I think I understand the cost of healthcare

Some facts I have heard recently about health care have suggested to me that the cause of the excessive cost of health care in America is linked to the rise of the housing bubble, and if economic history is any guide the bubble that is health care should burst rendering the current political battle over it moot. Or at least we might be able to do something about the bubble through the law, which might be better than doing nothing, this is risky because we don't know about the effectiveness of the law.

As I understand it the main thing that drives the Republican and Right-Wing opposition to Obamacare, the Health Care Reform legislation just pased, and why the reaction is so swift, is the idea that the government can force everyone to have to buy health insurance. That is the basis of up coming court challenges to the law, and the threat that government programs will erode that quality some people see in what they have now, including medicare, but certaintly also private medical coverage.

What doctors are saying now about the system, because they are on the front lines and will be affected by the changes in the law, is that the problem in that the per-capita cost of health care in the USA is about twice that of the nearest other nation, a nation about as wealthy as ours, and that problem is created by the demands of their patients. It is alittle more complicated than that because the government is a large player in the current system. The bitter pill, say the doctors, is that the expectations of their patients will have to change and that could take decades if the costs are going to come down on their own.

This sounds to me like the process that started the housing bubble, which I saw first in California in the 1970's, when high-paid tech workers started to bid up prices. One can label this supply and demand, and talk about the setting of price in a so-called free market, but in so doing one has to describe why such markets go very much ary and when the consequences become life-and-death as in the delivery of medical care when it is critical, we can agree that the behavior of a market becomes rather more important than whether or not someone gets the American Dream of owing their own home. But I can see that the economic mechanism is the same and with the same gremlins of assymetry in the flow of information, making unregulated markets generally not ideal models either of rational behavior or just allocation of a scarce resource. Enter Obama, wanting to fix inbalances created in the market for health care and insurance, mitigation of risk from sickness and disability. The government is a check on the sociopathy of markets that replace empathy with fiancialization. A legitimate role of public policy is to answer the blind spot created by reducing everything to its equivailent dollar value. This is especially true when the big-spenders skew the price distribution.

I am not an economist, but what the housing appreciation of the 1970's taught me is that supply and demand leads to the high-end driving up the price distribution regardless of the real value of the goods being supplied. This leads to huge margins in the construction of homes and the resale of existing homes. The market becomes rigged as the lenders and sellers speculate on the price, and the whole bubble bursts when the process becomes unsustainable. The markket fundementalists assert that if left alone such process will find a rational equilibrium, which mistaken assumption is based on the even flow of information between lenders and barrowers. This does not happen very well which is why is leads to cycles that end in chaos. The conservative finance types insist that the rigging is not their fault and blame regulators, whereas it is greed and self-interest that leads to secrecy that causes the imbalance.

The same thing is going to happen with health care, and some aspects are already taking place.Why are insurance companies getting so stingy with coverage? Is it possibly because they have access to information about their customers that is new, read electronic medical records, and they can cherry pick the least risky people to cover. They are not forced to disclose this process nor are they forced to compensate the people they have disadvantaged. This is why the legislation says that they can not longer refuse coverage. What it does not say is how much they get to charge for assuming that risk. There may be a hidden factor in this that maybe the insurance companies can't rise the the capital to meet the demand and are forced by the Bond Market to seek lower risk customers. This is means that the whole theory of managing risk with private insurance is under attack.

More importantly, like the high-end of the housing market driving all the prices up, the demand that people have for large intervention acute care for medical conditions, whith much less emphesis on preventative care, drives the cost of medical care up for everybody.

The Tea-Parties don't want to give up the perks this system has given them. They might fight to the death, literally, to keep what a skewed system has given them, which explains why they are so adiment, althiugh I think their activism is an almagum of issues ranging from regional animosities to Libertarian-like populism. For a while I had thought that this represented an early or possibly continuing manifestation of a class war in America, but for now it is enough to analyze it in terms of a classic rigged "free" market.

So, lets prognosticate. Suppose the legislation just passed had failed, or that the provision in it forcing everybody to get insurance is ovturned in the courts, or worse, the numbers don't deliver the savings to the National Debt or the real costs of health care don't come down, in other words, the legislation doesn't have the desired effect, as if it was never passed. The Right Wing asserts that this is what is going to happen anyway, goverment doesn't work, and maybe the GOP sees to that by appointing incompatants to office, making sure that their political economy is correct, so then what?

