Obama, Political Hack

During the campaign for the Democratic nomination last year, President Obama rejected Hillary Clinton's call for mandated health insurance. He claimed it wasn't needed, that if health insurance were more affordable, people would buy it. During the presidential camapagn against John McCain, President Obama called McCain's call for removing the tax advantage of employer provided health insurance a tax hike.

Now President Obama has embraced both ideas in the space of two days (via the NYT):

One day after signaling a fresh willingness to consider taxing employer-sponsored health insurance, President Obama indicated yesterday a new openness toward a nationwide requirement that every American have health coverage.

I think the basic premise of Democratic plans to reform health care is false. They claim that we can cover everyone and reduce the cost, but that claim makes one wonder whether anyone on the left side of the aisle passed Econ 101. Quite simply, you cannot increase the demand for a product or service without a corresponding increase the supply of the product/service and expect to see a reduction in cost. All of the plans to talked about to date will increase the demand for healthcare and do nothing to expand the supply. It seems to me, based on my understanding of supply/demand theory, that this has to cause an increase in price.

Until someone devises a plan to address the supply side of the equation, all claims of cost reductions are either fantasy or an implicit call for price controls (which would exacerbate the supply situation). The only other option is to reduce demand through rationing of some sort. I don't think that's what most people who voted for Obama had in mind.

President Obama ran as a different kind of politician. He's not. He's just like every other career politician of either party. He said what he needed to say to get elected and now he's backtracking. I'm not surprised, but I wonder how all those independents and quasi Republicans who voted for him feel.

Why Drug Companies Want Health Care Reform

Why would representatives (lobbyist) of the healthcare industry join President Obama in trying to pass health care reform? The usual reason - money. From the Washington Examiner:

To understand why the medical-industrial complex backs Obama’s reform, just read the executives’ words. Simply put, health care reform — if it’s the right blend of Obama’s plan and Sen. Ted Kennedy’s plan — will increase profits for health care giants while diminishing competition.

The insurers’ interest here is obvious: Half their business is reducing health care costs. Plus, Kennedy’s plan would mandate everyone maintain health insurance.

The drug makers’ angle was spelled out last month by David Brennan, chief executive officer of AstraZeneca and newly elected chairman of the Pharmaceutical Research and Manufacturers of America, the No. 2 lobbying organization in the country as measured by first-quarter spending this year.

At PhRMA’s annual conference, Brennan uttered the magic words of a corporate executive looking for a handout and beneficial regulation: “I’m an advocate of free-market-based health care solutions. But within that framework, I support appropriate government efforts to protect people whose health care needs aren’t met by the private marketplace.”

Specifically, PhRMA wants a government mandate that insurers cover prescriptions. Also, the biggest drug makers currently subsidize the prescriptions of poorer customers, and health care reform provides an opportunity to shift the subsidy costs onto the government and the insurers.

“Quite frankly, Americans deserve co-pay reform,” Brennan said. Translation: Government should regulate insurers in a way that subsidizes prescription drugs.

Brennan also bragged about the industry’s recent lobbying for big government, notably its central role in passing both the State Children’s Health Insurance Program and George W. Bush’s Medicare prescription drug coverage.

Big Business + Big Government = Big Money for Both = Empty wallet for Taxpayers