Obama's Healthcare Game

Given my usual warning, I don’t want to discuss politics in my writings for two reasons: it bores me to death and I’ll upset 55% of my readers. But an investor cannot ignore politics especially today. What happens in Washington doesn’t stay in Washington.

In his healthcare proposal President Obama is using a tactic described in behavioral finance as anchoring. Here’s a real life example from my married life. Let’s say I buy an expensive toy (usually a geeky one like an electronic gadget) for $300. My wife will ask me how much it is, and I’ll respond with $600. With a stunned look on her face, her reaction is typically “You paid $600 for this?” I then come back with, “What would you say if it was $300?”

Her answer is usually something like “Ok, that would be a good price,” and I’ll finally admit I lied and that it is $300. She’s not upset with me anymore and everyone wins. I anchored her at the higher price ($600) and then the lower ($300) now seems like a bargain.

Mr. President is doing the same thing. He asked in his healthcare bill a lot more than he knows he could possibly receive. So, any time he is giving up something, like insurance companies’ right to exist, he is “compromising” and Republicans and taxpayers claim a small victory. This is important. The President knows he won’t receive everything he asked for. He knows that the public option (a government insurance competitor - an oxymoron if ask me) was a “no go” from very beginning. And thus he’ll “compromise” it away with cooperatives.

As dust around the healthcare bill begins to settle, we are seeing hints that health insurance companies will not be euthanized and in the worst case, they may have to compete with cooperatives. Let me tell you this. As a guy who spent half of his life in Russia and has seen cooperatives, this is an antonym to competition. I have yet to meet a person who adores his HMO, but for-profit HMOs are a better evil and more importantly, more efficient than not-for-profit cooperatives. I am buying HMO stocks.

Comments

[Michael Clark:]

One thing I admire about us Americans is that we desire to lead, we think we can lead, and we think we should lead. But we need to also recognize when we are trailing everyone else. In healthcare, we are trailing. We pay more than any other wealthy nation for healthcare. It is not clear that we get more bang for the money. We die sooner than the Japanese, the Taiwanese, the French...and they all have government-sponsored healthcare. Republicans fight this die-hard battle against government-involvement in healthcare without really evaluating their position -- because it is based on faith, not knowledge. If we asked Republicans if they would rather have an effective government-sponosored healthcare or an ineffective (expensive) private system of healthcare, I'm sure the majority would opt for the ineffective private model, ignoring the word 'effective' and focusing only on the words 'private' and 'public'. The private vs. public is THE religion they worship.

Expensive healthcare benefits are crippling American business. They are keeping American workers from salary increases, because the healthcare benefit is so expensive it is eating up all the options for increases in salaries.

Rugged individualism is a positive in American history, having helped to build a great nation -- but it has a HUGE shadow. American's stinginess toward the issue of providing medial care for its own family members, children, aged, men and women who have worked their entire lives supporting the American social system and way of life, is really appalling. If you can't pay for medical services, then die. That is also this rugged individualism mentality. If you are rich, then you deserve what you have; if you are poor, the the hell with you.

Be kind to the world. That is what makes a civilization great. Be generous to the world. There is only one pie in the world, and I'm going to get what's mine. That is the soulless view of the world. That's why we have so many prisons, mental institutions, broken families, alcoholics, drug addicts...the soulless, myself, alone, against the world does not build the great sanctuary.

If Taiwan, Japan, France, Norway, England, Canada...can all build a national healthcare system, imperfect of course -- all man-made institutions are imperfect -- then why can't America, being a leader by nature, build an even better one, one that is the envy of the world?

How to pay for it? Let the wealthy pay more taxes. America has given them much -- they can afford to pay some of it back. I don't hear Republicans screaming that we are paying too much taxes for military expenditure...so it is NOT taxation per se that is the issue. It's violence against the poor, the losers, the shadows, that make the Republicans so loathe a change in healthcare.

Over 60% of Americans in bankruptcy last year were because of health crises -- and insurance that did not pay for the crises. Our system is BROKEN. Let's not lie to ourselves and pretend that everything is ok. We have problems in America. There are things we are not doing well. We have children taking guns to school and shooting their teachers and classmates. Let's not pretend this is not happening. America is a great country. But that does not equate to everything being well. Let's not hide behind the flag, and use patriotism as an excuse for justifying mediocrity and corruption. Our current healthcare system is mediocre and corrupt. The insurance companies are corrupt. The doctors and the drug companies are selfish and corrupt. Healthcare is a huge bubble in America, and it needs to be broken and rebuilt. We can do it, because we are good at creating systems. The idea that we can just leave everything alone, the way it is, is a fallacy -- a lie, and a picture of moral stagnation.

There is nothing sacred about the current healthcare system that rewards doctors too much, rewards drug companies too much, and rewards insurance companies too much -- and penalizes everyone else.

Aug 19 06:16 AM

[Roger Knights:]

"... and penalizes everyone else."

Except lawyers.

