Economics 101

Obama ’s idea is to provide more health care to more people and have it cost less.

At its core Health care is a service, it depends directly on labor of doctors, nurses, lab techs, clerks, administrators, and so on. To provide it at less cost you must either service more people in the same time, or pay the labor less. Insurance companies make between 2 and 5% so they are not taking huge parts of health care money as profits.

If we pay doctors and nurses any less they will (and do) leave the profession. The stress and work to dollar ratio is such that you cannot get quality doctors and nurses for any less money. They are also already seeing more patients per hour than they should. Lab techs, LPNs, Nurses aids, and other less skilled labor at hospitals are already paid so little cutting their wages makes no sense, having them process more paperwork/hr or samples/hr etc. is going to take either capital investment in faster better tools for them to use, or somehow getting them to be more productive. Good luck getting them to do more work for what they get paid.

Clerks, now here is an interesting place to save money. We have and need a large number of clerks in the medical field, not just transposing doctor’s orders but processing insurance company and government mandated paper work. When I was a kid the doctor we went to had 2 nurses, our insurance didn't pay for routine visits it only kicked in if you needed surgery etc, one of the nurses took care of scheduling and colleting office visit fees. Last week I took my kid to the doctor there are 2 nurses, and at least 6 people running around doing paperwork, and when you look into the office area 3 or 4 are always on the phone to insurance/government offices doing or fixing paperwork. I asked about this to the young lady taking my co-pay ($25). She loved the new computer system as it now only took around 15 min to process all the paper work associated with a patients visit. I only saw the doctor and nurse for a little less than 10 min. (he sees an average of 6 people per hour). Since I've been seeing him for a while I asked him about this, and he said that for every hour seeing a patient there is a little over two hours of paperwork, of which 90 min is for government and insurance paperwork and 30 min doing charting. He said if he didn't have to do all the government paperwork and insurance paperwork for routine visits he could charge the $35 a visit, and would only need 1 office person instead of 6. He said he could also provide better service as the rules insurance and government force him to do unnecessary tests, and don't allow him the flexibility to treat people, he has to treat symptoms. He didn't let his son become a doctor, because engineering can provide a higher quality of life.

So how is having more government going to reduce the cost of health care? If they force lower wages (reduce what they pay doctors and hospitals) they will lose doctors and we will have service shortages (long lines and wait times like in UK and Canada). What has the same government who's been known to buy $1000 toilet seats and $600 hammers, done to be trusted with doing the impossible? The only way they can provide health care to more people at lower cost is to not allow people to reduce services. Your 80 years old and need a new hip, today if you have the insurance or the cash, you get a new hip. Under the government, in order to reduce overall costs, they will say, too bad, the cost/benefit to offering this service to somebody of your age isn't there, here's a wheelchair and some pain meds. This is what is going to happen, restrictions on available services for specific groups/classes of people. The rich will still be able to pay cash for what they want, but regular people depending on insurance will have their services limited. It will be in the details of the health care bill, how else do you explain the government exempting itself for the law, and not allowing the people to see what they are doing until after it’s already passed.

You cannot cut $500 billion from Medicare spending over the next 10 years without anyone getting less of anything. If there is that much “fraud, waste, and abuse” in the system then a lot of civil servants should be going to jail, that much “fraud, waste, and abuse” cannot be an accident. That big a cut will have to result in reduction of services.

The reasoning for having the government takeover of health care is a lie in the first place. Right now, uninsured can and do walk into any emergency room and get care, no they don't get the best oncology treatment if they don't have insurance but they don't go without basic health care. The cost of this is passed on to the rest of us; it's not that much and doesn't add significantly to our current health care costs. George Mason University economist Jack Hadley and three co-authors, in a 2008 Health Affairs article calculated that "uncompensated care represents 2.2 percent of health spending in 2008." Why would we want a total restructuring of health care to save a mere 2.2% to cover the uncompensated expenses?

If you look at the health care "crisis" critically it's clearly a government caused crisis. They don't allow insurance companies to sell across state lines (limiting competition and protecting big business). They add large amounts of admin costs thru huge amounts of regulation to both insurance and health providers (again because of economy of scale this protects big business). The government doesn't allow health providers to advertise prices except is small niche markets like eye care (again protecting established businesses and making it harder for competition). They know tort reform will reduce health care costs, but because most politicians are lawyers, who make their living from law suits, they continue the stupid system which has caused malpractice insurance and health care costs to skyrocket. Here’s an easy fix that won’t cost taxpayers a dime, get rid of regulations for licensing and prescription drugs they add layers of un-necessary doctors visits, paperwork, and artificially reduce the labor pool adding to health care costs.

I can't think of anything that doesn't get worse and cost more with additional government involvement. Cars are a great example, In India for around $2500 you can buy a car that gets 60mpg. That car will never be available in the USA as configured at that cost; it cannot meet our regulatory requirements. They are trying to make it meet our regulations but expect it to cost an additional $1500 if they can modify the car enough (and it will less than 50mpg configured for US). Shouldn’t individuals be able to judge safety, comfort, economy, quality for themselves and purchase what they think is best for their circumstances, and exactly how does the purchase of a car for private transport effect interstate commerce.

Massachusetts has already done what the president and congress are now proposing. Since 2006 it has mandatory insurance requirements, resulting in their health care rising disproportionately to the rest of the country. We have a model of what the Obama is trying to force everybody to do, Massachusetts; it does exactly the opposite of what he claims it will accomplish. Simple observation and understanding basic economics shows that more government involvement always leads to higher costs. There is not one regulatory requirement that doesn't add to the cost of what is being regulated.