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« Charisma en charitas: Marai's Eszter 18.3.06 [NL] | Main | A New piece in the Plame Puzzle »

Health Care Privatization: U.S. (2)

In my search for information on the consequences of privatization of health care, I found that Slate (26-02-2006) offered a good overview by Michael Kinsley, founding editor of the web review:

The hideous complexity of President Bush's prescription-drug program has reduced elderly Americans—and their children—to tears of bewildered frustration. The multiple options when you sign up, each with its own multiple ceilings and co-payments; the second round of red tape when you actually want to acquire some pills; the ludicrously complex and arbitrary standards of eligibility, which play a cruel and pointless game of hide-and-seek as they lurch up and down the graph paper like drunks: Suddenly a mystery is solved—so, this must be what he means by "compassionate conservatism."
The economist discusses here the overall costs of the programme, that vary from an estimated $737 billions to (now) $678bn. That is up from $400bn when the programme was first proposed. But what interests us here over all, is that the extra costs are almost entirely an extra benefit for drugs-companies. Kinsley continues:

What's shocking about this, more than the numbers (hundreds of billions of dollars are hard to fathom), is that Bush's drug benefit comes without even a theory about how it will be paid for. Even after nearly three decades of Republican abracadabranomics, this may be a first. A transparently phony theory at least pays tribute to the hypothesis that money doesn't grow on trees. Not even to bother coming up with a phony theory is an arrogant insult to democracy. It raises "because I said so" to a governing philosophy.

Indeed, there is nowhere a benefit to be seen: neither to sick people, nor to the national economy.


The classic Republican phony theory is, of course, supply-side economics. Every proposed tax cut from before Reagan until Bush's own has been defended on the grounds that it will pay for itself by stimulating new economic activity. This is a theory based more on faith than on evidence, but at least it's a theory.

Bush's other big attempt at a domestic initiative—Social Security privatization — came with a theory: Investing in stocks pays better than government bonds. So, you can close the looming gap between Social Security revenues and benefits—and even give the oldsters a bit extra—by letting folks invest for themselves at least part of what the government is now investing for them in those dismal bonds. The theory had a comically obvious flaw: How can society as a whole divert money from government bonds to private stocks as long as the government is still spending and borrowing as much as ever? But, at least, as I say, it was a theory. At least it paid us the compliment of obfuscation. Better to be duped than ignored. Bush's proposed Health Savings Accounts—as a way to cover the uninsured and restrain the rise in health costs—come with a theory that may even have some merit.

And Social security has not been reformed in the US, as we know. Bush campaigned for it in 2004 and 2005, but got no response. It is mostly forgotten now. The untransparency of the health care reform helped to get it through House and Senate, after the interests of pharmaceutical companies had been secured.

So, what is going on now? We can tel you: A big game of superbenefits to the pharmacos:

[..] pills are also a characteristic postindustrial product, like software or movies: They can cost billions to develop but can be mass distributed for practically nothing. Conventional supply-and-demand economics offers a compelling explanation of how an "invisible hand" sets the price and distribution of brooms or spaghetti sauce so that the benefit to society and individuals is maximized. But it has almost nothing to say about Fosomax or Windows or Brokeback Mountain. Conventional compassion, however sincere, is little guide to what you do about a lifesaving drug that costs $100,000 a year. And spraying government subsidies on the insurance industry and other big companies does not equal using the power of the free market to solve these problems.

The Dutch version of Bush medicare stands since 01-01-2006. Insurance companies are struggling to get exclusive contracts with hospitals and pharma-furnishers. The patient comes last. And the worst is still to come: elderly people (risky clients) being exiled from one company to another, higher contributions (12% rise announced for 2007)...

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