Wednesday, September 9, 2009
Health Care--President Obama's Speech
As noted on the first day of class, a key starting point for economics is the concept of scarcity. All goods and resources are scarce relative to human wants. President Obama is speaking before Congress at 8:00 this evening about health care reform. Watch his presentation. How does he handle and discuss scarcity as applied to health care? How does he propose treating scarcity with respect to health care? Will his approach be effective? Why or why not? (Also--think about alternative ways to account for scarcity.)
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Well first of all, President Obama hopes to eliminate scarcity and provide healthcare coverage for everyone through his multiple options: keep your existing, buy a plan from the new exchange, or if those are unaffordable, you can choose the not-for-profit option. The new marketplace for buying insurance will use the free market to encourage competition and therefore improve efficiency. I am no expert on healthcare, but why this new market would be different from the market we have currently I do not understand. There must be money thrown in by the plan to somewhat subsidize this, just like the catch-all plan provided by the government that will cover the people for whom money is just too scarce to afford any healthcare. But this whole new government insurance coverage will be expensive, so I understand why many people question where the money will come from. President Obama claims the current system is so inefficient that savings can be wrung out of the new plan, but I also have my doubts. If companies could wring out more savings, wouldn't they do so in order to lower their premiums and thereby attract more customers? Or are the customers without insurance too costly to be worth attracting? And yet, despite all the money we spend, 1.5 times that of over countries, we don't get better results. So maybe there are potential savings? So it seems that throwing money at this problem of scarcity has not been efficient in the past, and scarcity still exists-all of the uninsured people.
ReplyDeleteThe key topic of debate when it comes to helathcare reform is answering the question whether or not we all have a right to the best healthcare. We all want the best healthcare for everyone, and given an unlimited budget this is definitely possible. But we would need to make choice if we want to keep our budget deficit in mind. This is where scarcity come into play.
ReplyDeletePresident Obama certainly stressed keeping the budget deficit in mind. The speech didn't have all of the details laid out but there were certainly some key points that gave a glimpse of what to expect during reform:
- President Obama wants to pursue malpractice reform in order to reduce the overall healthcare costs.
- Obama also wants everyone to buy an insurance that can afford to do so. At the moment, anyone who does not have a health insurance can simply step into an emergency room in order to receive care without payment on the spot. This kind of behavior leads to unnecessary costs for the government and by implementing a policy that requires everyone to have health insurance can certainly help curb some of it. [Although, an important point to consider here would be that how many people who can truly afford health insurance actually not have it?]
- President Obama at one point mentioned that he wants to remove the insurance frauds that costs Medicaid huge sums of money. This would be certainly desirable for everyone.
I am a believer in market system. And I do believe that it would be difficult for us to provide all of the care that we want to give to the public without raising the budget significantly. Even if we were able to save some money by attacking the three key points that I listed out above from his speech, it would be extremely difficult to allocate such large amount of money efficiently without letting market do so on its own.
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On the side note: I could not seem to figure out whether or not he is still supporting the public option?
At the beginning of the speech, he clearly mentioned that there is a need for a compromise between the two political parties. He also mentioned that there would be no change for those who already choose to buy health insurance that is employer based. The only thing that would change for everyone is that there would be more consumer protection laws. This is certainly desirable in market and I firmly support it.
Then Obama went on to explain that there would be an exchange created where those who cannot afford health insurance because they are self-employed, or unemployed would be able to use a policy that is affordable. And he also spoke of a creation of a non-profit insurance firm. He stressed that this would provide the added competition necessary in order to keep market prices fair. But how can the competition be fair if one insurance firm is given an added advantage of operating without a profit?
He also said that there would be health care for everyone. And those who simply cannot afford an option even through an exchange would be able to receive health care. Isn't that public option?
If someone can shed some light on it, I would gladly appreciate it.
I too am a believer in the market system, but am a bit skeptical of how much this plan is going to cost (even though he stated that he would not sign this bill if a single dime will be added to our deficit). Unlimited amount of coverage, no one will be denied, no charge for routine check-ups, and one cannot be dropped due to illness would be great to have within an insurance plan, however, these are quite drastic changes that will take time and money to implement. I do believe, though, that his pursuit on malpractice reform would give the most cost-effective results. Obama has promised a lot, and like previously commented on, if we had an unlimited budget this plan would seem to provide healthcare for all in need, but we have a deficit, and a large one at that, so I am not sure this is the right plan at the right time. I will commend Obama for his efforts, and his support of both party’s ideas and influence on the plan.
ReplyDeleteI, naturally, am a bit hesitant to believe all of the promises Obama made this evening. Though it all sounds appealing from a politician, in reality, no matter what the route, the objective of "fixing healthcare" is far from easy. It terms of economics, the plan is quite extensive.
ReplyDeleteOne of the most pressing questions I have, and do not know the answer to, revolves around a specific comment made by Obama. Within the first 15-20 minutes of his speech, he mentioned making it against the law for companies to deny coverage because of a pre-existing condition. Though this sounds great, I don't whole-heartedly believe that this will work. What happens if one specific health insurance company is bombarded with individuals in need of a heart transplant etc.? It seems as though firms would be forced to take on enormous risks. Especially if they are not allowed to turn people away. As a result, I would assume that premiums would increase. Yet, Obama is insistent upon rates staying low. Maybe I am missing some things, but in my mind, this sounds like a difficult thing to do!
