CMU professor: Obamacare not right prescription
By Jack Markowitz
Published: Sunday, April 15, 2012, 6:37 p.m.
Medical care in the United States is so good -- and so frustrating. It costs far more than any other health system in the world -- a sixth of the economy -- with results not nearly in keeping.
Allan H. Meltzer suggests some reasons. Almost half of Americans' health spending is in the last six months of life, where investments in youth would pay off better. Old and sick, we are kept going pathetically with facilities, methods and technology that are anything but low-priced. Anything but life-enhancing, too, in many cases.
We reward medical specialists far out of proportion to general practitioners who so often make more difference, and earlier. Thank government price controls for this: the reimbursements of Medicare and Medicaid.
Result: health care reform is badly needed. But Obamacare "doesn't solve the basic problem," says the oft-quoted Meltzer.
The longtime professor of political economy at Carnegie Mellon University and historian of the Federal Reserve has issued a new book for everyday readers, "Why Capitalism?" (Oxford University Press, 154 pages, $21.95.)
He wrote it, he says, because people have taken to predicting the "end" or the "death" of capitalism, because it falls short of perfection. Its virtue is unique, though: the only system "consistent with the freedom of individuals to develop their ideas," Meltzer told a meeting of alumni of CMU's Tepper School of Business.
Inequality of incomes is often held up as its worst sin. Only high taxes can extract a "fair share" out of the greedy rich. But, in fact, says Meltzer, super-earners tend to be people of "unusual skills" -- rock stars, athletes, heads of corporations that operate in 100 countries.
Plus, the recipients of capital gains from investments. Tax too much away and such folks get out the travel folders. "Where it's costly to live," said Meltzer, "they leave."
Real health care reform, he said, would provide insurance choices like those already enjoyed by government workers -- and CMU employees. Subsidize the poor, yes, yet they should pay something.
But Obamacare's "mandate" to force coverage is no way to go (and likely unconstitutional). Co-payments could be designed for elderly patients and their families to "make a judgment" whether life-extending measures are worth it in all cases. As to government "death panels" -- no way.
With 30 million more patients to insure -- and a shortage of family docs as it is -- Meltzer asked an eminent Pittsburgh physician how the system can hope to provide even more primary care. Answer: "with trained nurses."
And what about capitalism's other recent failure: the bailouts of banks "too big to fail?"
Fix that, said the CMU prof, with a banking rule requiring a high capital ratio -- say 15 to 20 percent of assets -- not 6 percent. A bank's failure would fall on the risk-takers, not taxpayers. "Capitalism without failure," he said, "is like religion without sin."
On the other hand, "in the United States we're losing the rule of law and replacing it with the rule of regulation," he said. "The rule of law made us a great country. We don't want to lose that."
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