Obama's wonderful healthcare explained

I like it much better now, just like I love fannie and freddie and know they have no issues. (!!!)

(programmers will note that ! = not )

Barack Obama's health care Rx has dangerous side effects

By ROBERT GOLDBERG
Exclusive to nydailynews.com

Thursday, October 9th 2008, 6:19 AM

Barack Obama is claiming that John McCain wants to run health care like Republicans have been running Wall Street - implying that McCain would let greedy private companies take advantage of average Americans.

The ironic truth is this: Obama wants to run health care like Washington, and especially Democrats, have been running Fannie Mae and Freddie Mac. That's likely to have more troubling consequences for the health of Americans and their economy.

In simple terms, McCain's plan allows people to purchase health insurance across state lines. So a family in New Jersey that's currently spending $12,000 a year on insurance could instead purchase a policy from another state - where a similar policy might cost, say, $3,000. McCain also would give you a tax credit of up to $5,000 toward the purchase of your insurance and allow you to invest money for health care expenses in a tax free account.

These are the policies that Obama calls radical.

He should know better - but perhaps is compelled to make this political attack for two reasons. First, he wants to blame the current financial meltdown on banking deregulation McCain supported in 1999 (as did Joe Biden and most other Democrats). In fact, banks that took advantage of that deregulation by offering a wide range of financial products - such as Bank of America - are now picking up the pieces of the Bear Stearns of the world. So if deregulation is killing the financial sector, it is also saving it.

Second, the truth about Obama's vision for health care is this: He would create a market for health care much like Fannie Mae and Freddie Mac created a market for mortgages. We should fear that outcome.

In 1938, the federal government decided that Americans needed better access to mortgages, so it chartered Fannie Mae. In 1970, to provide competition in the secondary mortgage market, the government created Freddie Mac. Both functioned as private companies - but with implicit government backing, precious little oversight and highly preferential treatment overall.

As their influence grew, it was the government, not markets, that drove increasingly favorable mortgage terms. This year, Fannie and Freddie owned or guaranteed around half the country's mortgages. Government used that leverage to dictate who banks should lend to, regardless of risk. Banks then took huge bets with mortgages they were holding, "secure" in the knowledge that the government wouldn't let the mortgage market become worthless. The rest, as they say, is history.

Back to health care. Obama would create an agency known as the National Health Insurance Exchange, where Americans in need of insurance could purchase private coverage (at government-set prices) or buy into a new National Health Plan. Like Fannie Mae and Freddie Mac, these two components of Obama's plan would fundamentally distort the private market.

For instance, Obama's plan would mandate what's known in the insurance industry as "guaranteed issue" and "community rating." Guaranteed issue means that insurers can't deny coverage to someone who's already sick. Community rating means that insurers can't charge more based on an individual's expected risk. In other words, Obama's plan could perversely mean that people won't bother getting insurance until they need it.

Forcing insurers to cover patients regardless of risk and pre-existing illness is a lot like, well, leaning on banks to give mortgages to people with no income and troubling credit histories.

With the government dictating costs and forbidding insurers from being selective about how and who they insure, the private insurance market could well collapse.

If we do not learn the right lessons from the housing crisis, we could well repeat it - in a completely different sector of the economy.

Goldberg is vice president of the Center for Medicine in the Public Interest.