Squaring the ObumaCare Circle by Ohmyrus

President Obama's health care plan is running into trouble even from his own party. In his quest to be President he had to make all sorts of promises and the center-piece was reforming health care. He claimed that tens of millions of Americans are not covered by health insurance and the cost health insurance is also rising faster than the average income.

He promised to expand coverage, improve quality, lower costs, honor patient choice and holding insurance companies accountable - whatever that means. But votrepreneurs (politicians) must have a bogeyman to blame.

This is like trying to square a circle. If his ObamaCare is passed, the current number of health care providers and facilities will be spread over a larger number of patients. How can he expand coverage and improve quality at the same time? If you expand coverage without increasing the number of health care providers and number of hospital beds, then quality will have to drop. For some people, they will not get the doctor that they previously had. Or you have to wait a longer time before a hospital bed becomes available - by which time you might be dead.

So you can see how votrepreneurs get elected by selling snake oil, then rush to come up with a bad plan to keep their hasty promises. An obvious part of the solution must surely be to increase the supply of health care services by training more health care providers and building more hospitals. But this takes time and the system works on a four year election cycle - which is one of the flaws of democracy that I have written about elsewhere in this blog. I have mentioned time and again, the democracies are too short term in outlook to solve long term problems. That is why his Reforms did not even mention anything about training more health care providers.

Currently, 91% of Americans say that they have health insurance. Out of that number, 83% rated their health care as good or excellent. This works out to 76% of all Americans rating their health care as good and excellent. What this means is that Obama wants to help the nine percent of the people who do not have health coverage and the 24% who feel that their health care is not good enough.

But without increasing the supply of health care, the additional 9 percent coverage will be at the expense of the 91% of the population. In reality, no government policy can ever benefit 100% of the population. You have to do the greater good for the greater number. Obama's plan will do the greater good for the smaller number which does not make sense. It should also be remembered that the nine percent of Americans not covered include the rich, the illegals, those in between jobs and those eligible for other government programs. Perhaps, only 5% are left who really needs help.

But it gets worse.

His program is going to cost a lot of taxpayers' money. How is he going to pay for it? To get elected, he has promised that there won't be a middle class tax increase. Only the rich will pay for it. This is popular with the majority of course and it is how votrepreneurs (politicians) win votes. Promise to spend on the majority by taxing the minority.

But this is also nonsense. Already, House Speaker Nancy Pelosi is proposing a 5.4% surtax and an 10% point increase in the payroll tax to fund ObamaCare. The surtax is a complete reversal of his promise not to tax the Middle class. But it is the payroll tax that is more damaging. An increase in the payroll tax should result in cuts in wages but the companies are forbidden to cut wages.

So this is effectively a compulsory rise in wage costs for the companies which is stupid at a time of recession. Any rise in wage will result in higher unemployment, smaller bonuses, lower salary increments and lower starting salaries. So the Middle Class will be made to pay for it indirectly. There is still no free lunch. Its just that the cost to the voters is not so obvious.

Even with the tax increase, the Congressional Budget Office (CBO) contradicted Obama's claim that his Health Care Reforms won't increase the Budget Deficit, now already in the trillions. Instead, it estimated that ObamaCare will add $64 billion to the budget deficit by 2019.

The whole affair is depressing. What happened was that Obama, a slick votrepreneur, promised the voters the moon and used his eloquence to con them into believing that he can deliver. After entering the White House, he hastily came up with a stupid plan that will worsen America's budget deficit, increase taxes at a time of recession and end up helping maybe only 5% of the population.

If the US is serious about improving health care to its citizens, they should see how others do it. Some experts, like Cynthia Ramsay, have rated Singapore's health care to be the best in the world, while the WHO has rated Singapore's health care system at 6th.

What's amazing is that Singapore spends very little on health care - only 3.5% of GDP as compared to 8.9% for Italy, 8.2% for the UK, 15.2% for the US and 11.2% for France. Life expectancy for Singaporeans is about 82 as compared to about 78 for British and Americans while infant mortality is also lower in Singapore than in the US or UK. See Wikipedia for life expectancy and infant mortality.

How does Singapore do it? While this complex issue is beyond the scope of this article, one key to Singapore's success at providing good healthcare at low cost to the taxpayer and the patient is to adhere to the dictum, "There is no free lunch".

Healthcare in Singapore is not free although the poorest people are subsidized up to 80% of health care costs. Once you give free health care, costs will balloon as patients demand the state to provide everything. Then you need to ration health services. There are horror stories in the UK where patients have to wait up to one year before an operation. By that time, you could be dead. This does not happen in Singapore even for the poorest patients.

So its possible to improve health care without increasing costs but ObamaCare is not the way to do it.