Sep 10

Long before he walked on water, Steve Jobs’ comments and musings about Apple’s products resulted in the not-necessarily-flattering phrase, “The Reality Distortion Field”.   As President Obama is no longer walking on water, he seems to have been pulled into that same tractor beam in trying to pitch his health care plans to the country.   All subsequent quotes are his…

For those who already have health insurance”, the President assured that “what this plan will do is to make the insurance you have work better”, by making it “against the law” for insurance companies to:

  1. Deny coverage to those with pre-existing conditions
  2. Drop coverage due to changes in health
  3. Put “arbitrary some cap” on total lifetime payments

Likewise, he said there would be limits on the total out-of-pocket expenses, and that companies “will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies.”

Only a Reality Distortion Field would suggest that it is economically possible for a company to be forced to incur (perhaps dramatically) higher expenses and not attempt to recover those costs through some combination of higher product prices and/or reduced availability of the product itself.   But let’s move on.

The President wants to create an “insurance exchange”.   Hello — this is commonly called a market, something we do not have in health insurance right now.   Of course, the kids that want to play in that sandbox will have a strict list of rules to abide by as to what they can sell.   And of course, the neighborhood bully, the allegedly self-funding, non-profit, “public option”, will be in the sandbox from the start, welcoming all newcomers.     I suppose logic and reason should result in similar non-profit entities being created in other industries as well, just to “keep them honest”,  such as those that provide us with food, clothing and shelter, three things that are at least as important as health care, but that’s another story.

And yes, technically, nothing in the plan will require anyone to choose the public option.  But here again the central planners assume that we live in a static world.  If, all other things being equal, a “public option” was not burdened with the pesky issue of profits, and enjoyed structural cost advantages, wouldn’t that necessary result in a lower-cost product?   Wouldn’t many individuals and/or companies flock to it?  Isn’t this exactly how organizations like Fannie Mae, Freddie Mac and Sallie Mae eventually took over their marketplaces, all the while under political influence?   We’ve seen that movie before.  You know the ending.

He continued:  “So let me set the record straight. My guiding principle is, and always has been, that consumers do better when there is choice and competition.” Great.   Calling you to the carpet Mr. President:   allow the insurance companies to truly compete. Let the best ones win and the worst ones fail.    This is how markets work and when left alone, they do it better than any other system.    The many Republicans waving their plans and reports in the air seemed to want to have a chat with you as well.

But lastly, there was the tortuous reasoning that we will somehow fund this more-perfect system largely with savings from cleaning up the old one.   Somehow, the very same government forces that resulted in “hundreds of billions of dollars in waste and fraud” will by way of the Reality Distortion Field now waste nothing.

The President cited two moments in history where government stepped in and supposedly acted bravely against calls of overreaching.  “In 1933… there were those who argued that Social Security would lead to socialism. But the men and women of Congress stood fast, and we are all the better for it.   In 1965, when some argued that Medicare represented a government takeover of healthcare, members of Congress, Democrats and Republicans, did not back down.”

Are we better for it Mr. President?   I would suggest that those two acts, along with numerous others, planted and fed the seeds of an insidious moral hazard, leading too many to look to government for their long-term well being, rather than to themselves and their private relationships with their fellow man.   Socialism requires exactly that mentality.   As for Medicare, it represents nearly 50% of total healthcare spending, which sounds like great progress towards a “government takeover of healthcare” to me.    This goes a long way towards explaining the disconnect between what things cost and the monitoring of those costs by consumers, the exact kind of monitoring that in a normal market would keep price inflation in check.    Most importantly, Social Security and Medicare will soon be broke.  They simply can not be held up as role models.

Will a majority of voters succumb to the Reality Distortion Field?  Or will their representatives ignore them and enact Obama’s plan anyway, seeking to build a monument for themselves?   I think Obama showed his cards:  “I am not the first President to take up this cause, but I am determined to be the last.”

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