It now looks like America is going to get comprehensive health care reform after all. President Obama has shown his willingness to burn many political bridges to close the deal. There may still be a lot of sparks and friction getting sufficient votes in the House, and the Senate reconciliation process will cause a lot of squawking from the Republicans. But it looks to me like Obama is going to get a big new legislative plan for health care passed while the tulips are still blooming here in the northeast.

I’ve already written about my apprehensions regarding the ObamaCare approach, i.e. much government oversight and control over health care providers and insurers (along with many new requirements and fees for both individuals and businesses). I agree that there is a health care crisis in America. And I think that the heart of the problem is costs. Health care is much more expensive now than it was going back thirty, twenty or even ten years.

Since 1970, health care costs have risen at a rate one and one-third times higher than the general cost inflation rate, and one and one-quarter times the rate of increase of household income. That doesn’t sound like much, but it adds up over time. With regard to Medicare, in 1970 it accounted for 3% of the federal budget; today it makes up 13%. Health care is taking a bigger and bigger bite out of our economy, and somebody’s gotta pay for it, one way or another; whether in higher taxes, lower wages, lower deductibles, or higher costs if you directly pay for your doctor, drug and medical bills. Or, most likely, some combination of all of these. Those who can’t pay have increasingly been getting less health care.

As a result of the cost monster, employers are cheaping out or totally denying employees health insurance coverage; the health insurers themselves are cheaping out we who they are supposed to serve, searching for any reason to deny paying for care; government programs are cheaping out on doctors and hospitals who provide the care; the doctors and hospitals, perversely, try to provide even more care because all of the lawyers out there ready to sue them for any little slip-up or unexpected patient outcome; and the average Jane and Joe are cheaping out, avoiding doctors visits and necessary medications because more and more of the rising costs are getting pushed on them (or ALL of those costs, if their employers or government do not provide them with coverage). It’s getting bad now, and a lot of people are starting to feel the effects. But if it goes another ten year, then most everyone will feel the bite. The working poor have taken the brunt thus far, but the trend will soon hit the middle class.

So yes, something has to be done. But is ObamaCare the right thing? I have my doubts as to whether it can effectively control the cost problem. And so do some other people. Here are some recent quotes and articles I’ve seen that make a lot of sense to me.

Most discussions of health care are like something out of Alice in Wonderland. What is the biggest complaint about the current medical care situation? “It costs too much.” Yet one looks in vain for anything in the pending legislation that will lower those costs.

One of the biggest reasons for higher medical costs is that somebody else is paying those costs, whether an insurance company or the government. What is the politicians’ answer? To have more costs paid by insurance companies and the government.

This was from Thomas Sowell on the Real Clear Politics web site.

Another interesting fellow who has made a lot of money over the years because of his common sense and his gut feelings about how the American economy works also had some interesting things to say. That fellow is investor Warren Buffet. In a recent interview regarding ObamaCare, he said that Obama should go back to the drawing board to come up with new legislation that deals with the “cost, cost, cost.” He called the health care cost problem a “tapeworm eating at American competitiveness.”

When asked about the goal of insuring those who lack health coverage, Buffet replied: “Yeah, I believe in insuring more people, but I don’t believe in insuring more people until you attack the cost aspect of this.” Cold hearted? Perhaps, but there’s also some common sense behind it. I.e., just why are so many people going without health coverage and comprehensive health care these days? To paraphrase an old Bill Clinton-ism, “it’s the cost, stupid”.

There was also a good article by Howard Fineman in Newsweek about his experience in a hospital in South America. It made him think about the health care cost problem here in the USA. He saw how a little hospital managed to give good care while cheaping out on the frills (that we take for granted here in the USA), allowing a lot of people to gain access to health care without all the government and insurance company bureaucracy we have here. Not exactly the solution to our problem, but an interesting perspective, nonetheless.

I have already stated in detail what my own solution to the health care problem would look like. I.e., a mix of market-based provisions and government oversight revolving around vouchers for health care coverage, given annually to each American household; the federal government would raise taxes, eliminate the employer deduction for employee health coverage, and issue vouchers worth around $7000 per person. The recipient would then be responsible to get the best deal in a national competitive insurance market, with minimum coverage standards defined by the federal government. I also agree with the need for real medical tort reform. By making the average person responsible for getting the maximum health care bang for their buck (both voucher value and out-of-pocket costs exceeding the voucher) and avoiding frivolous spending, and by controlling defensive medicine, we could get more health care quality at lower costs (or at least at stable costs, versus the galloping cost increases at present).

I’ve also been impressed by some of the market-based proposals put forth by Democratic Senator Ron Wyden. They are not as revolutionary as my proposal, but if they were combined with some of the Republican ideas about health care (including real tort reform), a very sensible reform bill could be realized.

But, it doesn’t look like that’s gonna happen. Obama has totally ignored Wyden, and the Republicans are being pig-headed about compromise. So, let’s just hope for the best with the highly complex and potentially expensive system that Barack and Nancy are giving birth to.

I’ve heard the argument that when Social Security and Medicare were enacted, there were all sorts of nay-sayers and doomsday prophets. And yet, we’re still here, right? Or are we? Social Security and Medicare will be bankrupt within a decade or two, and if ObamaCare doesn’t turn work properly regarding cost control (recall that Medicare eventually came in seven to ten times more expensive than was forecast in 1965), then the USA is in for some real financial trouble. Greece has been going through a lot of financial angst lately, but
if one day the USA can’t pay its bonds and its bills, then the whole world economy could go down the chute!

(Or, the Chinese will rescue us, after putting all sorts of restrictions on pay and living standards and government spending in the USA; just as our government put all sorts of restrictions on the financial companies that it recently bailed out. Won’t that be fun.)