Tuesday, September 1, 2009

Wider Perspective on the Healthcare Reform Furor

Here's a good Slate article explaining, in a cool-headed way, the gist of the healthcare reform impasse.

And here's some political advice to Obama on the issue from from Bob Dole, who's been spending his retirement working at the Bipartisan Policy Center.

1 comment:

drooga said...

that was a bipartisan comment?! good lord we're in trouble.

lets take a step back and review how insurance, say medical, works: we have plenty of statistical data that lets us predict with an astonishing degree of accuracy the number of americans in a given year that will lose a limb, get a cold, get throat cancer, need a caesarian and so on. the problem is that we don't know precisely which ones.

so we spread the risk around: since we know the number of people that will need medical care and we know the costs of this care, we can charge each person a premium which is simply the expectation that they'll need a certain procedure. and if we've got our probabilities correct in calculating that expectation, on average every year we'll pay out exactly whatever we took in premiums.

you'll notice of course that there is no benefit whatsoever private for-profit companies bring to bear in this process. it is exactly the same with charities: there are the genuine charities who give out over 90% of the money they raise and then there are those charities who manage a shameful 50% - the rest being taken up in expenses, huge salaries etc. that of course is exactly the case with medicare vs the pvt insurance companies (though not as egregious as the previous example).

there is NO economic justification whatsoever for private companies to be involved in medical insurance. in a sane world, the govt would do so or if you wanted to leave it to the pvt sector, you'd regulate them to have a certain percentage return on equity (like the utilities, for example). otherwise insurance is a money-for-jam business, a huge freebie for someone who believes he can beat the interest rate with his investments.

don't believe that last statement? i give you the example of warren buffet, the friendliest capitalist ever (of course i'm a huge fan). he loooves the insurance concept: he collects premiums that he can invest NOW while paying out premiums later (its called making money from the float; i've explained it baldly but it would take us too far afield to get more precise).

but given the political realities and the huge lobbying power that the insurance companies have, regulating them is just not going to happen. so a public option is about the only way out. and dole wants to reject it! lets wait, lets try later .. oh god, thats the same playbook the republicans used to kill hillary care. as humphrey applebee in the incomparable brit tv program "yes minister" would have soothingly said "in the fullness of time, minister. when the moment is ripe minister..."

as a final note on this absurd without-facts debate, there was a genius of a new york state rep who said (i'm paraphrasing) the following: "so you republicans believe that govt shouldn't be involved in healthcare and that it does a terrible job? ok, i'm proposing as law that the govt shut down medicaid. here's a chance to show exactly how much you disagree with a govt run medical insurance program." not surprisingly, the bill didn't garner a single vote.

so there you are. i find it incomprehensible that bob dole's rehashing of a tired nineties tactic gets space.

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