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Tuesday, November 25th, 2008

This tidbit from James Pethokoukis’s blog over as USN&WR makes me want to read Douthat’s and Salam’s new book:

Another interesting healthcare reform option is highlighted by Ross Douthat and Reihan Salam in the book Grand New Party. Uncle Sam would require individuals and families to put 15 percent of their income into health savings accounts. If you run out of money before year-end, the government steps in. If you don’t, you get the money back or it rolls over into a retirement account.

This idea seems to have promise – though without seeing the ancillary details, there are some glaring issues with it on process grounds, even as you can see the proposal working out ratehr well under most circumstances in the world. It seems to penalize those with families, by reducing their retirement funds; those without an income would not have to face the trade-off that seems essential to their system working – choosing between retirement savings and health care; and preventive medicine would seem to be discouraged, although it is seen by most wonks as the surest way to reduce overall health care costs. Why get a regular check-up if you’re depleting your retirement savings to do so?

The plan seems designed mainly to tackle two political problems – the lack of health insurance for many Americans; and the moral hazard of having unrestricted access to health care. It’s rather ingenious, even if I’m not sure that the second factor should be taken too seriously. People want to avoid going to the doctor – or at least I do. This policy almost seems designed to create a massive sociological experiment. Aside from short-term medical emergencies, people would be forced to create health care and retirement strategies that balanced their long-term financial needs with their short-term health care decisions. Should I get the botox, or save more for retirement? Should I schedule this regular check-up? Should I spend money on these various preventive steps and live longer – or save more so I can spend my fewer years in a splendid retirement?

I’m sure it’s worth checking out the book just to see what other ideas Salam and Douthat have to reinvigorate conservatism.

But for now, Obama’s plan – or some variation between the rather similar Clinton, Obama, and Edwards plans – is the right way to go. It’s the shortest route to improving our current mess.

The core problem we need to solve though isn’t that our health insurance system as currently instituted is flawed, but that health insurance as the primary means of dealing out health care is flawed. Politically, the Obama/Clinton/Edwards path of patching up the current system is the only feasible one at the moment – to improve the status quo marginally. But there are far too many perverse incentives – for health insurance companies, for patients, for doctors in a health insurance system.

Of course, James Pethokoukis has greater things on his mind than our rotten health care system. He seems to be concerned that if Obama is able to pass a program that actually gives substantial benefits to Americans, it will move America to the left. Which is why he has now declared that it is the responsibility of the Republicans to stop this idea or face destruction. After all – the average American hasn’t seen much improvement in their lives as a result of the government in a long time. His theory is, once a competent liberal is able to pass a plan that substantially improves a problem in the lives of many Americans, then people will abandon the anti-government rhetoric of the conservative movement and abandon the program of incessant and regressive tax cuts.

The fear of socialism lingers like a spectre.

So, Pethokoukis proposes Republicans do anything they can to stop “Obamacare,” in order to save themselves. His little speech reminds me of a football coach trying to psych his team up for the game. But he’s playing with fire.

In light of this market disaster, this financial earthquake, some necessary changes are required to be made to our grand social bargain. Free trade is a good thing – but it creates chaos in it’s wake. The financial crisis is just the latest symptom. Obamanomics is a pragmatic, liberal approach to treating the core disease – which is not free trade or globalization, but destabilization. Obamanomics does not ideologically prescribe government intervention as Reaganomics proscribed it. Rather, it is a series of pragmatic first steps. It does not have as it’s goal the creation of some Great Society as previous versions of liberalism did; and it also does not merely try to find a Third Way between the Left and Right as Clinton did.

The key factor in understanding Obamanomics is that it does not force it’s values in the hoped for end result, but instead in the processes of getting there. Rather than imagining a perfect world and attempting to bring America to this goal, Obamanomics tries to improve what is already here, especially by instituting processes that inherently reflect core values like transparency, accountability, fairness, a long-term strategic orientation, and an aversion to government coercion.

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