Health Care Reform and Its Unintended Consequences

[digg-reddit-me]I said I was going to make a point of noting solid criticisms of the Obama administration by mainstream conservatives and right wingers.

Mona Charen of the National Review wrote a solid piece that didn’t resort to blatant falsehoods as far as I could tell that made a solid case against health care reform. Her basic point is that she doesn’t trust the Democrats:

Every single page [of the health care bill] proclaims something that is dubious — that the Democrats know what they are doing.

Rather than talking about death panels, she points out that electronic recordkeeping has overwhelmed doctors with information they are not used to having to sort through – and thus has made hospitals less efficient. (She cites no study, but it is certainly plausible that this would be a short term effect.) Preventive care, she explains, while probably saving lives could end up costing more – as “more and more of us are tested for more and more diseases.”

Her big point is that this health care reform is “brought to you by the same people” who brought you Medicare and Medicaid – and that the costs of these programs were vastly underestimated. As she points out:

In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost — $90 billion.

Long term forecasts of government spending – or really anything – are a fool’s game, and Charen is right to point this out. On a macroeconomic level, there are too many factors to take into account – and that’s not even counting “black swans” that change everything. In this case, the major factor causing the government health care costs to be so off was the explosion of health care inflation in the 1980s which has only gotten worse since. But it’s not clear that Medicare or Medicaid played any role in this – especially as their costs have been below that of private insurance.

Bill Clinton made a similar point to Charen’s yesterday in trying to make the case for why the health care reform should be passed:

There is no perfect bill because there are always unintended consequences…

Yet, Clinton maintained:

The worst thing to do is nothing.

As Steven Pearlstein writing for the Washington Post described the price of doing nothing (and was later echoed by Barack Obama):

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

This is the answer Democrats give to the sensible concerns of Charen and those like her: there inherent uncertainty in any attempt to change a macroeconomic trend, but given where we are headed if we do nothing, it’s worth trying.

The only other option is to give up.

This is exactly the sort of sensible criticism that – in my opinion – conservatives should be making. However, the answer should not be to do nothing, but to “tinker” instead of instituting massive top-down changes, and to adopt the measures that work after tinkering. For the most part, this is exactly the approach the current bills take – which is a testament to the fundamental insights of the conservative movement of the past few decades. To take into account this fundamental insight while promoting a liberal agenda is in fact the essence of Obama’s approach: It’s why 40% of the stimulus was tax cuts; it’s why the key health care reform is to create a market that allows individuals to make decisions based on information that is more transparent; it’s why the answer to global warming is a cap-and-trade program that decentralizes authority and whose main mechanism is a market. That this has been Obama’s approach is what has forced the right wing opposition to him to become so unhinged.