September 23, 2013

NYT piece on Obamacare starts from wrong

Via strata-sphere.
The New York Times had a piece yesterday talking about the inevitable trade-off on Obamacare.  The premise, that lower healthcare costs would mean less choice, shockingly admits that there is indeed a downside to the plan.  The real problem is that the NYT starts from a place that isn't based in reality.

I would applaud the NYT for pointing out a flaw in legislation they so vehemently supported in the past.  I would, if that were really the case.
 
They have another agenda though.
 
Trying to salvage a modicum of credibility on the subject perhaps, they make note of the following problem:

Federal officials often say that health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers.

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.

When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers.
Here's the problem with the problem they are supposedly pointing out: economics.

When you restrict the cost of something, you find fewer producers willing to produce that good or service. Why? Because there is less money to be made in providing that good or service to the marketplace. Yes, there will indeed be fewer choices and insurance companies won't have to restrict eligible doctors for inclusion in their coverage because the doctors who charge more will probably self-select out of the particular service. Dr. Smith will stop doing tonsillectomies because they don't pay him enough to do them. Regardless of whether insurance providers do it or doctors do it themselves, there will be fewer doctors doing certain (probably most) things.

When you combine that with adding millions to health care rolls, you have a supply and demand problem - less supply, more demand. That's what's called a shortage. In a natural situation when a shortage occurs, the market seeks equilibrium by driving the price upward until supply meets demand. If that cannot occur due to regulation, what ends up happening is the overworked suppliers cutting corners and the quality of supply (doctor visits and medical services) suffers. In other words, medical care gets worse as it gets spread too thin. How's that for an outcome?

Now doctors may who opted out may opt back in seeing the need for more medical services. But they will not do so with the same quality of service. Everything from cheaper tongue depressors to shorter examinations would result. In short, there is no way to make this work. Not as it stands.

But pointing out the flaws really isn't part of the NYT agenda. After all, they still support it. Fewer choices does not sound so terrible in light of the public sentiment for controlling cost and still providing more service to more people. The NYT couches its criticism in language that still appeals to these two incongruous objectives of covering more people and paying less. They will continue to do so if they can, until the realities of Obamacare explodes in the face of the nation.
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