Aug 19 07:23 AM

[Leftfield:]

Why does Obama, like Hillary, need to "anchor" their side of the debate to a collectivist government alternative in the first place? Why must Americans now choose such a lousy plan or the present corporate oppression or nothing?
This was the land of private markets. You know, where there is individual choice and responsibility. Which once gave us the wealthiest society ever with the largest, most prosperous middle class. What has happened to our system?

Aug 19 08:09 AM

[whisperonth...:]

Exactly what we need - another lying president. We're not digging out of this mess until we realize that the government can't protect us from ourselves, no matter how hard they try. You may try to call it anchoring, but the rest of us still see it as lying. And if you think your wife really fell for that $300/$600 garbage, I feel sorry for you, because my guess is that she's been playing that game with you for far longer. I'd bet she also has a 'cash stash' someplace that you don't know about.

Aug 19 11:37 AM

[User 362998:]

So...to echo Leftfield's point, I have yet to hear any clear explanation as to why we would be better off if the government runs healthcare. There is much commentatry about the evils of insurance companies, but no clear discussion of why the benefits of a government run system will outweight the significant (and fairly clear) problems.

I've found it to be a bit like asking a supporter of our current president what they like about his policies....the discussion typically shifts (and quickly) to a litany of what they didn't like about GWB.

Aug 19 01:06 PM

[Pat C:]

Include me in your 55%.

Aug 19 02:47 PM

[Old Trader:]

It should come as no surprise that Obama is a skilled negotiator...he's a lawyer, and a Chicago politician, to boot.

Aug 19 07:16 PM

[realold:]

You left out your best possible example: The Soviet Union. When someone in Canada needs a very difficult operation with the best of care, where do they go?

I


On Aug 19 06:16 AM Michael Clark wrote:

> One thing I admire about us Americans is that we desire to lead,
> we think we can lead, and we think we should lead. But we need to
> also recognize when we are trailing everyone else. In healthcare,
> we are trailing. We pay more than any other wealthy nation for healthcare.
> It is not clear that we get more bang for the money. We die sooner
> than the Japanese, the Taiwanese, the French...and they all have
> government-sponsored healthcare. Republicans fight this die-hard
> battle against government-involvement in healthcare without really
> evaluating their position -- because it is based on faith, not knowledge.
> If we asked Republicans if they would rather have an effective government-sponosored
> healthcare or an ineffective (expensive) private system of healthcare,
> I'm sure the majority would opt for the ineffective private model,
> ignoring the word 'effective' and focusing only on the words 'private'
> and 'public'. The private vs. public is THE religion they worship.
>
>
> Expensive healthcare benefits are crippling American business. They
> are keeping American workers from salary increases, because the healthcare
> benefit is so expensive it is eating up all the options for increases
> in salaries.
>
> Rugged individualism is a positive in American history, having helped
> to build a great nation -- but it has a HUGE shadow. American's stinginess
> toward the issue of providing medial care for its own family members,
> children, aged, men and women who have worked their entire lives
> supporting the American social system and way of life, is really
> appalling. If you can't pay for medical services, then die. That
> is also this rugged individualism mentality. If you are rich, then
> you deserve what you have; if you are poor, the the hell with you.
>
>
> Be kind to the world. That is what makes a civilization great. Be
> generous to the world. There is only one pie in the world, and I'm
> going to get what's mine. That is the soulless view of the world.
> That's why we have so many prisons, mental institutions, broken families,
> alcoholics, drug addicts...the soulless, myself, alone, against the
> world does not build the great sanctuary.
>
> If Taiwan, Japan, France, Norway, England, Canada...can all build
> a national healthcare system, imperfect of course -- all man-made
> institutions are imperfect -- then why can't America, being a leader
> by nature, build an even better one, one that is the envy of the
> world?
>
> How to pay for it? Let the wealthy pay more taxes. America has given
> them much -- they can afford to pay some of it back. I don't hear
> Republicans screaming that we are paying too much taxes for military
> expenditure...so it is NOT taxation per se that is the issue. It's
> violence against the poor, the losers, the shadows, that make the
> Republicans so loathe a change in healthcare.
>
> Over 60% of Americans in bankruptcy last year were because of health
> crises -- and insurance that did not pay for the crises. Our system
> is BROKEN. Let's not lie to ourselves and pretend that everything
> is ok. We have problems in America. There are things we are not doing
> well. We have children taking guns to school and shooting their teachers
> and classmates. Let's not pretend this is not happening. America
> is a great country. But that does not equate to everything being
> well. Let's not hide behind the flag, and use patriotism as an excuse
> for justifying mediocrity and corruption. Our current healthcare
> system is mediocre and corrupt. The insurance companies are corrupt.
> The doctors and the drug companies are selfish and corrupt. Healthcare
> is a huge bubble in America, and it needs to be broken and rebuilt.
> We can do it, because we are good at creating systems. The idea that
> we can just leave everything alone, the way it is, is a fallacy --
> a lie, and a picture of moral stagnation.
>
> There is nothing sacred about the current healthcare system that
> rewards doctors too much, rewards drug companies too much, and rewards
> insurance companies too much -- and penalizes everyone else.

Aug 20 12:06 AM