How to Destroy a Healthcare System (Part I)

When did this nation stop believing in capitalism and free markets and start believing that government was the answer to all our problems? The Founders saw government as a necessary evil, but one that required restriction and limitation. It appears we have gone from the invisible hand to the beneficent hand, to talk to the hand and now the back of the hand.

Why would any American presume that the matter of their healthcare could best be managed by the federal government? Why would any thoughtful individual trust that the most personal of decisions is best made by the state and federal authorities who brought us the IRS, the Katrina debacle, a bankrupt Medicare and Medicaid system, an insolvent social security system, failed public education, the Department of Motor Vehicles, 20 million illegal aliens and the inept INS, a cap and trade plan built on pseudo-science that will further bankrupt an economy on life support, the destruction and decimation of the inner cities (via the Not So Great Society programs) and the TSA.

No one would deny that our healthcare system is imperfect, especially those of us who work in it. That doesn’t mean that we should abandon the system of care people the world over travel here for. The primary criticisms of cost, quality and access are fair criticisms. They deserve examination which extends beyond the demagoguery of those who would double down on the failed socialist medical experiments of Western Europe and Canada in societies which are much smaller and far less diverse than our own. Doubling down is exactly what the President proposes. The government already is responsible for the majority of the healthcare delivered in America. Government is a massive part of the current problem. If you like Medicare and Medicaid, you will love Obamacare.

This will be a multi-part effort to explore the rhetoric driving the left’s determination to present the state as the only solution for another in the endless maladies which plagues this wretched nation infected by liberty and capitalism, an analysis of what President Obama truly proposes as his alternative to our current system, and finally a discussion of solutions, never seriously considered by the Obama Administration, which would enhance for all the significant value our current system already provides.

Healthcare Costs Too Much

Yes, American healthcare costs more than the fabled nationalized systems of some other nations, but to the inquiring consumer the question should be less one of expense than one of value. Spending at 17% of GDP certainly is significant, but lets put it in context.

Federal, state and local government now write annual checks approximating 41% of GDP. This figure, based on OMB data, details government spending of $6.1 trillion dollars in a nation whose GDP is $14.1 trillion. The only other comparable period of spending occurred during WW II.

Spending will go higher if the Obama health plan moves forward. While few seem interested, the President tells us he needs to spend $600 billion as a “down payment” for his health care program over the next ten years. This is above and beyond the $200 billion already approved this year in the “stimulus” bill (generational theft act) that earmarked funds for SCHIP, Medicaid, the creation of Federal Council on Comparative Effectiveness Research, and “investments” in information technology. (Yes, you read correctly, this is “stimulus money” approved under the guise of putting people back to work.) If only we all lived in the magical world of our President where more spending is the answer to too much spending.

A digression, but this is related to the question of the cost of healthcare. The Obama team is also working feverishly on an “energy plan”. It is the snake oil offered as an elixir for the hoax that is global warming…errr…climate change. Based on the ever changing con that man, not nature, is responsible for global warming (snow in North Dakota in June, cooling over the last decade, revising past temperature records), make that man made climate change, the administration, with multiple Congressional dupes in tow, including John McCain, has designated CO2 a pollutant. And what do we do with pollutants (and healthcare, and energy, and education, and business, and car makers, and…you get the picture)…we regulate! We will control CO2 emissions through cap and trade legislation! Are you serious? Yes we are. We will sell vouchers for CO2 emissions to businesses and they will pay for their CO2 emissions.

Memo to the President, businesses will pass those costs on to consumers in the form of increased prices for energy and a host of other goods.

Hang in there, this is about healthcare. Cap and tax comes with a huge cost in taxes that will be paid for initially by energy producers and then passed on to consumers. The net effect estimated by CBO is a reduction in GDP of 0.3 to 0.5%. Others predict the impact will be greater, approaching 1% of GDP. That will automatically increase government spending as percentage GDP.

