Deciding For Everyone

"My guiding principle is, and always has been, that consumers do better when there is choice and competition. That's how the market works." President Obama (D) in a joint session to Congress September 9, 2009

"The plan I announced will provide more security and stability to those who have health insurance. (Applause.) It will provide insurance to those who don't. (Applause.) And it will slow the growth of health care costs for our families, our businesses, and our government. (Applause.)" President Obama speech at a rally in Minnesota September 12, 2009

If only it were true Mr. President.

Bill Clinton smoked, "but didn't inhale," and George Bush didn't believe in "nation-building." Now Barack Obama promises us both a free market and a free lunch in healthcare with his promises to expand health insurance coverage and rein in costs. Does this President really believe it will be a free market with all the regulations being proposed?

The latest unrealistic promises are nothing new for the federal government, as Walter Williams explains in his September 2, 2009 column, "Washington Lies":

"At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee, along with President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. That's nine times Congress' prediction. Today's Medicare tab comes to $420 billion with no signs of leveling off. How much confidence can we have in any cost estimates by the White House or Congress?"

The President is concerned about the growth in healthcare spending. His solution is more regulation by the federal government. Contrary to what President Obama proposes, the market works when individuals decide what's best for themselves, not when the federal bureaucracy gets more and more involved controlling prices and deciding for everyone. Healthcare is in trouble now because of too much government intervention. Things won't get better when the federal government intervenes even more.

In their book, Patient Power, John Goodman and Gerald Musgrave describe what's wrong with third-party payers whether they are private insurance companies or the government:

"The central focus of third-party paying institutions is to eliminate 'waste.' Yet bureaucratic institutions (operating principally through reimbursement strategies chosen by people remote from actual patients and doctors) usually cannot eliminate waste without harming patients. Third-party payers may seek to eliminate waste by controlling price, or quantity, or both."[1]

A September 13, 2009 NY Times article about kidney recipient Melissa Whitaker, is an example of a third party payer's attempt to control the "waste" of excessive healthcare costs. In an attempt to control wasteful spending, Medicare limits anti-rejection drug coverage to three years after a transplant. Medicare paid for her first kidney transplant which cost over $100,000. Three years after her first kidney transplant, when the Medicare coverage limit expired, Whitaker couldn't afford to pay the approximately $17,000 to $36,000 per year on her own to continue taking her anti-rejection drugs. Eventually her transplanted kidney failed. Medicare then paid for dialysis for four years at $9,300 a month, more than three times the cost of the anti-rejection drugs, and paid $125,000 for a second kidney transplant.

Like the President, Whitaker looks to healthcare "reform" in Washington to solve the problem that occurred in her particular case. Like the President, she hopes more of the same will make things better--more government regulation, more bureaucratic third-party payment rules about what's best for the patient--the very things that contributed to her situation.

Hospital administrator Gabriel Vidal disagrees with the President's "more of the same" prescription, and points to the third-party payer as the problem:

"Unfortunately, since Obama uses faulty logic to diagnose the problem, his solutions will only make matters worse faster. The correct framework within which to diagnose the problem is to admit that costs are out of control because they do not reflect prices created by the voluntary exchange between patients and providers, between customers and producers, like every well-functioning industry."

President Obama believes that government knows best what everyone needs, so he would think the government should decide for everyone how the healthcare system should work. His healthcare "reform" means more third-party payers, more "Medicares," and more health insurance companies deciding what's best for patients. The authors of Patient Power explain why that is exactly the wrong thing to do:

"No one cares more about you and your family than you do. And the further removed decisionmakers are from you and your family--geographically, economically, and politically--the less likely they are to make the decision you would have made with your health care."[2]

The correct diagnosis for what ails our healthcare system is: third-party payers control medical decisions that should be between doctors and individual patients and their loved ones. President Obama has happily acknowledged that the government is very involved in healthcare and believes even more government involvement is a good thing. His ideal is a single third-party payer: the taxpayer. Many Americans recognize this and don't want the lives and health of their loved ones increasingly subject to politicians making medical decisions for them.

"I am not the first President to take up this cause, but I am determined to be the last." President Obama in a joint session to Congress September 9, 2009

If only it were true Mr. President.

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[1] Patient Power Solving America's Health Care Crisis, Goodman and Musgrave, Cato Institute, 1992, p. 23.

[2] Ibid. p. 33.