Healthcare reform and my expensive education in economics

July 7, 2009

morici— Peter Morici is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission. The views expressed are his own. —

America’s healthcare system is broken, but President Obama inspires little confidence with his fix.

Healthcare absorbs 18 percent of GDP—about 50 percent more than in other wealthy countries. Prices are too high and are a terrible burden on jobs creation.

Whether Americans continue to pay through private premiums or new taxes, no fix is real without bringing down prices, substantially.

Sadly, Obama’s plan will force Americans to pay even more and chase more jobs abroad.

The U.S. system in unsurpassed in responsiveness—you can see a doctor quickly—but ranks low, internationally, by many other quality measures—infant mortality, life expectancy and preventable deaths. It is burdened by exorbitant drugs prices, doctors that earn twice their Canadian counterparts, higher administrative costs, and a torts system from hell.

Family doctors increasingly act like unionized civil servants—no evening or weekend appointments and closed two hours at lunch. Private insurers and federal agencies encourage doctors to game reimbursement systems, charge well-off patients concierge fees, and send tough decisions to specialists.

Americans subsidize health care globally by paying most of the costs for developing new drugs. Single payers in Canada and elsewhere force drug companies to charge little more than manufacturing and marketing costs, and they must recoup all their development costs by charging Americans oppressive prices.

Unlike U.S. health insurance companies, single payer systems abroad don’t pay executives salaries in the millions, impose multiple systems of private rationing second guessed by buccaneering lawyers, and create massive paperwork burdens to justify high rates.

Americans have created a “competitive market” for private insurance that is less efficient than the French bureaucracy—what a triumph of free enterprise!

The torts system pays lawyers grandly for curing little, and imposes Orwellian decisions on doctors regarding testing, best practices and care for the terminally ill.

Some people can’t afford health care but those are hardly all the 46 million uninsured. Many are poor adults and children who should be enrolled in Medicaid, illegal immigrants, and young workers and rich folks who opt out.

Essentially, President Obama would subsidize health care for those who can’t pay without addressing the perverse incentives for doctors, executive salaries, drug prices and torts abuses that make health care too expensive in the first place.

My very expensive education in economics tells me, when prices are too high for an essential service, subsidizing purchases for those who can’t afford it increases demand and pushes prices up even more.

Americans will be stuck paying both higher health premiums and new taxes.

President Obama promises to lower costs down the road in exchange for new taxes to cover the uninsured today.

Remember Wimpy in Popeye: “I’ll gladly pay you Tuesday for a hamburger today.” The children in the theater laughed at the con. Sadly those children are not voting in Congress on Obama’s healthcare plan.


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The Hippocratic Oath decrees “Do no harm or injustice” in the modern English translation. What is the AMA’s position on injustice and their 70 plus year long opposition to public health care. Do physicians absolve themselves from the oath by simply having an office assistant refuse to let an indigent patient see them because of the lack of money or insurance? Can the delay or refusal to treat someone ill cause harm? Having spent many of my years without access to health insurance, the common response from such providers(oxymoron) is ” If your that sick, go to the emergency room”.

However there is something wrong with a society that puts higher value on economic goals and obligations than seeing to the health of all of it’s people. If we were ever truly a christian nation the precept ” I am my brothers keeper” would have guided us to action long ago.

We as a generation have put the financial burden of affluence, wars, banking and industry bailouts on future generations because of our unwillingness to pay now. President Obama is poised to sign a climate bill that will put the responsibility of meeting those goals upon future generations. If we cannot come together now to sacrifice and shoulder the burden of building a just and equitable health care system for all, then we all deserve the wrath of history.

Posted by Anubis | Report as abusive

The only sure way to wring waste and greed from the bloated system is the single-payer approach. And the path to that goal is the public insurance option. It will be the least expensive choice because we (congre ess) will be able to set the doctor and hospital fees — take it or leave it. Anybody paying attention will choose the public plan and there will be, therefore, a single payer system. No more for-profit insurance companies.

The 46 million uninsured who are shut out from obtaining medical treatment will have free access, as is their right. Profiting from insuring medical care is outrageous. We elected the president and congress to provide the free care they promised, and we want it now. It MUST BE DONE NOW, this year!

Posted by deron | Report as abusive

I totally agree,

This Obama health care is a big hype and hush hush void taxing later on? wtf, I actually hope it gets implemented so that it will fail drastically, maybe then the American people will wake up.

We might as well go back to farming… barter economy

Posted by Ian | Report as abusive

I really enjoy working 48 hours a week to support those who do not work at all and those who don’t legally belong in this country. I can’t wait until this gets implemented. I may even work another 8 hours to help out more!

Posted by Hopeless | Report as abusive

If you think controlling payments to doctors is going to fix the problem then you will have a even bigger problem on your hands. Do you actually think someone is going to works hard spend all those years and hours in school and a hospital? Do you think they will give up 15 yrs of their life to get paid peanuts? Do you think they will put themselves in debt 150,000 and more? Good luck with your single payor system. You might be insured but who will treat you? Oh I know, Obama and congress will treat you. Yeah they can solve everything. One of the biggest probs is lawyers, people who don’t pay now abuse the system and then sue, and the cost is getting passed onto us ( the ones who actually work ) Duh this isn’t that hard to understand. Wake up get out of lala land!!!!!

Posted by Impeach him | Report as abusive

While I had hoped that the public option might be a stealth tactic towards a single payer system, Obama and the congress have gone out of their way to assure the insurance industry that this is not so. Single payer still is the only option with a chance to significantly lower costs as this article implies. The AMA is an industry lobbying group and nothing more. Don’t let their propaganda fool you. I joined them for free as a medical student in order to get JAMA and never reupped because I did not like their policies at all. Lastly while I disagree with most of what Impeach has to say s/he does hit on one very important point. To reform heaklt care in the US we must also reform health education. No country makes future doctors pay so much money to go to school. With udergrad debt many will graduate with a net worth of -200K. While I don’t believe finances should be the primary driving force for physicians, that is a pretty strong incentive to make a lot of money just to dig oneself out of that hole.

Posted by Steve | Report as abusive