I think that the result if the fixes don't work and we get the status guo is a meltdown of health care in the form of a bubble, and that we may get what the conservatives fear the most, a disincentive to train doctors and their support staffs and the changing of the orientation of people trained in health care to it being a public service rather than a for-profit business. The beaucrats who overburden the system will surely go. Many hospitals and insurance companies and many HMOs will fail, and they may anyway, there will be a doctor and nurse shortage, and those who survive will have to learn how to efficiently dispense their expertise, and that will certaintly involve use of less-skilled people in public health out reach and preventative medicine. There will be deaths from this process; there will be people who will not be seen with the right intervention, but that is bound to happen now with the investment market driving the priorities of the system. This is why I support generally the intent of the passed legislation. I just never bought the argument that a government agency controlling costs and influiencing life and death decisions is any worse than some insurance underwriter hidden deep in the bowels of some corporation in Hartford Conn. At least it is easier to scrutanize the government than some corporation.

Broken American Politics

The debate which resulted in the passage of Health Care Reform and the continuing battle and the passions it has stirred up reveals that the American Political system is itself sick. It is not just the rhetoric and anger, but the polerization and lack of compromise which worries me.

I really blame the GOP and Right Wingers for this, although the situation was helped by strategic decisions by the Democrats. The Republicans and others on the Right suffer from such extremism that they can't even see that the abuses they supported by George W. Bush had almost destroyed them, now they are back as if they had no part in the scandal and corruption they were party to.

For her part Nancy Pilosi should hever have agreed to ananesty for Bush and Chany for war crimes and Obama should have reversed TARP and the Bank Bailout. They get the GOP and right wingers off easy and they came roaring back and its not over, because the Right could still undo this law and more.
If I were in her district, I wouldn't vote for her, even though she has been touted today as the most power speaker of the house.

I wonder if the state of American Politics really represents that a class war is going on, and has been going on for some time. There are many factons on the Right that pride themselves in no compromise, whether it is Right to Life, Fundementalist Christians, or Market Fundementalists such as Libertarians.
What the Health Care debate reverals is that the Party of No finds support from people who believe "I've got mine, screw you." a siege mentality. What this country needs is a retreat from that mentality and replacing it with one in which we share a common stake in the future.

Another indicator of this is how fiscal conservatives are allowing the states to falter vua under taxation and that the nation's public schools are being allowed to be destroyed. Rather than having the businesses who benefit from a well-educated domestic workforce pay their fair share in taxes, the No Tax Increase Republicans are standing pat on the insistance that states be allowed to fail because their revenues and investments have failed linked to the business cycle promoted by the GOP and free market advocates. One must question the partitism of the Right and in addition wheather any of these people believe that America has a future.

Health Care Reform Bill passes

Yesterday the House of Representatives passed a Health Care Reform bill by a slim margin and the contentious issue is not going away. Already some states want to outlaw it and there are legal challenges already in the works. The battle has divided the country along conservative and liberal lines; it seems that the most contentious issue is the requirement that everybody buy insurance, and the argument that because of the power of the government that it will drive private companies out of health care. The argument has become very heated and the vitrol seems to come from several sources, not the least from people who are worried that they will lose their benefits or choices.

Some facts are that 87% of Americans have some form of Insurance, but that the rest, about 45 million either cannot afford to pay premiums or have been refused helathcare insurance. The bill aims to insure between half and two thirds of them through subsidies for the cost of getting insurance and it makes getting insurance by 2014 manditory.

I will be eligible for Medicare in two years and for me the benefit of the bill is that most of my prescription drug costs will be covered, along with what i will get under Medicare for doctor and hospital care.

One of the things I like best about the plan is the emphasis given to preventative care. It has been claimed that people with so-called "Cadillac" plans, which would be taxed, don't go for preventative care.

I am still puzzled by the rage this issue has seemingly caused in the piblic, which is in part fanned by the politicians who opposed it. There is alot of partisan politics and we haven't finished the battle over this. Like some of FDR's legislation the opponants will fight this in the courts even if Obama loses supporters who get defeated in the mid year elections.