LOL at Dr. Berwick and Obamacare

LOL is the only way that I can respond to Dr. Berwick’s recent editorial in the WSJ “The Right Way to Reform Medicare.” After observing that Medicare costs are growing, he summarily dismisses the Republican plan to have customers pay for their own insurance, eliminate guaranteed Medicare benefits and limit choices. He says the right way to bring down costs is to make care better and improve our healthcare system. This observation begs the very basic question he asks. He observes that we should use the automobile, computer, television and telephone industries as examples to follow in making health care better. What follows is a long list of unsupported promises, vacuous claims and socialist utopian platitudes as reasons why the Patient Protection and Affordable Care Act (“Obamacare”) is the solution to our health care problems. This vacant reasoning is the same reasoning supporting Obamacare in the first place, “we must pass the bill to find out what is in it.”

I will agree with one statement in Dr. Berwick’s analysis. We should look to private industry to find our solution to our health care problems. If Dr. Berwick had initiated a reasoned analysis on this proposition, he would have come to a completely different conclusion. What is it about these industries that has made them successful in making their products better and more efficient? It is the very thing that Obamacare is removing from the healthcare industry: freedom, competition and market forces.

When someone goes to buy a car, a television or a computer, he has a multitude of choices. Technology is changing dramatically in each of these industries. The technology is changing dramatically because the many competitors are motivated to make a better and cheaper product that is attractive to customers. This is particularly true in the telephone industry. It was only after the deregulation of AT&T decades ago, when companies were able to compete for customers, that the technology advanced to give us the technologies we have today.

Market forces impacting costs and prices drive producers and consumers to make commercial choices which they deem to be the most beneficial and efficient. Removing market forces and price signals removes the incentive to be efficient. One example should suffice. Anyone who has been the beneficiary of a good health insurance plan at work should recognize that when there is no cost to visiting an emergency room, there is no incentive to minimize the use of that valuable service. When emergency room treatment of a cold or flu or a splinter has no cost, there is no incentive to seek an appropriate alternative yet less costly form of treatment, such as chicken soup or a tweezers. Price causes customers to make efficient and cost effective decisions.

Obamacare, by removing market forces and price signals from the market place, will cause the healthcare system to operate in an increasingly inefficient manner. Dr. Berwick is correct to observe that Medicare costs continue to grow. However, a reasoned analysis would cause him to conclude that that very fact contradicts his conclusion that Obamacare will improve the health care system. Medicare is a federal program that has removed market forces from the health care industry. What Medicare does in a small way, Obamacare does in a big way. If Medicare costs are increasing, Obamacare costs will increase much more. Obamacare is a big problem designed to solve a small problem. The actual solution should be to eliminate the small problem. Government is the problem. Therefore, government should be removed from the system.

Dr. Berwick’s reasoning is also internally inconsistent. Consider the following paragraph:

Under President Obama's framework, we will hold down Medicare cost growth, improve the quality of care for seniors, and save an additional $340 billion for taxpayers in the next decade. These policies don't shift costs to seniors or deny care to people in nursing homes or people with disabilities. Instead, they focus on improving the quality of care and lowering costs by putting patients first.

Who is “we?” One can only conclude it is Dr. Berwick and the Obama framework. They will “hold down” Medicare cost growth compared to what? One can only conclude that these central planners will hold down Medicare costs compared to actual costs. However, artificially holding down costs compared to actual costs does shift cost. It also makes a service more attractive than it actually is, causing an increased demand on the service. If the demand exceeds the supply in a centrally planned system, care will be denied because there will be no market forces—due to the actual cost being artificially held down—to incent the expansion of the service. If you artificially hold down the price of a television that costs $1,000 to make to $500, there will be cost shifts, there will be a reduction in service, or there will be no service, i.e. bankruptcy.

Obamacare scared me in its inception and its final passage. I am even more frightened by this kind of reasoning behind its implementation. With this kind of reasoning, we have a government that will bankrupt us all if they don't kill us first.