September 25, 2009


Mr. Policy Hits a Wall (David S. Broder, September 24, 2009, Washington Post)

[William Schambra, director of the Hudson Institute's Bradley Center for Philanthropy and Civic Renewal], like many others, was struck by the "sheer ambition" of Obama's legislative agenda and by his penchant for centralizing authority under a strong White House staff replete with many issue "czars."

Schambra sees this as evidence that "Obama is emphatically a 'policy approach' president. For him, governing means not just addressing discrete challenges as they arise, but formulating comprehensive policies aimed at giving large social systems -- and indeed society itself -- more rational and coherent forms and functions. In this view, the long-term, systemic problems of health care, education, and the environment cannot be solved in small pieces. They must be taken on in whole."

He traces the roots of this approach to the progressive movement of the late 19th and early 20th centuries, when rapid social and economic change created a politics dominated by interest-group struggles. The progressives believed that the cure lay in applying the new wisdom of the social sciences to the art of government, an approach in which facts would heal the clash of ideologies and narrow constituencies.

Wow, we haven't had a president who undertook such a systematic approach to public policy since...the Ownership Society and Neconomics of George W. Bush. Indeed, if we grant for the sake of argument that the UR has a broad overview guiding him, the main difference between the two would appear to be that W's was based on the results that the social sciences rendered while Mr. Obama is stuck on failed theory. Take, for instance, health care: W's solution to the problems of people not being able to afford their own care when they sicken later in life and to the over-use of medicine by the healthy was HSAs, which allow the healthy young to save money for later and turn patients back into consumers, unleashing the market forces that no one any even bothers denying force down prices. Mr. Obama, by contrast, not only proposes that the healthy be forced to buy insurance--a nearly complete waste of their money--but that we consume even more useless health care in the form of "preventive medicine." In effect, money the young could be setting aside for when they'll need it is to be spent while they're healthy and rather than reduce the consumption of medicine we'll force its increase, driving costs higher in the absence of any market discipline. Mr. Obama isn't adopting a 19th century framework for testing policy prescriptions, he's adopting the policies of those 19th century progressives. It's as if we never saw the Second Way fail, never went through the 20th century.

There was a hilarious article in the Washington Post this week, that reflects this same level of obtuseness:

France has long been proud of its national health insurance, part of a many-tentacled and costly social protection system designed to embrace almost everyone who is legally in the country. Most French people have grown up with the idea that the government is the ultimate guarantor of health care, even for people who cannot afford to pay. The concept has become so ingrained over the past half-century that it is an untouchable part of the political landscape, making the debate over President Obama's proposals in Washington and the fading chances for a public option seem, in the words of the newspaper Le Monde, "altogether surreal."

But the fast-rising cost of drugs and medical care, particularly for the elderly in their final days, has raised the question of how long France can afford the health care it has come to expect. Seeking to beat back rising deficits, the government has reduced the reimbursement rate for many medicines and routine medical services, opening a growing market for private insurance policies, called mutuals, to cover the steadily increasing co-payments.

Without abandoning the bedrock of health care for all, therefore, the French system has begun to evolve toward something resembling Medicare, the health insurance for older people in the United States, except that it covers people of all ages. The shift is regarded as inevitable, specialists said, but increasingly it is raising the delicate question of how much the government will be forced to resort to even higher co-payments in the years ahead.

The French model is failing, why don't Americans want it?!?

Doubling Down on a Flawed Insurance Model: Obama's plan takes the problems of the current system—mandates, runaway spending and more—and makes them worse. (JOHN F. COGAN, R. GLENN HUBBARD, AND DANIEL KESSLER , 9/25/09, WSJ)

The administration's plan will impose mandates that employers provide coverage, mandates that individuals obtain coverage, and mandates about the form this coverage will have to take. These will remove the freedom to choose one's health-insurance plan, because government, in its effort to correct perceived inequities, will dictate which health-care services must be covered and which health-care providers must be used.

The proposed unprecedented intrusion of government into private markets will have adverse effects on people with insurance in both the short and the long run.

The mandates will lead to large increases in the cost of health insurance for everyone. Research studies have shown that as people become insured, especially under a health plan that offers broad coverage and low copayments, they consume more health-care services. The best estimates indicate that each newly insured person will approximately double his or her health spending.

With 30 million to 40 million newly insured persons under the administration's plan, aggregate health-care demand will increase significantly. But when demand expands prices increase. We estimate that the higher demand will increase health insurance premiums for the typical family plan by about 10%. Because an employer-sponsored family insurance plan cost $12,680 in 2008, this translates into an increase of about $1,200 in the typical annual premium.

Posted by Orrin Judd at September 25, 2009 8:01 AM
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