07/04/2009 03:03 pm ET Updated May 25, 2011

July 4th Gift: Freedom from Newspeak, Scotoma, & Rose-Colored Glasses


George Orwell's revolutionary book "1984" was radical fiction in 1948 when he wrote it but is almost humdrum today, and close to true. Orwell coined the word newspeak, meaning common words having uncommon meaning. In his book, firemen started fires rather than putting them out. Today in healthcare, newspeak is "cost cutting."

You expect "cost cutting" means cutting costs. Not so. No one knows the true [marginal] costs in health care, certainly not the government. "Cost cutting" to the government = cutting their outlay or reducing what they pay out, not what we all pay out, which is that $2 trillion now calmly reported. Cutting payments (their costs) actually increases long-term national expenditures (our costs).

Scotoma (Italian) means seeing what you expect rather than what is really there. When the President says he is for universal healthcare, you "see" him creating a healthcare system in which all Americans can get health care services. That is what you expect and therefore that is what you see (scotoma). What is really there is a politician needing to pass legislation regardless of what it will do so he can declare a win on healthcare.

Rose-colored glasses screen out the responsibility that comes with freedom and the power to make decisions. Problem: there is no such thing as responsibility-free living. Robert Heinlein said it in one word: Tanstaafl! ("There Ain't No Such Thing As A Free Lunch.") If you smoke cigarettes or weigh 400 pounds and get "free" health care, someone is paying for the extra resources you consume.

Now that you are free of newspeak, scotoma, and see clearly, you can grasp the probable results from ObamaCare, from adding a Government Insurance option to the mind-numbing morass of insurance choices and limitless paperwork.

The Government Insurance Option Scenario
1. Government offers price-controlled health insurance for all Americans, no exceptions or exclusions. [Are illegal residents eligible?]
2. Government decides on a payment schedule. These payments have no relation to either the value of services or the marginal [true] costs.
3. Government payments are below the level of providers' fixed costs. They refuse to accept patients covered by the Government option, just as they are doing now with MediCare patients.
4. Private insurance lowers their premiums in order to compete with the Government option. They can also reduce their payment schedules to match the Government. Competition is based solely on how little insurers spend and therefore how much money remains from premiums or taxes.
5. Now all Americans have health insurance. What they do NOT have health care. Doctors and hospitals are going out of business because their payments are less than their fixed costs. Insurers vie to see how little care they can get away with covering.
6. Those who remain in the health care business must reduce services and waiting lines get even longer. To survive at all, they need government - State and Federal - grants (derived from the tax base).
7. Did I mention the effect on the national deficit? Oops. Given the continued disconnection between supply and demand, the system cannot self-regulate and the costs of healthcare will continue to rise.
8. With healthcare costs strangling the entire economy, the government will do what all other countries with so-called universal health care do to control their expenses: they ration health care.

Do you like what you now hear using real words (oldspeak) and what you now see putting aside scotoma and taking off those rose-colored glasses?

The Administration's 'solution' for healthcare will be even worse than a "fix-that-fails:" it will be a "fix-that-backfires." [Quotes are from systems thinking.]