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Thursday, February 11, 2010

Obama's Potemkin Village

President Obama seems to be a congenital liar, and perhaps a little more stupid than his fans thought. A product of a long process of social promotion and congenial B studenthood, perhaps. (If he would release his transcripts we would know.)
Faced with dropping poll numbers and nationwide protests by angry voters, President Obama conducted a Potemkin Village town hall in New Hampshire, much like Stalin created fake Russian villages with fake prosperity and villagers ordered to smile and answer correctly to Western journalists. The New Hampshire Potemkin town hall was pathetic. Over 1,000 anti-Obamacare protesters were outside. Inside, staged softball questions, including one from a wee moppet whose mom ran part of Obama’ selection campaign in Massachusetts. And a moronic analogy between Obama’s proposed public health option and the US Postal Service.
Does Obama want us to think the public health option will suck more and more taxpayer money into a black hole, while providing shoddy service, little innovation, and being forced to close hospitals and leave communities with diminishing services, as does the Post Office? Does he think that the governmental Post Office was created AFTER FedEx and UPS came into existence, to keep them “honest” by providing competition, as he dishonestly claims a government funded health insurance is needed to keep private insurance companies honest?
Leaving aside the Obama crew’s failure to grasp that insurance companies provide a check on each other, as long as we are free to pick among them (and would provide more options and be more competitive if the government did not regulate them into uniformity with mandates and prevent them from competing across state lines for our business), what about the question of innovation? The US Post Office only managed to figure out a vending machines could sell a stamp decades after private retailers had been using them to sell gum, snacks, condoms, tampons and everything else. Governments do not innovate, and have little incentive to do so.
And what of government’s failure to innovate if we allow Obama to nationalize the 1/6 of our economy devoted to medical care? One of President Obama’s recent statements about the furor he is facing from voters is that it’s OK that nationalized medical care may mean old people (and others? the handicapped? disabled? incurable? genetically compromised?) will be strongly “nudged” (to use Obama team member Cass Sunstein’s new Orwellian term for totalitarianism) to forego costly treatments and just take pain killers and expire without making trouble, because “we” already ration health care in that those evil insurance companies sometimes say “no” to such treatments.
Of course one can always pick an insurance company that does cover what you need treated. Or you can pay cash for a treatment, even if that means mortgaging a house, borrowing from relatives, or appealing for donations. Obama is either dishonest or dumb in that he evades the way innovations happen, perhaps because he intends for innovation to end, or at least be strictly controlled by a federal government that will decide when any are needed. Innovators in a market economy usually create new products and services that are extremely expensive and available only to the wealthy initially, and then are made more cheaply by new competitors entering the market. A recent example being flat screen TVs or cell phones, once luxury items, a few years later, cheap and ubiquitous. Medicine is, or should be, no different, as such things as lasik surgery have shown.
Most medical services, other than cosmetic surgery, today are provided in very heavily regulated markets, and paid for by government-controlled health insurance provided to employees through their employers because of the tax code. Consumers do not have the same control they do in their free market purchases where they shop and control the purse strings. As a result the medical technologies covered by current government-regulated insurance have not fallen in price as rapidly as lasik surgery. Overall health expenditures increased from 5.9 percent to about 14 percent of gross domestic product from 1965 to 2001 and to 16.2 percent of GDP by 2008. [1] Henry Aaron, senior fellow at the Brookings Institution, recently asserted that medical spending continues to rise faster than the GDP because the population is growing and new medical technologies and therapies are constantly being developed to enable more people to receive treatment than previously possible. [2]
Professor Mark Pauly of the Wharton School of Business stated, “Basically, most of the data I know about indicates that the lion’s share-whatever that is-of the growth in medical spending per capita, even after you adjust for the aging population, is accounted for by what we call technology.” [3] For example, before the development of hip-replacement surgery, an arthritic hip was treated with aspirin and a walker. Now a single hip replacement can cost from $20,000 up to $50,000 depending on age and the length of hospital stay. [4] Advances in medical equipment also seem to drive medical expenses ever upward. MRI (magnetic resonance imagery) machines involve both heavy capital outlays and additional personnel. The average x-ray costs $80 while a similar MRI machine costs over $1,200 per examination. Unlike x-rays, MRIs can detect brain and muscular disorders. [5]
Obamacare plans to solve the problem of costs, not by deregulating and allowing consumers to shop as they do with lasik, but by denying you access to the new services. Obamacare means that new drugs, treatments, procedures and medical devices will not come into being. Perhaps we will have a somewhat more equal access to treatment (except for the ruling political class, like Congress, who are more equal than others) unless we are elderly or in some other group deemed socially value-less. But the care we will be receiving will never include anything that did not already exist in 2009.

1- Steve Eisenberg, medical director of Blue Cross Blue Shield of Minnesota, September 19, 2001.
2- Geri Aston, AMNews staff, “Medicare sound for now, but long-term outlook is gloomy,” April 17, 2000, The Newspaper for America’s Physicians.
3- “Health Policy Discussion” from “Productivity in Health Care: The Value of Medical Technology,” AEI Conference, February 28, 2001.
4- Leigh Hopper, “Hip replacement firm issues recall,” Houston Chronicle, January 23, 2001.
5- Mark H. Gurda, “Rising costs, September 18, 2000

Bruce Majors is an unpaid Tea Party community organizer in Washington, D.C. and has written for the American SpectatorLos Angeles TimesDes Moines Register, and Cleveland Plain Dealer.