President Obama addressed several different aspects of scarcity during his speech this evening. First, this entire issue of the healthcare crisis inherently deals with scarcity. If there were unlimited resources of time, trained professionals, and hospitals, then the government could supply everyone with healthcare, no problem. Second, Obama also acknowledged the need to work with the government’s finite resources when he discussed funding his proposal. Because the government’s resources are limited (unless they keep increasing the budget deficit), trade-offs have to be made. In this case, Obama proposed to transfer resources from other parts of the healthcare system – namely by eliminating the ‘fraud and waste’ in Medicare and also using contributions from the health insurance companies themselves. Another part of his proposal that deals with scarcity is the creation of the free market for healthcare. In a truly free market, scarce resources will be efficiently allocated. However, in the current market, this is not the case. Today, healthcare companies are pretty much able to control the supply – by deciding whom they want to cover and whom they don’t, leaving many people out in the cold, which artificially lowers the supply. This causes an inefficient allocation of resources, which is what the plan is attempting to fix. By creating an entity that isn’t focused on only profits and requiring companies to accept people despite preexisting conditions, the government will begin to increase the supply of affordable healthcare, which will also bring about a more efficient allocation of resources.
ReplyDeleteThe only doubts I have about this plan are about the government’s ability to pull the funding for this new entity from the current system. It may be that we are spending 1.5 times what most countries do, but it will take a lot of work to find all the little places where the extra money is going.
Here is my take on the Obama Speech last night. Besides the fact that Congress appluads the most ridiculous of statements, there were a lot of interesting things said. The main thing that was very disturbing to me was that Obama never seemed to address how anything was going to work. He even said that many details still need to be worked out. On a plan that one person has invested so much into how can he not have the details not figured out yet. Obviously everything he is saying it theorizing and speculating about the future, but he failed to grasp the important failures of the current health care format.
ReplyDeleteBeing a natural conservative, I found the Republican response much more intriguing as to the failures of the system and the flaws it might accrue.
The fact that Obama doesn't believe that this will cause any added debt to our nation startles me because the nonpartisan congressional committee found significantly otherwise.
Overall, I think the speech failed in obtaining any real support and appeared to be more of an attempt of using guilt as a motivator rather than intelligence.
These comments are good. Andrew addressed the specific question most directly though--scarcity implies that we cannot all get all the health care we would like. In a market system, people who pay for health care, either directly or through insurance, get access. But even then, not to everything. The preexisting conditions are related to this issue.
ReplyDeleteHow might we decide who gets what coverage besides using prices?
I would say some factors that could determine coverage beside for price could be age. A person under the age of 15 could be one appendix to the healthcare policy. Another component could be health and fitness. If a person works out then that person may receive more benefits. This would not hinder the health company because in hopes of them being in shape there would be less medical bills.
ReplyDeleteHealthcare is a tricky topic because no one wants someone to go without healthcare. It will be a challenge for President Obama to create a solution for healthcare that both parties will agree on.
With a plan to reform health care without adding to the deficit at all, it seems like resources are very scarce. I don't know how inefficient the system is now, but it sounds quite ambitious to try to fund the refroms mainly through reyling on eliminating aspects of the system that waste money. The president didn't go into too much detail about these wasteful practices that will be changed, but he did mention that malpractice law reform will play a big part. He also said that the public option part of his plan would have to be self sufficient and would not need extra money from the government.
ReplyDeleteI think that a push to make it required for people to have some basic health insurance is a good idea. This will cut down on the hidden costs we pay when uninsured people have expensive emergency treatments. Hopefully the free market idea for health care for the uninsured will achieve its goal of driving the price down for care. This would obviously help uninsured people purchase a plan, which benefits everybody.
I think that it is difficult to decide who gets what type of coverage without using prices. When it comes down to it, insurance is still a business. It is a little trickier than other industries because there are a lot more ethical questions, but at the end of the day, insurance companies are going to try to make a profit.
I didn't get to see the speech so I don't know how Obama addressed scarcity in it. However I do know that he is delusional if he thinks the plan will work the way he says it will. We have already seen what has come of medicare and medicaid, and thanks to both Republicans and Democrats, it is not pretty. Remember when Bush signed the Medicare Act in 2003? Originally it was suppose to have a budget of $400 billion. It is now in the trillions. Competition in health care coverage is being stifled by the government, and that is not good for anyone.
ReplyDeleteIf I had to present a new health care plan I would remove all government from the equation. It wouldn't be employer based and people would have the option of shopping across state line. With more competition, cost of insurance would fall, allowing even poor people to afford it. Also with medicare and medicaid gone, people would be paying lower taxes and would have more money in their pockets.
For anyone who thinks insurance companies should be forced to cover people with pre-existing conditions, that is just illogical. Just think if you could purchase flood insurance after your home was destroyed by a flood. Only the people who are affected would buy it, and the insurance companies would soon go broke.
-Matthew Witt
I believe that President Obama makes a lot of good points and his plan seems to be filled with good intentions and strong points. It is definitely a good thing that it will be against the law to deny a person insurance coverage because of a preexisting condition, for insurance companies to drop coverage when you get ill, to place caps, and for insurance companies not to charge extra for routine checkups. I think everyone can agree that security, stability, and quality health coverage would be great, unfortunately, who knows if it is possible to achieve. President Obama plans on creating this health coverage plan without adding to the deficit. I am unsure if there will be enough savings within the current healthcare system in order to pay for this plan now and in the future.
ReplyDeleteWhen dealing with the problem of scarcity, we must realize that not everyone will be able to get the healthcare that they would like. If price is not going to be the deciding factor of who is going to get the care that they would like and who is not, what will be the factor? W
ill those with preexisting conditions be able to get their care of choice since they may have the most pressing needs? Will others with less serious and imminent needs have to be forced to have less healthcare? The fact that there is a limited amount of resources creates the issue of scarcity. If we had an unlimited amount of resources we would be able to give everyone maximum healthcare, but this is not the case. I feel that it is going to be extremely difficult to implement a new system and we have a lot of work cut out for us if we are planning on creating a stable and quality healthcare program.
-Dan Wilbur