More healthcare deceptions

by Joseph Beaudoin

President Barack Obama’s new approach to health care, following the August recess, must be taken with a grain of salt. In their assessment of “Obamacare New and Improved,” Americans ought to keep in mind the administration’s earlier ethical failures. Obamacare, after all, has been deeply rooted in deceptions, omissions and fact avoidance.

While accusing conservatives of “wild misrepresentations” of his healthcare plan, Mr. Obama has tried to fool the public–including, apparently, himself. Indeed, before his vacation, Mr. Obama assured the American people that AARP endorsed his healthcare plan. The problem is, Mr. Obama did not have a plan and the AARP denied endorsing it. This is but one of many inconsistencies.

Mr. Obama also assured Americans that the government option would not change their current healthcare plans. Yet, Mr. Obama knew that the government option would cause many employers to cancel their current plans which would result in forced changes to their employees’ plans. Consequently, in insisting that the government option would not affect those who want to keep their private plans, Mr. Obama was less than candid; one might even say he was deceptive.

The government option is symptomatic of the president’s confusion. At first it was the bedrock of his reform plan. Then it was only “a sliver” of the plan. Then, after Speaker Nancy Pelosi, California Democrat, made some noise, the White House re-embraced the government option as the foundation of the president’s plan. It looks like Mr. Obama’s leadership has a lot in common with a wind sock.

While Mr. Obama and liberal Democrats continue to insist that a government option will lower health costs and improve health care, they have provided no reliable support for these gratuitous assertions. The government option is nothing more than a liberal mantra and, just like all mantras, the faithful repeat it thoughtlessly and believe in it in the same fashion. Mr. Obama prefers mantras to empirical studies, perhaps because he finds it easier to repeat mantras than to craft policies based on facts.

The president’s confusion has not been limited to the government option. For instance, he assured Americans that private companies will be able to compete with his government option just as FedEx is able to compete with the Post Office. This is a fallacy–like stating that a luxury automobile competes with a bicycle because both are means of transportation. More worrisome though, Mr. Obama’s fallacious comparison could be a Freudian slip. He, in essence, may have warned Americans that the government option will replace FedEx-quality health care with Post Office-quality health care. Going postal will acquire quite a new meaning.

The administration and its congressional allies will continue to push the government option as a panacea while ignoring independent cost studies. The White House has ignored reports from the Congressional Budget Office because these reports contradict the mantra. For the same reason, the administration has disregarded healthcare studies by PriceWaterhouse Coopers and the New England Healthcare Institute. These studies identified areas where large cost reductions can be achieved quickly.

Unnecessary medical tests and inefficient claims processing produce $210 billion each in yearly waste, i.e. 18 percent of the $2.3 trillion America spends on health care. In budget terms, this represents $4.1 trillion over 10 years. They ought to be priorities.

Unfortunately, eliminating unnecessary tests would hurt tort lawyers, a major Democrat interest group, who pockets 30 percent of malpractice settlements. Indeed, unnecessary test results mostly from doctors’ pre-emptive efforts to defend themselves in case of malpractice litigation. In other words, about nine percent of U.S. healthcare costs are attributable to defensive medicine. That is why real healthcare reform must include legal reform. But under Mr. Obama, it will not.

Inefficient processing of health claims relates to the 700 different health plans available in the United States and to the fact that insurance companies have different claim forms. Standardization of basic plans and claim forms would reduce health care expenses by another nine percent per year. Mr. Obama will not pursue this course of action because it runs contrary to his cherished government option.

Regardless of what Mr. Obama and the liberal Democrats say, the government option remains their ultimate objective. They will try to push it through openly or covertly. Expect to see a healthcare bill with a Trojan horse clause, i.e. a clause that will include a government option under certain conditions some time in the future.

As the Trojans painfully found out, it is better to steer clear of Trojan horses.

-Joseph Beaudoin holds degrees in economics and finance. He has worked in the banking and investment industries for 20 years. He is a regular contributor of Reflections.