President Obama is a gifted orator, and beyond that, he is a smart guy with sensitive political antennae. He did a fine job in his big speech tonight of articulating some of what is wrong with the health care financing and delivery system in America, and he was correct to sense the need to step back and address, toward the end of his speech, not only the specific issue of health care but the broader issue of the role of government in society. There, he acknowledged that it is one of the strengths of America that it prizes self-reliance and rugged individualism and has a healthy skepticism of government. He acknowledged that "government could not and should not solve every problem." But he also said, "the danger of too much government is matched by the peril of too little."
And there is where I think his argument begins to break down. Mr. Obama painted a picture of abusive and monopolistic health insurance companies cutting off care to cancer victims in a drive to meet "Wall Street's relentless profit expectations." He also tried to portray health care as an area in which successive politicians had tried and failed to achieve reform, beginning his speech by saying it had been "nearly a century since Theodore Roosevelt first called for health care reform."
"I am not the first president to take up this cause, but I am determined to be the last," he said.
In fact, though, a series of presidents and state governments have achieved steady expansion of the government role in health care. As Mr. Obama recounted elsewhere, Medicare was created in 1965 and a prescription drug benefit was added in 2003. The State Children's Health Insurance Program was created in 1997 and expanded in 2009. Twenty-three states have patients' bills of rights. The Consolidated Omnibus Budget Reconciliation Act of 1986 required employers to allow former employees to continue their health insurance coverage at group rates. During the Bush administration, the total government share of health care spending in America grew to 45.3% in 2007 (the most recent year for which data are available from the federal govermment's Centers for Medicare and Medicaid Services), from 42.7% during 2000, the last year of the Clinton administration. Total federal, state, and local government health spending in America grew to $1,036 billion in 2007 from $597 billion in 2000. Mr. Obama apparently thinks the problem in health care is the peril of too little government. But it is just as possible to conclude that the problems with health care cost and delivery are examples of the danger of too much government. Even Mr. Obama conceded that Medicare and Medicaid are plagued by "waste and inefficiency," which raises the question of why he wants to expand federal authority over the rest of the health care system.
Mr. Obama made a nod or two in the speech to entrepreneurship, saying at one point, "If you strike out on your own and start a small business, you'll be able to get coverage."
But he seems also to be strangely out of touch at times with the realities of the business world. At one point, he said that failing to provide health insurance gives companies "an unfair advantage over their competitors." But companies compete to attract employees just as companies compete to lower costs. If a company doesn't offer health insurance coverage, it isn't going to be very successful in attracting and retaining highly skilled employees. Competition isn't always a race to the bottom. The problem with companies choosing not to cover workers is more one of cost-shifting to Medicaid and hospital charity care than one of unfair competition. If the company does offer health insurance, does that give the company an "unfair advantage" over its competitors in employee retention and recruitment?
At another point, Mr. Obama said the fact that in many states most of the health insurance market is "controlled by five or fewer companies" is evidence of a lack of competition. There are plenty of markets with five or fewer players that are plenty competitive. Think of Coke versus Pepsi, or Burger King versus McDonald's, or Democrats and Republicans, or Verizon, Sprint, T-Mobile, and ATT.
Mr. Obama decried "the usual Washington battles" and said "we can replace acrimony with civility." But he managed two cracks about the costs of "tax breaks for the wealthy" and the "Iraq and Afghanistan wars." Mightn't it erode support for the Afghanistan war Mr. Obama supposedly supports to lump it in with the Iraq war and the tax cuts for the rich he opposed?
Missing from the speech was any language at all praising the American health care system as it currently exists. Nothing about the miracle drugs developed by American pharmaceutical laboratories, nothing about the skills of surgeons or the caring of nurses or the magic of magnetic resonance imaging, nothing about progress and technology. Instead the picture was one of rapacious profit-driven insurance companies and expenses that threaten to bankrupt the country. For all of Mr. Obama's attempts to inspire and exhort – "The time for bickering is over…Now is the time to deliver on health care!" — the overall picture of America and its health care system that he painted in his talk is an oddly grim one.
That isn't to say that there aren't grim things about the system, particularly if you are uninsured, a taxpayer underwriting those soaring costs, a victim of a preventable medical error or infection, or a self-employed individual trying to purchase a policy for your family. Focusing on the problems helps motivate fixes for them. But there's a risk to the president's approach, too. When the president says Wall Street profits come at the expense of cancer victims, without any acknowledgement of how the profit motive and Wall Street financing also contribute to innovative cures, he's chipping away at Americans' faith in free-market capitalism, a system that, while it isn't perfect, has done an awful lot to contribute to good health.
Two other parts of the speech struck me as slightly off. The first is when Mr. Obama seemed proud to deny that his plan would insure illegal immigrants. "Not true," the president said. Later in the address he went on to speak of health care as a "moral issue" and one that involves "the character of our country' and "fundamental principles of social justice." If that is the case, how can Mr. Obama justify -- other than as a cold political justification -- denying health care to a cancer-stricken young Mexican girl? If it is wrong for an insurance company to deny a needy patient chemotherapy on the basis of maximizing Wall Street profits, isn't it just as wrong for the Obama administration to deny a needy patient chemotherapy on account of her immigration status?
The second was when Mr. Obama also seemed proud to deny that his plan would provide any government funding for abortion. Mr. Obama ran as a pro-choice candidate. The Democrats control both houses of Congress and the White House. If an abortion is necessary to save the health or life of a mother, why should funding for it be denied on the basis of religious or political beliefs of anti-abortion politicians? If it is wrong for an insurance company to deny a needy patient chemotherapy on the basis of maximizing Wall Street profits, isn't it just as wrong for the Obama administration to deny a needy patient an abortion on account of the political exigencies in Washington? At least, more explanation is needed from Mr. Obama as to why this particular medical procedure should be subject to special unfunded treatment. This isn't an argument by FutureOfCapitalism.com for government-funded abortions or for abortion, period, but just expressing the sense of this listener that that section of the speech was inconsistent or inadequate.