« Happy St Patrick's day | Main | Figures don't lie »

Anatomy of reform

By Owen Paine on Friday March 19, 2010 05:32 PM

Here's Paul "bellwether" Krugman, liberal conscience terrier, summing up Obomneycare (hopefully for the last time):

".. withdrawing coverage... is [now] widespread... for a simple reason: it pays.... Employment-based health insurance... is unraveling.

Americans overwhelmingly favor guaranteeing coverage to those with pre-existing conditions...To make insurance affordable, you have to keep currently healthy people in the risk pool, which means requiring that everyone or almost everyone buy coverage... You can’t do that without financial aid to lower-income Americans so that they can pay the premiums...

You end up with a tripartite policy: elimination of medical discrimination, mandated coverage, and premium subsidies."

Do that sound watertight to you, my fellow taxpayers? Not to me, not by a long shot. As my ever so benignly vicious pop -- god rest his facetious soul -- was wont to add: "and the price tag?"

Here's the cost arch versus the status quo arch, according to Krug -- per CBO 'findings':

"the proposed legislation would reduce the deficit by $138 billion in its first decade... [$14 billion on average per year -- peanuts, anyone?] ...and half of 1 percent of G.D.P., amounting to around $1.2 trillion, in its second decade."
Showing us a full twenty-year arch -- that's reaching for it, no? Must be necessary to get at those serious reductions out there in years 18 through 20.

To put this in perspective one needs a few more embedded number assumptions. The health sector is currently gaining GDP share. The numbers look something like this: the difference between general inflation and health sector inflation per annum revolves around 5% -- 8% health-sector vs. 3% over all. So the rest of the economy is inflating at a little over 2%.

Watch Mr Fright Graph climb!

The health sector share is now 15% of GDP. But if the health sector is inflating at 7-8% a year -- doubling every 10 years or so -- then as the sector grows as a share of GDP it would "pull" the overall inflation rate up towards itself. For example, if the health sector share gets to be 1/3, then the inflation rate of rest of the economy would only "out weigh" it by two to one, instead of today's six to one. At that point, with an 8% health sector inflation rate, to keep the overall rate down to 3%, the rest of the econmy would have to inflate at less then 1%. Yikes, that's the verge of the infamous deflationary trap!

Where does that put this bill's cost control measures?

If we stick to the bill's projected outcome -- twenty years or so to close the rate gap -- is that really bending the cost curve fast enough? Of course not.

Obviously, despite the patent cost crisis, price controls are far from "job one" here. In fact, despite all the circle-dancing and arm-waving, it looks to me like cost control ain't a serious part of this bill at all. It's behind numero uno: insurance profits; numero dos: health sector profits and fees; and numero last but not least in the hearts of googoos everywhere, the humane crusade to cover the uncovered.

Comments (6)

Regarding no cost controls in sight, here's something I wrote 8 months ago that touched on the problems of Obamacare, as then proposed... seems it's only grown worse in the interim.


In an recent interview with Business Week, that fucker Peter Orszag basically admitted this shitball won't alter the rising costs.

And I'd stick keeping doctor pay rates untouched in that list of tasks.

Another supply-side bailout from Black Reagan.



docs are presently filled under "fees "
in numero dos

however i'm prepared to coalition with the welby crowd of mundane "generalists" internists pediophiles etc


as usual for
my econ con efforts

this post is too boring

it's lacking in open forum
personal value displays
black hat dart boards

btw here's oxeycontent on health sec reform ala obummer

" ... Obama pretends to be trying for "the National option" on health care, but his plan is no different than the intermediary-friendly pile of horse feces that Hillary Clinton proposed under husband Bill's first term.

Let me be more explicit by referring to health care.

As I used the term above, "intermediary-friendly" refers to legislation or its equivalent (an administrative program created by regulation or executive order) which serves those who step between the MD and the patient and take a chunk of the patient's fees."

good start

" This may be a HMO, it may be a hospital, it may be a hospital's contractor for ambulance services, it may be a hospital's contractor for MRI readings. It may even be as remote as a manufacturer of expensive medical equipment like MRI machines."
the point here is to sort thru the players to see the relative size of each one's
cost added

the following gets a bit foggy

" a hospital needs the MRI machine manufacturer if it's going to bill you that exorbitant amount for the "routine MRI" they performed on you to rule out brain tumor in the case of your gout-afflicted toe."

cartoonomics is fun but often only adds to the confusion
as in this case:

"Hillary Clinton's boondoggle was interested in taking money out of the hands of MDs and hospitals, and putting it in the hands of insurers and HMOs. "
the idea was to mediate the process
with for profit insurers
which as oxy correctly suggests
if slightly off kilter

".. was just the cover under which that game of hide-the-guilty was played."
so long as one fingers
the big hidden guilty players
here hiding behind the insurance black hat
scape goats
ie the real problem "costers ":

the mri makers the drug fuckers
the hi tech and lab service provides
and the specialists of course

not this oxy propheteering:

"If Barack Obama ends up signing anything on health care, I am wagering my entire life savings and current assets on the point that Obama's health care plan will not be anything more than a reshuffling of the deck ..."

he proved all to largely accurate no ??

even a blind squirrel like me finds acorns now and then, op.

thanks for forgiving the cartoonomics, but I am fairly serious about the over-prescription of MRIs and CAT scans, inasmuch as I've had them prescribed for me with fear-mongering tones and reverence for technology, on several different ER visits after sports-related injury. certainly gout is not often seen in American medicine practice 2010, and I can imagine a dunderheaded ER doc thinking a painful toe might be a neuroma of some type distant in location from the toe itself. the heavy reliance on technological "diagnostics" means less native talent for the diagnostic process, and more error that doesn't fit within the premises of the techno-diagnosis. while we may have the most techie health care on Earth, we don't have the best, as millions of unhealthy and un-cared-for Americans prove daily.



i agree the medical rackets are based
on patient/rube ignorance and self love
ignorance of full social cost and spare nothing i deserve to live for ever
but the healt providers "incentives"
to racketeer
can be snuffed out
even hmo's have found ways ...
where useful to them

Post a comment

Note also that comments with three or more links may be held for "moderation" -- a strange term to apply to the ghost in this blog's machine. Seems to be a hard-coded limitation of the blog software, unfortunately.


This page contains a single entry from the blog posted on Friday March 19, 2010 05:32 PM.

The previous post in this blog was Happy St Patrick's day.

The next post in this blog is Figures don't lie.

Many more can be found on the main index page or by looking through the archives.

Creative Commons License

This weblog is licensed under a Creative Commons License.
Powered by
Movable Type 3.31