Sunday, March 1, 2009

The President As Investment Adviser Suggests Health Care

NATIONAL HEALTH CARE: Follow the metaphors.

President Obama is a gifted writer and chooses his words carefully. During the campaign when he tended toward the complex, supporters said he was “nuanced.” Paying attention to his choice of metaphor and the nuances of his words makes his message quite clear. Take health care as an example.

The President in his state of the union address used the word investment almost a dozen times. Before, during, and since that address he has often referred to $634 billion for health care as a down payment. He asks us to believe, in other words, that he will take from us some $634 billion as our investment manager and use it as the down payment on a health care system.

Let us put aside the fact that 47% of the country did not choose Mr. Obama to manage their investments, and that almost certainly the 53% who voted for him to be President, were not voting for him to manage their investments. Since he is going to invest for us, I pose two questions.

First, if $634 billion is the down payment on our investment, what is the total cost of this business? He is not saying. Are we prudent investors to hand over $1,800 for every man, woman, and child in this country as a down payment that obligates us to entirely unknown future costs?

Second, what is the nature of this health care business our investment manager wants us to get into? Ultimately, he and advisers have told us many times, it is a national health care system run by government. In other words, the government would create an HMO (Health Maintenance Organization) with a monopoly on service and whose board of directors are several hundred politicians who know little about medical care or even biology and almost as little about business and investing. Their management team will be tens of thousands of anonymous bureaucrats. Many will be chosen not for expertise but for political connections. Most will be almost impossible to fire, no matter how incompetent.

Fortunately we already have some data to evaluate how prudent this investment might be. The government through Medicare, Medicaid, the VA, SCHIP, and other programs already owns 47% of the medical care business. Costs have risen much faster than inflation. Medicare operates its hospital insurance in the red. While most businesses can and do cut costs to break even, the costs of running the government’s share of health care have risen steadily over 40 years.

President Obama is admirably clear in how he is going to manage our money and what he will do with it. What is not at all clear is how many Americans of any party would willingly give their money manager the green light on such an open ended investment.

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