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Obama's Non-Game-Changer   September 9th, 2009
More passion, restating existing details, nothing changed       


More observations...

I'll grant that President Obama sounded more passionate in his speech before Congress this evening than he has in the clips I've seen of his recent speeches. And he finally offered a better glimpse of what he wants, sort of. But ultimately we're about at the same place we were when we started.

Obama basically swerved hard left but did it in a way that was passionate and vague enough that it might have sounded reasonable to the casual observer that doesn't invest a lot of time following the details of this issue. To those that do pay attention on a daily basis, it was either clear that Obama was playing to his liberal base or it wasn't clear what he was saying at all. What he definitely didn't say is anything that hasn't been said before.

Some Interesting Statements

He said "Under this plan, it will be against the law for insurance companies to deny your coverage because of a preexisting condition" but he didn't mention that this must necessarily drive up prices of health insurance.

He said "They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime," but he didn't mention that this, too, must necessarily drive up prices of health insurance and reduce the menu of options available to the consumer.

He said "We will place a limit on how much you can be charged for out-of-pocket expenses" but failed to mention that that, too, will drive up prices.

He said "Insurance companies will be required to cover, with no extra charge, routine checkups and preventive care... That makes sense, it saves money, and it saves lives" While it might make sense and save lives, the CBO disputes the argument that it saves money. It also can't be done at no extra charge. This, too, will drive up health insurance prices.

He said "If you lose your job or change your job, you'll be able to get coverage." You already can. I did.

He said "Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers." Those customers and that competition already exists.

He said that the "exchange will take effect in four years" but then proceeded to say "In the meantime, for those Americans who can't get insurance today because they have preexisting medical conditions, we will immediately offer low-cost coverage" which sounds to me like a government-sponsored "public option" today and a co-op in four years. He's proposing the most radical option today and a less radical option in four years.

He said "Now is when we must bring the best ideas of both parties together" yet I didn't really hear any mention of market-based reform championed by Republicans.

He said "I have no interest in putting insurance companies out of business" but four sentences later said "An additional step we can take to keep insurance companies honest is by making a not-for-profit public option available." This will only work if government is more efficient than private companies. If it is, it will drive insurance companies out of business. If it isn't then it will become another massive and growing government program like virtually every other social program that has been instituted in the last 70 years--all the major ones are currently on the road to bankruptcy.

He said "In 34 states, 75% of the insurance market is controlled by five or fewer companies". But "five or fewer" is plenty in order to insure competition unless there is illegal collusion going on. And I'd rather have "five or fewer" competitors than the government monopoly that a public option will eventually lead us to.

He said "But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a better deal for consumers." Again, I've never seen a government program that is actually more efficient than the private sector for accomplishing the same level of service. But even if it's possible, what Obama is saying is that the public option will offer better services because it's non-profit. How is a for-profit insurance company supposed to compete with that?

He said that "would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities" but failed to mention that those same public colleges and universities by definition are receiving government subsidies that he elsewhere promised would not be the case for his public option, and that tuition in public colleges continues to skyrocket.

He said "And I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need." But that's a promise he can't make. That promise only can be made by an individual that is paying cash for a service. If anyone else is involved, be it insurance or government, tough decisions will be made on your behalf.

He said "Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan." But the truth is that a certain amount of fraud, inefficiency, and waste is going to be found in any program costing hundreds of billions of dollars. It's a fact of life. It's frustrating, but it's not going to go away. Most politicians promise us more efficiency and less waste, but it just sounds good. It's not possible to obtain those savings to the magnitude required. And if it were possible, why don't we start with that as a way to lower existing costs and addressing our massive deficit? If there is so much savings to be had, might not achieving those savings make health care more affordable and more people could acquire health insurance without government interference?

He said "They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects" but he later said "add it all up, and the plan I'm proposing will cost around $900 billion over 10 years." If the public option will be entirely self-sufficient, why does his plan cost anything?

He said "I believe it makes more sense to build on what works and fix what doesn't, rather than to build an entirely new system from scratch." Yet what he is apparently suggesting would ultimately drive private insurance companies out of business.

He said "Nothing in our plan requires you to change what you have." His plan might not require it, but it will be the inevitable outcome of his plan driving private insurance companies out of business.

Back Where We Started

In short, he didn't propose anything novel that hasn't already been tossed around in the debate at one point or another. He endorsed a public option that, depending on what part of the speech you focus on, will either be self-funded or will cost $900 billion. And he slyly eased into an endorsement of an immediate public option that would happen before the less extreme "exchange" would be implemented four years from now--and he didn't specify whether that exchange would be self-funded or government funded.

Personally, I suspect that if a public option is implemented "in the meantime," even if ostensibly only to cover those with preexisting conditions, it will have ballooned and become a de facto general public option long before the "exchange" goes live four years from now. Every social program we've implemented has consistently suffered from gradual "creep" in its mission. Social Security only used to apply for a small number of employees at large employers and was taxed at around 2%--now it's effectively 15% and everyone has to pay it, including the self-employed. I have no doubt a public option will suffer that same kind of mission creep and experience the same cost-overruns that every other government social program has experienced.

In the end, Obama once again really didn't say anything. He restated the problem, albeit emotionally, and at least tipped his hat as to where he stands on a number of options. Basically he supports or is willing to consider everything and is opposed to virtually nothing. He said he's willing to take the best aspects from both the left and the right, but everything significant that he said he supports is from the left.

I don't see that anything has changed. Unless this speech was enough to convince some Blug Dog Democrats in the House and a few Democrats in the Senate, the same dynamic exists tonight as did this morning. Obama didn't offer anything awe-inspiring or novel nor did he change any of the arguments. It would seem that he was hoping, once again, that his teleprompter-reading skills would be enough to sway the public and a few legislators.

Will his speech work? I guess we'll see. But I must say that while maybe the first ten minutes was mostly good common-sense statements that we could all agree on and it seemed like he was paving the way for a groundbreaking solution that maybe no-one had thought of, by about 20 or 30 minutes into the speech it had basically become a work of comedy.

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