So what about healthcare costs? Well, the President has to fund his healthcare plan. He had hoped to spend all the money he takes from you under cap and trade (approximately $3900 per family per year) and use it to pay for his healthcare reform. Unfortunately, as of this weekend, the President reported that the $600 billion he planned on coming in from cap and trade will not be enough to support the incredible cost cutting healthcare system he is bringing you. He will need to consider taxes on the wealthy, reducing deductions for mortgage interest and charitable donations. When gas is $5/gallon and electricity costs reach the levels the President promised you prior to the election (“Under my plan of a cap and trade system electricity rates would necessarily skyrocket, even, you know, regardless of what I say about whether coal is good or bad, because I'm capping greenhouse gases, coal powered plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”), remember you are doing your patriotic duty. Take comfort from the scholar in residence at the White House, Joe Biden, “Time to be patriotic ... time to jump in, time to be part of the deal, time to help get America out of the rut." Thanks Joe.

In 1950 healthcare costs were 5% of GDP. Per the CBO, government spending in 1950 was 23% of GDP. Yes a 250% rise in relative heath care spending based on GDP, to 17%, over 60 years is concerning, but why don’t we hear similar concerns about a near 200% rise in government GDP spending?

All these GDP numbers are impressive, but what does the average US household pay out of pocket for healthcare? As percentages of our 2007 national household budgets, according to the US Department of Labor, we spent 34.1% on housing, 17.6% on transportation, 12.4% on food (5.4% on food away from home), 5.7% on healthcare, 5.4% on entertainment, 3.8% on clothing, 0.9% on alcohol, and 0.7% on tobacco products. Interestingly, and incorrectly, the White House website reports “Americans spend more on health care than on housing or food.” The President needs to check with the Department of Labor.

The message from those advocating nationalized healthcare is that healthcare is a right, much as the government attempted to make home ownership a right (via Fannie, Freddie, and the community Reinvestment Act). That worked out well.

Most of us consider food, clothing and transportation a necessity for survival. How about government issue food or clothing or automobiles? Well never mind that last one. We will have Obama Motors but is anyone really looking forward to bouncing around in the 1.1 Liter Marxi Clown Car?

The point is, right now, the average household spends more on entertainment than healthcare. The average household spends more on eating out, alcohol and tobacco than they do on healthcare. This is not everyone mind you, it is the average American household based on Department of Labor statistics. So where is the outrage over the 13.6-percent increase in entertainment spending in 2007?

Lets break that down. In 2007, expenditures for pets, toys, hobbies, and playground equipment rose by 35.9 percent. When will the President talk about the cost of tickets at Yankee stadium? Who will control Big Baseball? Also under the category of entertainment come pets. According to the Department of Labor this massive burden levied on American households was due to a large increase in spending on pet purchases, supplies, and medicine.

As a Memorial Day offering, President Obama once again opened the flood gates of the bottomless reservoir of hope he revealed during his campaign and encouraged us with the unbridled optimism which suffuses his views of America:

“Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care over the last several decades….If we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.”

Aside from his failure to comprehend that it is unlikely that the deficit can be controlled by quadrupling it in your first 120 days in office, President Obama has a point. Healthcare costs are unsustainable. Unfortunately it is not necessarily human health care costs. Unspoken in the healthcare debate is the fact that, unlike their Great Depression counterparts, today’s Americans are straining under the burden of caring for their pets. Per the American Veterinary Association Americans keep 164,000,000 dogs, cats and birds kept as pets. In 2004 only 3% of these pets were insured. While 10% of American citizens uninsured for a year is worrisome, it pales in comparison to the 97% of domestic dogs, cats and birds whom are uninsured. The average annual medical costs for a dog or cat is $200. Food aside, Americans are paying $30 billion annually for pet healthcare. Thirty billion dollars!

Where is the outcry for universal pet coverage? Why is there no discussion of price controls for big animal pharma? President Obama promised hope for all, when will he speak for the animals and there beleaguered owners? American humans, illegal or not, will be cared for when they show up at an emergency room. That is not the case for your neighbor’s adorable mutt or the charming Tabby down the street. There is no Emergency Medical Treatment and Active Labor Act (EMTALA) for animals. Have we all become speciests?!

Tongue in cheek, yes, but only by half. Are there other target rich environments in the federal and private spending world beyond healthcare that threaten our economy? Yes there are. Would it be worthwhile pursuing opportunities to reduce cost in our current healthcare system? Yes it would…if the overall value is maintained. The President, however, is convinced, and has convinced much of the nation, that healthcare reform, the above facts aside, is the critical area requiring government intervention. He regularly regales us with several talking points to make his case that healthcare costs are obviously outrageous and that government is the answer to reigning things in.

A discussion of the top five on the Obama list of healthcare cost myths in the next installment.

Quaere Verum