Obama’s Speech to AMA on Healthcare Misses the Point

In a speech before the American Medical Association on Monday, June 15, President Obama pitched his plan for heathcare reform. The main thrust of the speech was that his plan would be “deficit neutral” and would not interfere with people’s existing healthcare arrangements, while expanding coverage and offering public alternatives to existing private systems.

Underlying the Obama plan is the same hubris that underlies all schemes to take decisions out of the hands of everyday people and instead entrust them to central planners: the belief that the government knows what you need better than you do. Driving it is a belief that there is only one test of an equitable system: outcomes. “We need to give doctors bonuses for good health outcomes,” said the President, “so that we are not promoting just more treatment, but better care.”

President Obama asserted several times in his speech that he does not seek to establish a “government-run” health care system, and that anyone who claimed otherwise is incorrect. It seems that the President has a poor understanding of his detractors’ complaints. Obama is not in favor of a euphemistically named “single-payer” system, no — but he is in favor of making some Americans pay for others’ health care, and for establishing a “Health Insurance Exchange” that would include a “public option.” Obama said that, “to help ensure that everyone can afford the cost of a health care option in our Exchange, we need to provide assistance to families who need it.”

Who is “we?” It is the taxpayer.

The establishment of a “public option” in heathcare will do what the establishment of a “public option” did to housing markets: create massive economic distortions, misallocate resources, and drive participants (in this case, patients and doctors) out of the private sector. You can’t keep your doctor and current health plan, as Obama promised would be the case, if your doctor decides to close up shop or if your private health plan is distorted by “competition” with publicly-funded government agencies.

“Because our health care system is so complex and medicine is always evolving, we need a way to continually evaluate how we can eliminate waste, reduce costs, and improve quality,” said Obama. This is precisely the argument for a free market solution. Doctors and patients must be allowed to apply the specialized knowledge they have about their particular conditions and resources, free of government meddling. Markets eliminate waste, reduce cost, and improve quality; firms that fail to do so are quickly replaced by others who succeed. Obama, it seems, doesn’t understand this, given that he reached the opposite conclusion, saying “I am open to expanding the role of a commission created by a Republican Congress called the Medicare Payment Advisory Commission – which happens to include a number of physicians.”

Americans should not be fooled by Obama’s misleading assurance that healthcare reform will be accompanied by a reduction in paperwork. Government-enforced busywork is a problem, and reform in that area is always welcome, but it cannot hope to offset the bureaucratic nightmare that will result from expanded government reach into the medical profession. Healthcare becomes more expensive every time the government digs its fangs in deeper, and Obama has concluded that the problem is the fangs aren’t long enough.

In addition to the economic problems associated with an expanded government role in medicine, Obama’s plan includes a massive expansion of the surveillance state. Discontented with merely monitoring your phone calls and forcing the states to issue a national ID card, the Feds now want your medical records.

“[Patients’ medical information] should be stored securely in a private medical record so that your information can be tracked from one doctor to another – even if you change jobs, even if you move, and even if you have to see a number of different specialists,” said Obama. This proposal calls for a central database of citizens’ most private information. The potential for abuse is astronomical and certainly outweighs any gains that might be made under such a system. Moreover, the system would be government-mandated, and therefore government-controlled. How long would it be before the same body that passed the PATRIOT Act without reading it completely dissolves doctor-patient confidentiality in the name of national security?

Obama assured the AMA that his plan wouldn’t mean government would be “dictating what kind of care should be provided.” It is unclear how it could do anything else. A “public option” would have to be subject to public scrutiny to prevent abuse. For doctors delivering care under the “public option,” the kind of care provided would absolutely be dictated, by the establishment of quality standards and guidelines. These standards would lead to the poorest Americans receiving the worst care, while new, cheaper treatments languish in regulatory purgatory. Essentially, the problems created by existing government regulations would be magnified, especially for the poor.

The president recognized these problems when he pointed out that the FDA does a poor job of approving generic drugs, and that millions of dollars could be saved by streamlining the process. Streamlining or abolishing regulatory processes would do more to improve healthcare than anything else the President proposed.

And then there’s the cost. Some of the plan would be paid for through Medicare reform, but most would come from “raising revenue by doing things like modestly limiting the tax deductions the wealthiest Americans can take to the same level it was at the end of the Reagan years.” Obama recognized the need to put the cost of his plan in perspective, saying:

“There are already voices saying the numbers don’t add up. They are wrong. Here’s why. Making health care affordable for all Americans will cost somewhere on the order of one trillion dollars over the next ten years. That sounds like a lot of money – and it is. But remember: it is less than we are projected to spend on the war in Iraq.”

It is unclear why the cost of the war in Iraq should serve as a benchmark for anything, let alone a national healthcare program, and to his credit, Obama did also compare the cost of his proposed reforms to the cost of maintaining the current system. What he did not do, and what must be done, is to consider the cost of not rolling back existing programs and letting medicine be what it once was-a matter between patients and doctors.