Thursday, July 15, 2010

Why Obamacare is NOT Reform

This is by far the most sensible and scholarly treatment of this topic I have seen to date.  I have become convinced the way to spend less money on entitlement programs is not to guarantee more government spending. 

It's like bailing out a sinking row boat by scooping up buckets from the ocean and dumping it into the boat.

James C. Capretta, a former White House budget adviser on health care to President George W. Bush, will present the paper for the Galen Institute at an event on Capitol Hill with Rep. Paul Ryan (R-WI), one of the Republican Party’s rising stars, and Douglas Holtz-Eakin, a top conservative economist.  Ryan has come up with an alternative plan to be presented at the event.

Even as many on Capitol Hill are talking about addressing Social Security spending, Capretta writes in the 19-page paper that Medicare is the real problem.

Most Democrats and Republicans agree, Capretta says, that the 30 to 35 million seniors in Medicare’s fee-for-service (FFS) insurance program are “the engine … pulling the rest of the health system down the tracks at an accelerated and dangerous rate.”

Most FFS participants pay nothing out of their own pockets for health care, and hospitals and doctors are incentivized to provide them with as many services and tests as can be loosely justified.

But Capretta says in the paper that the Obama health bill is not reform because it attempts to stop price inflation and inefficient care through top-down government control rather than bottom-up consumer demand.

When government displaces individual choice, the seeds of dissent will be harvested.  That's why this alternative has some appeal.  Capretta goes on to say in this paper that Paul Ryan’s plan would move Medicare recipients from defined benefits to defined contributions, in which “cost-conscious consumers choose between competing insurers and delivery systems based on price and quality.”

“Beneficiaries would get to decide which insurance plan they want to enroll in. If the premium were more than the amount they are entitled to from Medicare, then they would pay the difference. If it were less, they would keep all of the savings,” Capretta says.

“Millions of otherwise passive Medicare participants would become active, cost-conscious consumers of insurance and alternative models for securing needed medical services,” Capretta writes. “Cost cutting innovation would be rewarded, not punished as it is today.”

Would it surprise you if I told you I like this market-based approach a lot more?

I have another brother, Jon, who is likewise a healthcare administrator in a small doctor-owned practice.  His take on all this muddle is that IF the Congress is turned around in November, there won't be enough votes to fund Obamacare going forward so why worry? 

That's the biggest two-letter word in the alphabet.

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