Charles Rowley's Blog

The United States is not endowed with a government in the normal sense of that term. All enactments at the federal level must pass through two legislative chambers, the House and the Senate, whose members are elected on different electoral bases and for differing terms in office. They must all be signed into law by the President, elected by a nation-wide vote as calibrated through the Electoral College. The term of office of the President differs from those both of representives and senators.  Predictably, therefore, it is rare for all three chambers to agree on legislation. Legislative outcomes typically are compromises that serve no specific purpose, and that therefore cannot be evaluated in terms of success or failure.

Decidedly, this is not the case regarding Obamacare. President Obama owns the health care reform legislation signed into law in March 2010.  Obama was elected into office in November 2008 with a clear majority in the popular vote, partly because of the financial crisis, partly because of the failed governance of President George W. Bush. For similar reasons, significant Democratic-majorities were recorded in the House and the Senate.  Because President Obama was the first mixed-race President in American history, he was able to dominate the first year policy agendas of  House and Senate majorities, and to drive through his policy agenda priorities on a partisan basis.

President Obama is a progressive socialist, driven more by ideology than by thoughtful political consideration.  His two agenda priorities, namely the economic stimulus legislation, and  health care reform, were specifically targeted to socialize as much of the U.S. economy as possible.  The stimulus legislation was a walk-over, ceded without a major struggle by a collapsed Republican minority. Health care reform was a slightly tougher victory, since electoral concern about rampant socialism cost him his filibuster-proof super-majority in the Senate.

On the first round, this cost Obama his cherished public option, the wedge that would open the gates for a full nationalization of health care – and for a  federal takeover of one-sixth of the U.S. economy.  So Obama made sure that the first round victory was designed to fail, and that the public option would reappear successfully in the wake of evident failure of private provision. This is how the story unfolds:

Health care is a heterogeneous product, comprising many models of varied design and quality. It is far different from the first autos, where regular  customers could have any model that they liked, as long as they selected Ford, Model T, and black. By calibrating Obamacare with socialist precision, Barack Obama has put the U.S. health care industry on the road to a dominant public option. John C. Goodman explains the nature of the model in a recent column (The Wall Street Journal, May 21, 2010)

Once  Obamacare kicks in – predictably after he has exploited his chance for a second term – the health care industry will be composed of five principal tiers in descending order of quality:

First, will be the Cadillac private insurance schemes available unsubsidized  to extremely wealthy individuals,  and available subsidized to all federal employees and to union-dominated private  employer-insurance programs.  Individuals enrolled in these programs will have access to the finest medical facilities, physicians, specialists, hospital, after-care and the like.

Second, will be the standard employer-provided subsidized  private  insurance schemes  that currently dominate the health insurance market in the United States. These schemes fund patients at lower rates than the Cadillacs but surely at rates sufficiently attractive as to secure access to high quality health care resources. This is the built-in fault line of Obamacare, as John Goodman clearly outlines in his column.

Third will be the Medicare program, slowly stripped of  budgetary appropriations to the point where  it is profitable only to less than average quality providers offering stripped down services in basic facilities.

Fourth, will be  highly-subsidized insurance in  newly-created health-insurance exchanges, designed to play a key role in the march to nationalization of the health care industry. These schemes (if they follow the Massachusetts model) will provide basic medical coverage at Medicaid rates plus 10 per cent, rates that are lower than those provided by Medicare.  These rates will provide health care at British National Health Service levels, with long lines, poor service, infection-plagued hospitals, and  Second World medical staffs.

Fifth, will be the massively increased Medicaid program, offering the lowest rates and a minimal (Third World)  level of health care service, where such a service can be accessed at all.

Let me now return to the Obamacare fault-line designed to move Americans from employer-provided to health-insurance exchange coverage. Private companies that drop their employer-provided coverage must pay a fine of $2,000 per employee, leaving their employees with the option of buying highly-subsidized insurance through the private exchanges. AT &T has already calculated that dropping its health plan for its 283,000 employees and paying the fines will save it $1.8 billion per annum. Caterpillar, John Deere, and Verizon have all made similar calculations with similar results. It does not take an Einstein to calculate where that road leads.

Suppose that the market insists that the dis-enfranchised workers must be reimbursed by higher wages and salaries and that those wage increases are fully taxed. Most dis-enfranchised workers will still find themselves better off, because of the huge subsidies ladled out by the federal government. The CBO has calculated that the average family’s annual subsidy at the exchanges will be about $19,400, almost $17,000 more than the average subsidy for employer-provided insurance.

All will seem hunky-dory until private exchange insurance fails to provide the goods, until those so insured are competing with Medicaid insurees, below Medicare insurees, for the health care services that they desire. There is no provision under Obamacare for the training of additional doctors and support staff. to handle the approximately 30 million additional Americans who will now be able, in principle, to access the health care market.  Exclusion and queuing for inadequate services is inevitable.

 At that point, the vote motive will kick in, and nationalized health care will be demanded aggressively through the ballot box. Rest assured of one thing. President Obama and his family will not be among those lining up for Second World services through the insurance exchanges. Socialist leaders never are.  Like all socialists, they take good care of their own.

Tags: excluded insurees will vote for nationalization, no increase in health care supply, Obamacare designed to fail, private insurance exchanges will fail, queuing inevtable

This entry was posted on May 22, 2010 at 2:21 pm and is filed under economics and public choice, health care legislation, pro-union policies, progressive socialism, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.