More economic thoughts

More economic thoughts

It is difficult staying focused.

What is the Democratic message?  We know the Republican message.  What is the goal?

Representative Henry Waxman was featured on the on The daily Show with Jon Stewart last night.  He was asked a simple question — what is the plan?  What is the goal?  A series of litanies followed without a crisp,  definitive answer.

Initially it was about covering 40+ million Americans who are currently uninsured.  But the nagging question, how this will be funded, shifted the focus.  More discussion follows.  Cost cutting.  Cutting waste, fraud and abuse.  All the old litanies.

The latest focus is insurance reform.  But what does this mean?  Insurance has become a club membership.  It has become an entry ticket.  Health insurance is the only Insurance you will ever purchase that you want to immediately pay off.  No other insurance  — life insurance, auto insurance, homeowners insurance, renters insurance — presupposes an immediate payoff.

Insurance reform should be a shared experience.  Insurance is a house bet against catastrophic loss.  There was a bill 10 to 15 years ago, that failed to pass, to cover every American for catastrophic loss.  That is where we should have started.  A simple thesis — cover everyone for catastrophic loss.  Four days in a hospital easily $40-50,000.   A mildly complicated appendicitis — easily $60,000.   A complicated heart attack could be $250,000.  This is what insurance should cover.

Insurance is seen as another entitlement.  We all expect insurance to pay for all our medications and other ancillary medical costs.

Insurance is subsidizing the cost of medications and drugs.

Augmentin, an antibiotic that is long ago off-patent, should be cheap but could cost you $125 if you pay cash.  It should be $25-30.  There are numerous other examples.  Diflucan, drug that is used to treat Candida (a yeast infection) could cost $300 per month.  Yikes.  Absolutely outrageous.  Even the generic form of Diflucan could cost between $90-100.  Why?  Insurance is subsidizing the cost of medications.  Absence of free market forces — or cost controls.

A typical chemotherapy session might cost you $1800-$2000.  But you are shielded from these costs because insurance pays the bill.  If insurance paid for absolutely no medications, severe pain would follow for about three to four months and then the price of drugs would plummet just like $5.00 gas caused temporary pain only to plummet within a few months.  There are no market forces controlling the cost of drugs.   And there are no cost controls as there are in most other countries.  So we have the worst of both worlds.

This is but one example of the rising cost of medical care.  A simple illustration.

There was a superb discussion in the Diane Rehm show on Monday between voice of the “left” and “right” — terms that are becoming obsolete.   What is the face of capitalism?   What is the future shape of our economy?  Our economic system?   Why is this important?   Because this entire health reform debate is framed in economic terms.  We have detailed previously – this is not the answer.   But listen to this excellent discussion with some of the Nation’s most gifted writers and thinkers:

Kevin Phillips, political and economic commentator. His most recent book is titled: “Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism”

William Greider, national affairs correspondent for “The Nation” His most recent book is titled “Come Home, America”

Peter Wallison, Arthur F. Burns fellow in financial policy studies at the American Enterprise Institute; served as general counsel of the U.S. Treasury department in the Reagan Administration

Some economists say the current financial crisis has exposed serious flaws in the U.S. version of capitalism: Why some believe we may be headed toward a more regulated, European style economic model.

stay tuned …

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