bill’s structural flaws would still make it unsustainable. Once the new subsidies kick in and people realize the draconian penalties for not joining, there will be a mad dash into the new system, increasing demand. With no new doctors to compensate, however, supply will not keep pace, creating a situation in which insurers will either be forced to raise prices or ration care.

All of this explains why the chief actuary of Medicare predicts that health care costs would rise ““ not fall ““ if Obamacare is instituted, and millions would lose their insurance.

Among the intelligentsia, and especially academia, there is no admission of these oversights or recognition of the contrary evidence. There is only unquestioning adherence to the assumptions of their fellow “intellectuals,” whom Obama identifies with.

We can only hope that these individuals take a sudden interest in the array of ideas buzzing outside their cloistered world, but we will not hold our breaths.

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