Health Care Reform and the Definition of Insanity

President Obama says he is going to "fix" health care. This, according to Fortune's Shawn Tully, means mandating "rich, standard packages of benefits," which are "far more expensive than anything most people would pay for with their own money," for all Americans. Although Obama's health-care plan is estimated to cost more than $200 billion a year by 2019, Tully states that the President promises that his plan won't drive the country deeper into debt because "it will be entirely paid for by "tax increases."

An additional $200 billion a year will be raised through tax increases?

Anyway. Certainly the cost of health care reform is a serious and complicated matter. But, as seen most recently in Obama's home state of Hawaii, there's another issue that should be on the political radar screen: the bird feeder effect and how it red-flags Obamacare with the definition of insanity.

The bird feeder effect

The garden-variety birdfeeder provides an important object lesson. As every backyard enthusiast knows, there is one primary way to attract birds to a habitat: free food. Provide free food, especially on a regular and reliable basis, and before long, more and more birds will frequent the area. Keep up the steady supply of free food and the birds begin building their nests nearby. This puts them closer to the source of free food. And, when the baby birds come along, the next generation grows up to be content with free food.

Of course, birds always have a God-given ability to hunt and peck for their own food, which may even be naturally abundant in the area around the birdfeeders. Nevertheless, even as the seeds of the pincushion flowers are naturally there for the taking, the siren call of free food at the birdfeeder trough seems largely irresistible.

In this respect, humans are no different than finches. Offer them free stuff and, most likely, they will line up to take it. Offer them free health insurance and they will line up to take that, too. In fact, to get the free stuff, many of them will drop their private, not-free policies as fast as birds drops poo.

In the end, therefore, offering free health insurance actually increases the number of "uninsured." This increases the number of people who then "need" free insurance. Which increases costs. Yet, except for media-buried analysis by the Congressional Budget Office, this clearly predictable and fiscally lethal phenomenon gets scant attention in the health care debate.

Congressional Budget Office analysis of proposed health care reform legislation

The Congressional Budget Office recently analyzed the proposed health care legislation sponsored by Senators Ted Kennedy (D-MA) and Chris Dodd (D-CT). Not surprisingly, the CBO found a huge birdfeeder effect. According to William Murchison, writing at RealClearPolitics, if the Kennedy-Dodd plan were imposed, "the CBO calculates that 15 million Americans would exit their private plans" and "coverage from other sources would fall by (an additional) 8 million." So, according to the CBO, right off the bat, at least 23 million people who were insured privately would chuck that coverage for the free stuff, if the Democrats' health care plan becomes law.

Aloha All Over Again

Apologies to Dave Barry, but the CBO is NOT MAKING THIS UP. In fact, for one of the latest in a long line of historical examples, one need look no further than Hawaii's 2007-08 universal health care debacle. In 2007, Hawaii implemented a universal child health insurance program, call the Keiki (Child) Care Plan. Only seven months later, the program was yanked. Why?

According to the New York Post, Hawaii state officials quickly found "that families were dropping private coverage to enroll their children in the plan. 'People who were already able to afford health care began to stop paying for it so they could get it for free,' said Dr. Kenny Fink of Hawaii's Department of Human Services." In fact, the Post continues, "85 percent of the children in Keiki Care previously had been covered under a private, nonprofit plan that costs $55 a month."

The phenomenon of dumping private insurance to get free insurance from the government is so predictable that analysts even have a name for it: "crowd-out." The New York Post notes that "MIT economist Jonathan Gruber says his studies 'clearly show that crowd-out is significant' --- on the order of 60 percent." In other words, government-provided health insurance for children "replaces private health insurance 60 percent of the time, and the rate will be greater if we extend eligibility to higher-income families."

Massachusetts, Wisconsin, Pennsylvania, Illinois, California---like Hawaii, each of these states attempted universal health care, only to find that the "universe" of recipients kept expanding. Hello.

The definition of insanity

It's often said that the definition of insanity is doing the same thing over and over, expecting a different result. Never mind looking around the world, several of these United States have tried and failed to escape the known and predicted "crowd-out" effect (otherwise known as the birdfeeder effect).

The Congressional Budget Office warns of the crowd-out effect. Yet pols proceed as if they can erect as many birdfeeders as they want and that won't affect the number of mouths they must plan to feed. They blithely cite numbers of "uninsured" as if people are born that way and have no ability whatsoever to decide between paying their way or stampeding to accept government give-aways.

It's insane to think that the federal government can accomplish a different result than the government of Hawaii, or of Massachusetts, Wisconsin, Pennsylvania, Illinois or California. Or maybe the administration's hellbent surge to repeat what has only failed before is not insane, but, from the socialist point of view, ingenious.

Indeed, Obamacare makes a perfect set-piece operation. First, bring on the birdfeeder effect. Then, unleash its efficient, fingerprint-free destruction of the private insurance industry. Finally, have big government at the ready to "fill the gap" by phasing in honest-to-Castonguay socialized medicine. Just don't expect a different result for American health care.

More B.A. Rogers: Surfer to Glenn Beck and Craig T. Nelson: How to Refuse to Pay Taxes and Still Live to Fight Another Day.

Sources:

Shawn Tully, "Four reasons why Obama's health plan is no bargain," CNN Money.

William Murchison, "Obama Tries to Skip the Details," RealClearPolitics.

Grace-Marie Turner, "Hawaii's Hard Health-Care Lesson," New York Post.

David Gratzer, "Canadian Health Care We So Envy Lies In Ruins, Its Architect Admits," Investor's Business Daily.