Tuesday, March 9, 2010

Obama "woos, targets and taunts"

From the AP's Julie Pace and David Espo in the C-J...

The editor chose to title the article "Obama woos crowd for health overhaul" with the subtitle "He targets insurers and taunts GOP". What an interesting combo: woo, target/attack and taunt!

Why is Obama ripping insurers, while proposing only band-aids for gaping wounds-- and without proposing a solution to the underlying problems in health care/insurance?

He fails to address laws which ties the hands of potential competitors for current insurers. He fails to address existing law which ties the hands of insurers. He supports a range of policies which-- directly and indirectly-- force insurers to cover so many treatments and so many insurance-hostile contexts. And then he wonders why competition is so limited and insurance premia are higher. (He also, apparently, wants them to get a ton of additional money, so this is complicated indeed!)

Is this ignorance or political posturing?

The president's pitch was part denunciation of insurance companies - "they continue to ration care on the basis of who's sick and who's healthy," he said - and part criticism of his Republican critics. "You had 10 years. What happened? What were you doing?" he taunted members of a party that held the White House for eight years and control of Congress for a dozen.

Again, this specific critique of insurers shows ignorance or pandering. The critique of the GOP is entirely warranted (although it could be extended back to the Dems in the more-distant past). In fact, the GOP failed to deal with seemingly important issues like this when they were in charge-- e.g., continuing to support federal funding of Planned Parenthood, failure to act on domestic oil drilling, Social Security reform, etc.

The president's proposal would give the government the right to limit excessive premium increases - a provision included after one firm announced a 39 percent increase in the price of individual policies sold in California.

Wow...it's rarely if ever good to implement policy on the basis of an anecdote.

Two other thoughts on the proposal:

1.) If you're going to force up costs and then put a ceiling on price, then you're going to have other adjustments, including firms leaving certain markets.

2.) If the government works to extend monopoly power, then it may make sense to regulate prices. (See: utilities or an even better example, cable TV, where government establishes and sells the enhanced monopoly power.) But this begs a question about why they're extending rather than reducing monopoly power in the first place!


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