Thursday, September 10, 2009
Pres. Obama's Speech
After reading and watching the speech this morning, I thought Pres. Obama did a great job last night before Congress. I wish I could have watched it with some of my conservative friends so I could have heard their response. My experience has been that once I explain in simple terms what Pres. Obama is actually proposing (compared with what his opponents say he is proposing), they are generally impressed and seemed confused that there is so much controversy. As the President clearly said last night, in no way is he proposing a government take over of the entire health care industry. A Canadian-style single payer system would not work in America. What we want is choice and competition. What Democrats are proposing is that one of these choices include an insurance plan that would receive initial support from government funds but would otherwise be self-sufficient and paid for by premiums. First of all, despite what you'd think from watching Glenn Beck, a majority of Americans actually supports a public option. Even still, some very smart friends of mine have expressed concern that private companies couldn't compete on an even playing field with a government plan and that government would be overstepping it's bounds. I have four responses that usually alleviate these concerns:
1) Are you opposed to state-run public universities? Of course no one is. They provide a fantastic education at a fraction of the cost. Yet those who choose private universities are free to do so. Are you opposed to using a government run mail system to deliver your packages? Often it's cheaper, though you do have the option of using UPS or Fedex to take advantage of their particular services. Not only is there enough room for these private companies, but I suspect that their prices are lower because of the competition with the public company. As a result, consumers are better off.
2) I support a public option because I believe it will lower costs and increase access. Have you ever considered the job of an insurance company? They make money by not paying for services. Plain and simple. This requires tremendous administrative costs and overhead to deny claims, sometimes with disastrous consequences for people whose health care is delayed (as described early in Pres. Obama's speech). I have met many people who work at insurance companies, including some very powerful CEOs and I do not think they are bad people. They are businessmen and women who are doing their job to maximize profits. This is their legal responsibility to shareholders and their primary concern. In principle I am ok with that, but I would love to have an insurance option that operated as a not for profit with the mission of providing care instead of making money.
3) Let me say this third point carefully: A public option is nothing like socialism and not even close to a government takeover of health care. According to Pres Obama's speech, the CBO estimates that only 5% of Americans will sign up. But, if it does work well, and some people switch over from their private plans, that is fine with me. If everyone decided that the US Postal Service provided vastly superior service to UPS or FedEx, and these companies did not innovate, reduce costs, or improve services to compete with the public option, why would we want to protect their profit margins? I don't think we would and I don't think we should in health care either. Put another way, I think the strangest argument I've heard against the public option is that it will work so well that no one will want a private plan. I am not THAT optimistic about the plan, but if it does, why stop it?
4) Finally, I generally don't like to insert religion into these kinds of debates, but it's worth mentioning a scripture that has helped shaped my feelings. It describes a society using its prosperity to ensure that everyone was cared for. "And thus, in their prosperous circumstances, they did not send away any who were naked, or that were hungry, or that were athirst, or that were sick, or that had not been nourished; and they did not set their hearts upon riches; therefore they were liberal to all, both old and young, both bond and free, both male and female, whether out of the church or in the church, having no respect to persons as to those who stood in need," (Alma 1:30, Book of Mormon).
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3 comments:
I followed a link from your mother's facebook post to here. I'm also very passionate about the subject. I think you make some very good points. My only issue with the public option of where it gets its initial funding.
There is a group of people who are hit extremely hard by the funding of such projects. It's my demographic. It's those of us who make enough money not to be poor, but aren't rolling in surplus cash. Just by virtue of my ZIP code, I'm paying up to double the local taxes of someone in my town who lives on "the other side of the tracks." My tax bracket on the federal and state levels is equally unmanageable. My income has remained flat for several years, yet I'm paying nearly $5000/year more in taxes than I was 5 years ago.
Where is the initial trillion dollars to fund this going to come from? (And we all know this number is going to easily double itself based on past performance by large government entities.)
The government seems to think I have bottomless pockets overflowing with cash. They never analyze the cost of living in a given area. I don't own a mansion, a yacht, or a luxury car.
David, your age demographic has it pretty easy still. You're just starting out. I used to think the same way twenty years ago. Now I have a wife and three kids to support. Another tax hike puts me in a position to have a negative cash flow. I will have to borrow money just to stay in my house.
If a public system can be self funding, I'm all for it. I'll transfer my existing health care dollars into it. Just don't sell me or my children into indentured servitude by creating a subsidized service for the masses.
Here are four quickly (and poorly and unspellcheked or proofread) thoughts to your four points.
1. If all that was existed as a private school system, and the government proposed all the sudden having a good part of the education market taken over by public schools, I would oppose it. Also, as suggested by a college I would not qualify "public universities" are actually run by the state. The anaolgy to public health care and public universites is a tenious one at best.
2. Yes, that is what companies do. Minimize costs and maximize revenues. But, a big push with this health care plan has been to, well, minimize costs. Whether the government is the one doing it, or a private firm that is much more sueable does not matter. I would imagine the government would not take its cost containment stewardship so seriously, and it will end up costing quadruple what is getting proposed. In the end, in an environment of scarce resources, someone will end up not getting something they want.
3. I dont have any problem with a "pulbic option". But when President Obama makes the very strong and bold statement "no ne will be forced to change their current plan", I believe that is dishonest to assert. They will not legislate the old plans away. But, so drastically changing incentive systems, cost structures, and market composition in the health care industry WILL change a lot of things (change is the goal of this administration, somewhat to its credit, somewhat not), and some of those changes will cause people being forced to change their current provider.
4. Desipite the rhetoric, I think that we are doing a fair job with the status quo (although it needs changing). I found this, and while unverified and from a sketchy source, I think it should be considered when looking at the real problem of the uninsured:
"Of the 46 million uninsured, 9.7 million are not U.S. citizens; 17.6 million have annual incomes of more than $50,000; and 14 million already qualify for Medicaid or other programs. That leaves less than five million people truly uncovered out of a population of 307 million."
Also, Obama asserted that "no one shoudl go bankrupt because they get sick". I completly disagree. It is very unfortunate, but those who do not take care to insure them selves (and the system for doing so should change, but, even still) should go bankrupt because they get sick. Just like they should go bankrupt if their hosue burns down and they didnt buy fire insurance. Just like they should go bankrupt if a typhoon hits their business and wipes it out. Society should nto take on the role of insuring everyone that the catastrophic not hurt them.
The other Jeff talks about most of your points. I just want to omment on your "Public option" in 3. The concern that I have, and I think most conservatives have, is that the government will front the cost of the startup, and then keep putting money into it, just like the post office. I always find it interesting that people bring up the post office to show that a public option can compete with the private options. Do you realize that the post office loses money every year? The government not only has to subsidize the post office, but they have to make a law saying that no one else can deliver mail to your house? UPS, etc got around that by delivering packages, but they still are not allowed to deliver mail.
We don't fear that a public option would drive the private sector out of business, we fear that the public option would be so subsidized, or the regulations on private business would make it so the private sector wouldn't be feasible. Look at it a different way. What would happen to UPS, FedEx, etc if the governement decided to subsidize the post office 100%? They would go out of business? Is it because the public post office is better? They provide a better service? No, it's because the cost is not born by the user, so there is no incentive to use a "better" company, just the one that I have to pay for anyway, so I might as well use it.
And, if that happened, what do you think would happen to the volume of packages in the US? Would we use more, or less of the service from the post office? Then the government would have two options, increase the cost to the taxpayer, or put limits on what people can use. Which looks exactly like what would happen with the health care, given government intervention.
Sorry for the long comment, as a closet economist, it really bugs me when people don't look at the incentives and economic principles that have to occur but are often overlooked.
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