Thursday, February 25, 2010

Difference Between Obamacare and Republican Proposals

Mark Thoma is the owner of Economist's View, a blog that i frequent. He's gotten quite a bit of attention thanks to the success of the blog and now contributes to Marketwatch as a commentator. Recently, he wrote this article comparing Obama's revised health care proposal to Republican proposals. I wrote the following response on his blog:

After reading the article, I see a fundamental difference between Republican proposals and Democrat proposals that Mark Thoma seems to have missed. The proposals favored by Obama and the Dems focus mainly on expanding coverage and establishing a system that will pay for the subsidies that are included with the expansion. Whether a person favors such an expansion along with the taxes and fees that must go along to fund it, is a choice that has no objective right or wrong answer. In my judgment and the judgment of most Americans, this is not reform, certainly it's not the reform we wanted. It is perfectly reasonable to oppose a costly expansion of health benefits and the creation of another social spending program when we face huge liabilities with Medicare and Social Security in the future. If expansion is the "reform" Thoma mentions, then I and the majority of Americans oppose reform.

The Republican plans mostly concentrate on cost reduction. This is the kind of reform I and most Americans had in mind when the health care debate first started. We want more affordable health care, we don't want a new program that will expand coverage to the uninsured, most of which are uninsured by choice or have no legal residence.

The public option is the only proposal by Dems that meet the cost reduction requirement of "reform". I'm not against the public option, but it depends on the details. The public option should not be subsidized or receive government funding beyond what private insurers receive. That is it must operate from the premiums it collects, otherwise it would mix in the expansion of coverage which is opposed. It also must operate under the same rules as private insurers, this shouldn't be hard, Congress can just change the rules for private insurers too if they wish, but for the public option to be a true competitor, it must not receive special advantages.

As an economist, Mark Thoma should realize that a public option with the conditions proposed has very little chance of reducing costs. I'm surprised Mark Thoma dismisses rationing so easily, I think rationing is the best and most effective way to reduce costs. The thesis is that we're paying for health care procedures that either aren't needed (all the tests) or aren't a good value (like giving hip replacement surgery to a terminally ill cancer patient with 6 months on average to live). A medical panel or board is needed to investigate and determine which procedures and medicines offer the best value. Insurance companies will tend by allowed or required to deny care based on those recommendations, I don't any other way that would reduce costs by a major amount. Of course liability would have to be reformed too.

Bottom line is that the administration's definition of reform is something that Americans don't want, an expansion of coverage. It's very reasonable to oppose this kind of reform without obstruction as the main purpose. Simply those who do not believe an expansion of health care services, along with the higher taxes and fees needed to fund such an expansion, is wise or beneficial at this point should oppose reform. Obviously Thoma is not one of those people, but he should not ocnfuse rightful and reasonable opposition due to disagreement with obstruction based on politics.