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Obama's Health Care Speech: Soaring Rhetoric, Scant Imagination

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A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation's health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from "integrated" systems, like the Veterans Administration, that directly provide some health care as well as medical insurance.

Yet Obama is not prepared to grasp the nettle. His speech was even weaker than the spin preceding the joint address to Congress suggested. I thought the Obama people were lowering expectations with a view toward a big positive surprise and they managed to go even lower than the bar they set. He took caricatured positions on single payer in order to create a false "centrist" option. The President has basically has reduced the public option to a marginal welfare style program for 5% of the population, rather than seeing it as a way to break the monopoly of the private health insurance companies, thereby helping to reduce costs. He's basically forcing everybody into a private health insurance run program.

The bad news is that Washington currently seems incapable of accepting what the evidence on health care says. The Obama Admininstration remains under the influence of the health insurance and pharmaceutical industry lobbyists, and is captive to a free-market ideology that is wholly inappropriate to health care issues. As a result, it seems determined to pursue policies that will increase the fragmentation of our system and swell the ranks of the uninsured.

We need affordable health care, not health insurance. Just look what is happening in MA. It's not solving the problem at all, because there was no mechanism introduced to REDUCE HEALTH INSURANCE COSTS. Physicians for a National Health Program's (PNHP) study of the Massachusetts model found that the state's 2006 reforms, instead of reducing costs, have been more expensive than expected. The budget overruns have forced the state to siphon about $150 million from safety-net providers such as public hospitals and community clinics:

"We are facing a health-care crisis in this country because private insurers are driving up costs with unnecessary overhead, bloated executive salaries and an unquenchable quest for profits -- all at the expense of American consumers," said Dr. Sidney Wolfe, director of Public Citizen's Health Research Group. "Massachusetts' failed attempt at reform is little more than a repeat of experiments that haven't worked in other states. To repeat that model on a national scale would be nothing short of Einstein's definition of insanity."

Yet Massachusetts seems to be the implicit model. Despite the obvious popularity of Medicare, there was no serious discussion of expanding it as a possible public health care option (as we had suggested earlier) and there was no attempt to use the public option as a means of expanding choice and competition if a worker was unhappy with the health care program offered by his employer.

The Clinton health care version at least tried to deal with the issue of portability, so that health care did not get tied in directly to employment (a highly germane consideration in a time of double digit unemployment and mounting economic insecurity). There is no hint of that in the Obama plan. If anything, it represented a retrograde step from what was on offer in last year's campaign via the Clinton or Edwards health care proposals. Most advanced countries have dealt with the defects of private health insurance in a straightforward way, by making health insurance a government service. Through Medicare, the United States has in effect done the same thing for its seniors. We get the status quo. The paucity of imagination of the proposals themselves were completely at variance with the President's soaring rhetoric, something which is unfortunately becoming a recurrent theme of the entire Obama Presidency.

Originally published at New Deal 2.0.

Roosevelt Institute Braintruster Marshall Auerback is a market analyst and commentator.