Health Care Idiocy

Health Care Idiocy

Either Commander Zero is a liar, or an idiot. I'm not sure which. I saw him responding at his press conference to a question about whether his proposal for a government health insurance plan would drive private insurers out of the market. In brief, he said that if government providing health insurance drove private insurers out of the market, then they really aren't very good at doing health insurance. Does Commander Zero not know about this concept of predatory pricing? Antitrust law makes it illegal to sell below cost, precisely for this reason. Government, of course, is exempt from antitrust law.

Commander Zero's laudable goal is to see that every uninsured or underinsured American has health insurance. But many of those uninsured or underinsured Americans are in that situation because they can't afford health insurance. How can the government provide health insurance for a family with a $25,000 a year gross income? Only by subsidizing it--which is to say, by offering it below cost. They have two choices of how to subsidize it:

1. By charging above cost to those who need insurance, and can afford it.

2. From tax revenues or increased deficits.

Take the first case. I would expect that a government health insurance plan to cover me, my wife, and my son, would cost about what my HP COBRA continuation group coverage would cost for all of us: about $780 a month. A family with $25,000 a year income simply can't afford that. (That's 37% of their gross income--perhaps 45-50% of their net income.)

What can they afford? Perhaps $200 a month. So how can the government reach that level? By charging a family like ours an offseting amount: so about $1360 a month. At that price, it's cheaper for me to buy individual health insurance from Blue Cross--quite a bit cheaper. So why would I pay $1360 a month for government health insurance, if I had a cheaper private sector alternative? I wouldn't. And then the whole house of cards collapses. You can't provide coverage for poor families by cross-subsidy from wealthy families if we have a choice in the matter. (And yes, you know that is why Obama's handlers are already backpedaling on Obama's promise of "if you are happy with your current health plan, you can keep it. Period.")

What about the second choice? If the government subsidizes health insurance from taxes or deficits, then Obama can indeed cover the uninsured and the underinsured. And you can make a case that this is a good thing, because it stops the insanity of using emergency rooms for sick babies, and cost-shifting from the uninsured to the insured.

But if everyone has the option of going onto the government's health insurance plan, how long will it be before those who are currently privately insured will switch over? And how long before employers, especially smaller employers, start dropping health coverage as a fringe benefit, to reduce costs? The snowball is going to start rolling down that hill, and the economy will utterly collapse from having to pay the bills--in taxes, or deficits.

I shake my head when I watch Commander Zero make these statements, because it tells me that he is either too dishonest to acknowledge that covering everyone requires an enormous subsidy, or forcing everyone into the same pool--or too ignorant to understand that subsidies necessarily will cause predatory pricing, driving private health insurers out of the market.

Yes, yes, I know that there are some things that can be done to reduce health care costs. But the think that we are going to reduce those costs enough to cover the 46 million uninsured without really enormous increases in government spending is fantasy. The choices are simple:

1. Rationing of health care.

2. Big tax increases.

3. Taking the already enormous deficits that Obama is running up and making them vastly larger.

Yes, in the long run, there are things that we can do to reduce health care costs by discouraging destructive behaviors. But Commander Zero can't even give up smoking--and somehow, we're going to get Americans to stop gorging themselves, eating deep fried junk, smoking, using dirty needles, having anonymous, unprotected sex with strangers, and refusing to exercise? The best that we can hope far are incremental improvements, and even this will require a level of nanny-statism that will make Democrat a curse word in every poor community in America.