Economic Ignorance At The Health Care Summit

Posted by Jason | Posted in Health Care | Posted on 26-02-2010


Yesterday, Obama held his health care summit with both parties. While working, I had it playing in the background. Unfortunately, I found my self laughing and yelling at the TV more often than I’d like to admit.

What the summit highlighted to me is the complete ignorance of Obama when it comes to economics. He can bring out his laundry list of sob stories, but it still doesn’t change the fundamental economics that I outlined in a previous post on root causes.

Here is a sample of Obama’s ignorance.

Tom Coburn:

“So when you break down the costs, what we know is 33 percent of the costs in health care shouldn’t be there.

And how do we go about doing that? And what are the components of that cost? And when you look at, when it’s studied, if you look at what Malcolm Sparrow from Harvard says, he says 20 percent of the cost of federal government health care is fraud. That’s his number.

If you look at Thomson Reuters, when they look at all of this, they say at least 15 percent of government-run health care is fraud.

Well, when you look at the total amount of health care that’s government run, you know, you’re talking $150 billion a year.

So tomorrow, if we got together and fixed fraud, we could cut health care 7.5 percent tomorrow for people in this country.”

“So it seems to me if cost is the number one thing that’s keeping people from getting care, then the efforts of us, as we go after cost, ought to be to go to those areas where the cost is wasted.

And there’s a philosophical difference in how we do that. One wants more government-centered approach to that. I would personally prefer a more patient-centered, market-orient approach to that. But nevertheless, there’s where we can come together, just on those two areas, where we could cut costs 15 percent tomorrow. And that’s for everybody in the country.

What would — what would happen to access in this country if tomorrow everybody’s health care costs went down 15 percent? Access would markedly increase.”


“So that’s an example of where we agree. We want to eliminate fraud and abuse within the government systems.

Let’s recognize, though, that those savings in the government systems, which will help taxpayers and allow us to do more, doesn’t account for the rising costs in the private marketplace.”

via Sen. Tom Coburn discusses cost containment at the White House health summit –

Can you believe how ignorant Obama is about markets and the economy? I guess based on his performance so far, you are probably can.  Coburn explains that based on the best case numbers 15% of all government spending is waste. The government accounts for 50% of all heath care spending already, so that 15% would count for 7.5% of all health care spending. Obama seems to think that there are two separate and unrelated markets and says that explains rising government costs but not the private sector costs. WHAT? Are you serious Mr. President?

This would be like dividing up a bathtub into half private and half government with the faucet on the governments side. When the tub starts overflowing, Obama would say, “Well the faucet explains why the government side is overflowing, but that doesn’t explain why the private side is as well.”

There is one health care market. It doesn’t matter where the money comes from. If more money is thrown at the same resources, prices go up. What Coburn is saying is you have 15% of all the government’s money as waste thrown into the market which is chasing the same resources as the private sector. That is one of the reasons costs are going up on both sides.

This one statement should highlight why government involvement in anything is a complete disaster. They have absolutely no concept of economics or reality for that matter. Democrats want to legislate based on feelings and wishes. Well, I may wish everyone was a millionaire, but that doesn’t mean it’s good policy. It doesn’t matter how many stories I tell about poor people.

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Comments (4)

I was hoping an enterprising Republican would have asked Obama the following question:

Mr President, you claim to be a big supporter of the free market. You have made such a statement on a number of occasions. Why are you unwilling to try an actual free market when it comes to health insurance and health care?

I would love to have seen what his response would have been.

What bothers me is that everyone knows the system needs reform. While the care most receive is great, the system is unnecessarily expensive. And that’s where the divide starts and there doesn’t seem to be any way to bridge it. Republicans have generally claimed the cost is due to too much government (you and I agree), however Democrats claim it’s because there’s not enough government.

I see why both sides are sticking to their guns. Each side claims the other’s implementation would make matters worse (even though that’s only true to 1 side). Do you see some kind of resolution to that ideological divide? I certainly don’t.

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I think ultimately we’ll eventually get some crappy bill. Democrats will get their partially socialized health care, and Republicans will get tort reform. Neither are good.

The problem with health care is third party payer and government involvement in the first place. Republicans lose the battle as soon as they say government has a role. From there on out, it’s a matter of how much the role is.

The Republicans love tort reform, which makes no sense to me. All that needs to be done is to make sure that frivilous lawsuits are punished some how. You should not cap pain and suffering at $250k. If someone is disabled for life, $250k isn’t going to make their life anywhere near what it would have otherwise been. People should have the ability to sue when they are harmed. If there is going to be tort reform, it should be left to states.

I’d love to see someone in the room ask what business is it of the government to be involved in health care. Where in the constitution does it give government that power? Of course Republicans may pay lip service to it, but eventually they concede that government has a role by involving themselves in this debate.

I see no resolution in the end that is good for us. Eventually this is going to build and build until everything collapses down on us. Then we’ll either be a dictatorship or we’ll go back to our founding.

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I was watching America’s Nightly Scoreboard last night and David Asman (who I typically agree with) was interviewing a British healthcare watchdog and that guy made an point which you inherently understand once you hear it, but you don’t always think about – Once you get a socialized system in place (which as you note we will probably end up with), any failure of the system is not due to the system itself, but due to a lack of funding for the system. The obvious response of the status-quo supporters is that we should be spending more money in that system (so much for cost control, eh?). And if you attack the system, you are portrayed as attacking the nurses and doctors in the system, and never the system itself.

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Where have I heard that before? Lack of funding for schools, and you don’t care about the children. You want them to starve at lunch.

Don’t think we should be fighting wars all over the globe, you don’t support the troops.

One day we’ll be able to say I told you so. Probably is we’ll be saying it to the other slaves.

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