Come for the Politics, Stay for the Pathologies

Tuesday, September 1, 2009

Obamacare 2.0: Let The Rationing Begin, II

How might Obamacare 2.0, as laid out by Charles Krauthammer, still result in rationing? On it’s face it looks like all the “town hall mobsters” got what they have been screaming they want: elimination of the public option and maintenance of private healthcare insurance.

Unfortunately, with government, nothing is as it appears to be:

It is all done through private insurance companies. Ostensibly private. They will, in reality, have been turned into government utilities. No longer able to control whom they can enroll, whom they can drop and how much they can limit their own liability, they will live off government largess -- subsidized premiums from the poor; forced premiums from the young and healthy.

The utility analogy is an apt one: Funded privately but beholden to a seemingly endless array of regulations, requirements and constraints.

Let’s start with your local gas/electric utility. Investors put up the money at risk for infrastructure and the administrative and operational costs of providing the service. The state Public Service Commission (PSC) determines whether their costs are reasonable, and what kind of rate of return they can earn. And who they must provide service to, and when they can turn that customer off (generally only after they owe hundreds or thousands of long over-due bills). And Washington determines the programs and budgets available to the utility to pay the bills for low-income customers – who the utility companies can’t turn off because of the legislation passed by Congress in conjunction with providing funding for low income customers. See how this works? The Utilities love it, ACORN loves it, and as long as the American tax payer doesn’t revolt, it’s all good.

There exists in such pseudo-private enterprises a symbiotic relationship that ultimately works best for the corporate entity and the governmental regulatory agency (a life force of its own).The average, pay-my-own-way customer is the least best served. Regulation and bureaucratic burdens make establishing service a nightmare, and discontinuing it not much better. Customer service has declined to the point that it’s almost an oxymoron. And prices will go up every year: if not the commodity portion of your bill at least the administrative cost portion. It’s as if you get the worst of both worlds: the indifference of monopolistic organizations combined with government inefficiency.

But it gets worse. The nuclear energy industry is a textbook example of failed private/public partnership. The Nuclear Regulatory Commission was set up in 1975 to regulate safety standards in the nascent nuclear reactor industry. It was determined that its predecessor, the Atomic Energy Commission,whose mission was to expand the “peaceful use of atomic energy” wasn’t leading us in the right direction (no windmills, hydro, solar or hamsters). At the beginning of the 70’s electricity generated by nuclear power plants was touted as “too cheap to meter.” Thirty years and one scary movie later, nuclear energy in this country is all but non-existent. Why? Is it too dangerous? I don’t think so, the French use it for over 85% of their electricity load. If it was dangerous and scary you can rest assured that, unless it could be spread on a baguette, the French would not be on board.

No, it’s because it was essentially regulated out of existence in this country. The NRC, freaked by the mass hysteria of the 1979 Three Mile Island incident, and it’s subsequent Hollywood version “The China Syndrome” increased their staff a hundredfold and begin writing regulations around the clock. No utility company constructing a nuclear plant could keep up with the rapid edicts flowing out of the NRC. Construction costs spun out of control, to the point that some plants under construction were abandoned with billions of dollars already invested. Scores of others were pulled off the drawing board, or decommissioned as required by their PSC’s in order to recover their costs.

As a result, 3o years later we still have the liberals screaming for domestic energy independence. We would have had it by now, but for out of control government regulatory intervention. As the cost of nuclear power became prohibitive, one might argue that it was “rationed”, using the new-liberal definition of that term. When a commodity or a service becomes economically non-viable, you get much less of it. What’s left (if any) is then “rationed”.

So don’t expect anything good to come out of yet another public/government enterprise. Imagine that Krauthammer’s assumed model was adapted for an auto company. The government will provide grants for people who need, but can’t afford, a car and the auto maker will make cars that the government approves of. And if you buy one of the cars that the government approves of, you’ll receive a tax credit. At first, the government may not get too involved, maybe only dictating salaries and benefits that can be paid to executives. Oh, and of course they will want to dictate the fuel standards that the cars have to achieve,the maximum body size and the optional equipment that can be added. Then down the road they may dictate what models they can make at all: some constituency might complain that it’s unfair that some people get to buy a really expensive car, just because they can afford it, when they have to settle for basic transportation. In the interest of egalitarianism, the government will restrict production to just two basic models. But you can get any color you want, as long as it’s black.

And then, since the government is rather strapped for funds to buy everyone a car, they will mandate that you can only get a new car every 8 years. 12, if you’re over 60 and retired. By that time it won’t matter anyway, because there will be a 5 year wait for a new car. You’ll have become adjusted to getting by with public transportation – an outcome the government highly approves of!

And so it will be with Obamacare 2.0: Health Insurers Co-opted by Government For Better Healthcare. “Private” insurance companies will have to conform and comply with a myriad of well-intentioned governmental regulations and nostrums. Eventually this fundamentally flawed business model will fail us, and the care and treatments that we’ve become accustomed to will no longer be available, or available only after significant waiting, worrying and suffering.

How bad can it be? The Swine Flu vaccine situation gives us a glimpse of our future. The government contracted with private pharmaceutical companies for the development and production of all the vaccine that will be available in the United States, It will be distributed through the CDC. Originally, the Obama Administration told us they would have 100 million doses available by September for inoculation in advance of this year’s flu season. Now, we are told to expect just 40 million doses available by the end of October. Obviously that will not be adequate to meet demand. Here comes the tricky part: who will get it? Who decides?

Let’s be clear; the government is not, repeat NOT rationing the vaccine. The CDC is simply prioritizing who should get the 40 million doses available first. For now, it’s pregnant women, healthcare/emergency workers, children age 6 months to 24, people age 25 –65 with health issues or compromised immune systems. (Truly senior, senior citizens are no where in sight. Hmmm?) The groups listed comprise an estimated 159 million.You do the math.

But no, there will not be rationing. Just prioritization and general unavailability.

The government lies, even when it thinks it’s telling the truth. That’s why they can never be trusted. Least of all with our medical care.

Vigilance is the price of freedom.