Saturday, July 04, 2009

Obama’s “Real Health Care Reform”

The battle in joined. Healthcare is now in the forefront. The Washington Post reported that things will start to heat up next month as the clash begins in earnest. Senator Kennedy plans to fight for a government controlled health care plan. This plan will be similar to the one implemented in 2006 by the Commonwealth of Massachusetts. Or like the great Medicare plan we have. Kennedy foresees a reform plan in which the federal government will compete directly with private health care insurance companies. President Obama will kick off his program June 6 with the “Real Health Care Reform” program.

The Kennedy plan that came out of the Senate also plans to open up Medicaid to a family of four with an income below $110,000 per year. In addition, it makes all physicians participate in Medicare. None can opt out. This will continue to make it difficult for physicians to run an office as Medicare pays about one third the normal fee of a private insurance. We commented before on how this will hamper access and alter physician practice and training. We will see less people go into medicine. Unexpected consequences will happen again, but now in medicine. Kennedy et al will need to move more to the middle of the road.

Everyone talks about the Massachusetts program as if it were a great success. It is not. The costs are just being observed and will continue to grow and put stress on a budget already ill. What can we look for if the federal government undertakes the Kennedy plan? Where will the money come from? President Obama says some will come from the technology changes he just brought on within the healthcare industry. Going to computerized medical records is the plan, but even Obama’s budget people (Orzag) don’t think we will save much here. Plus we know the healthcare consortium already said it did not agree to Obama’s 1.5% savings plan. They really didn’t mean it after some thought in the Washington water holes. We must look elsewhere for the money. That brings us to the 300 billion dollar tax exclusion money. If companies did not get the tax exclusion for their health care costs, that would be taxable money in the treasury. But the fight will be against the unions who have expensive insurance but with great benefits. A battle is looming over the summer in Congress.

Finally, we have to cite the article by Krishna Guha of the Financial Times (May 28th) in which we find more government double speak. The Congressional Budget Office (CBO) says that if the health care reform leads to a market tightly controlled, it would consider it run by the government. Neither Congress of Obama appears to want that. The CBO said that if mandated coverage was above 80%, it would consider this a government controlled entity. Medicare pays 75% or less. Politically this is a sensitive issue because you have government control, on the one hand, and continued private enterprise on the other. In the face of this reform, if that isn’t double spoken, what is?


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