Wrong headed ObamaTAX

iamnothere 2012/07/09 13:58:23

The Dream of Command Economics

July 5, 2012 3:16 P.M

In today’s Washington Post, Fareed Zakaria offers
an unusually stark example of the left’s basic conceptual error in the
health-care debate. Arguing (correctly, I think) that the core problem
to be solved is the problem of controlling costs without undermining
quality, he insists that centralized coordination and control is the
only effective way to do so and that conservatives are therefore barking
up the wrong tree when they look to markets for help.

Zakaria begins by getting the conservative approach wrong. He writes:

Republican alternatives to Obamacare, such as Rep. Paul Ryan’s plan,
don’t bother with expanding coverage, which is a mistake because they
leave in place a broken insurance model in which people can freeload.

Actually, Paul Ryan’s alternative to Obamacare—the Patient’s Choice Act—proposes an enormous
expansion of coverage. Among other things, it would transform today’s
tax exclusion for employer-provided coverage into a capped universal
health-care tax credit, which people could use to buy coverage or care
regardless of their circumstances. A similar proposal by John McCain in
the 2008 campaign was projected
to reduce the number of uninsured Americans by roughly 21 million. Over
time the effect would likely be even greater than that since this
system would create an enormous incentive for insurers to offer
attractive low-premium plans that could be purchased for the amount made
available by the credit (simply put, neither consumers nor insurers
would leave billions of dollars on the table unclaimed, and the enormous
competition among insurers for that money would yield appealing
options). So while it wouldn’t always involve insurance as comprehensive
as Obamacare would require, it would be likely to get us closer to
universal access to health insurance
than Obamacare—and without the kinds of violations of individual
liberty, the Constitution, and the laws of economics involved with

Zakaria then contends that the inefficiencies of the American health care
system—and especially the frequent disconnect between costs and
outcomes—are a function of there just being too many different players
in the system, each with his own goals. This is the classic liberal
complaint: disorder causes inefficiency. Citing a conversation with
Daniel Vassela, the chairman of Novartis, Zakaria writes:

“In America,” he said, “no one has incentives to make quality and
cost-effective outcomes the goal. There are so many stakeholders and
they each want to protect themselves. Someone needs to ask, ‘What are
the critical elements to increase quality?’ That’s what we’re going to
pay for, nothing else.”

And from this, Zakaria does not conclude that we need to rearrange
the financial incentives in our health-care system so that, like in
other parts of our economy, providers of services have a powerful
incentive (called the profit motive) to make quality and
cost-effectiveness their goal. Instead, he concludes that government
must take over decisions about how to provide coverage and organize the
system because presumably government is very good at making quality and
cost-effectiveness its goals.

Right. The fact is that the incentives in our health-care system are
all screwed up precisely because of government policies and programs.
Medicare, the biggest player in our insurance system by far, is an
arcane fee-for-service system that encourages volume over value and
inflates (while shifting) costs. Medicaid, meanwhile, has a
state-federal structure that makes cost-containment nearly impossible
(by having state policymakers make spending decisions while the Feds pay
at least half the cost in an open-ended way). And the tax exclusion for
employer-provided coverage creates a huge incentive for high-premium
insurance while shielding everyone involved from actual prices and
costs. All the incentives point to cost inflation and away from
outcome-based health economics, so we shouldn’t be surprised to have an
inefficient system.

It is precisely conservative reformers who have proposed to change
this, and it is precisely liberals who seek to avoid that change.
Obamacare doubles down on all of these sources of inefficiency, and it
does so on exactly Zakaria’s premise: that the chaos of the market would
make things less efficient and only the centralized coordination of a
benevolent bureaucracy can make the system work. It’s hard to believe we
are still having this argument.

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  • Kane Fernau 2012/07/09 18:05:31
    Kane Fernau
    Obama is calling for extending middle class tax cuts. What middle class tax cut? Obamataxcare raises taxes on the middle class.
  • iamnothere Kane Fe... 2012/07/09 23:00:31
    obama tax is going to take several thousand off of each and every person
  • johnc 2012/07/09 14:53:04
    The goal of democrats is and was to create a welfare state. The LBJ great society was to change welfare from a safety net. to a life style is working, check out the welfare, food stamp,, and poverty level since the Obama regime came into power,

    As Obamas top advisor , Valierie Garrett said when Obama was elected, "We are ready to rule" dictatorships rule, free people are governed.

    NOBAMA 2012

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