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President Obama’s Health Care Head-Fake


It’s a perplexing time to be a liberal. A Martian arriving on earth, having seen the Republicans pandering hard to their base in the primaries would assume the Democratic base would be rallying behind the candidate who held the correct positions in 2004, and be apologizing for ignoring him last time.

Sadly, Rep. Dennis Kucinich – despite the addition of an unfeasibly hot young wife – is still stuck in the low single digits. Meanwhile, John Edwards, has changed his tune and gone to the populist left, repudiating his 2002 pro-war vote and suggested a health care plan that has some elements moving towards single payer. Something that around 30% of the country and there a majority of the Democratic base say they want. And front-runner Sen. Hillary Clinton is still playing to the undecided voters of 2004 election by trying to be tough on Iraq, Iran and terrorists.

But the candidate who’d really confuse the Martian is the one who has the advantage of being fresh, looking different and not being in the Senate when that war vote was taken. While Sen. Barack Obama was correctly (like Kucinich) opposed to invading Iraq, until recently he hasn’t really pressed that advantage over Clinton. Now, Obama has a health care plan, and his defense of it makes him sound more like a liberal Republican than a Democrat.

As I said, it’s now very perplexing to be a liberal.

First let’s consider the obvious: There are only two rational ways to provide universal health coverage. Have the government do it (Canadians, Brits or Americans over the age of 65), or create a quasi-private coverage structure that essentially puts everyone in the same regulated pool (Japanese, Dutch, Germans and French).

Our Martian friend would certainly note that the American system linking health insurance to employment is just daft. But since 60% of Americans get their coverage that way, it’s an easy place to start for politicians who want to pretend to fix things by tinkering at the margins. So Clinton and Edwards have come up with an “individual mandate” – a government edict that if your employer doesn’t buy you health insurance the government will tell you to do so.

You’d think that new arrival, and foreign policy lefty, Obama would be jumping all over that mandate position of Clinton’s. And he is. Just not from the side you’d think.

Instead Obama is proposing reforms that he claims will reduce the cost of insurance, make it easier to buy, and is scoffing at the ability of the government to enforce a mandate – with his proxies in the New York Times and the apparently “non-partisan” American Enterprise Institute comparing it to auto insurance which all drivers should have but 15% don’t. This has lead to much ridiculous mudslinging in the primary debates, with lots of liberals from the left of Clinton defending her to Obama’s attacks.

Like the free-marketeers at AEI, I’m glad that under President Obama’s forthcoming regime all mandates will be voluntary. I will no longer consider myself in need of having to pay tax, drive on the right side of the road, or stop drinking in bars after 2 a.m.

It seems that Obama’s advisers don’t understand the economics of health care. If you allow an industry to choose between serving everyone at an affordable price, or serving those who can afford it and have a virtually inelastic demand for that service, it’s by definition true that they’ll cherry-pick as it’s way more profitable. The only way to stop this is put everyone in the system which requires some kind of compulsion (tax or mandate with subsidies for the poor) while at the same time restraining the costs of the system. Getting to voluntary universal coverage by trying to encourage lower costs and hoping everyone will join in will not work, and even Obama’s main health care adviser admits it.

But this irrationality has got me thinking. Why is Obama trying to promote something he knows won’t work? Political strategy. He’s done a quick assessment of the 2009 landscape and realizes that health care reform won’t pass anyway. After all, job #1 for the new President will be Iraq, job #2 will be solving the likely recession created by the housing market collapse so there’ll be no political oxygen left for job #3, health care reform.

Obama has decided that he doesn’t want to set up a nasty fight with the health care industry that he thinks he’ll lose. So his plan for universal coverage isn’t a plan, it’s a head fake to get through the primaries, to be ignored once the real political fight of 2008 gets underway.

Share  Posted by Matt Holt at 12:04 PM | Permalink

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