Obama Doesn’t Understand “Zero-Sum Game”

Obama was recently quoted, in a CNN story, as saying:

“That’s why I’ve said we’ve got to have health reform this year — to drive down costs and make health care affordable for American families, businesses and for our government,” said Obama.

If your goal is to “lower the costs for families, businesses and government”, en toto, then you are destined for failure.
Let’s say it costs $500 for an operation, and 1,000,000 people a year get it. That’s $500,000,000 a year in costs for that operation. Let’s assume for round numbers that the population of the US is 10,000,000 (this is not right, but we’ll use it as an example).
Now, in a pure-capitalist society, those 1,000,000 people all pay $500. The rest of the country pays nothing.
In a pure-socialist society, those 1,000,000 patients all pay nothing. The government pays $500,000,000 to the medical providers, and charges everyone in the country taxes totalling $50 per person. Actually more than that, probably about $100 per person, because the government infrastructure for billing, processing, collecting, and then paying out to programs all has to be accounted for.
But at the end of the day, the “total cost to the American people” hasn’t changed. In fact, it’s only gone up (from $500,000,000 to $1,000,000,000 because of government overhead).
So if you want MORE expensive healthcare for the country, … yeah, you should definitely sign up for Obama’s plan….

One thought on “Obama Doesn’t Understand “Zero-Sum Game”

  1. While in concept what you say above is true, but reforming health care is more complicated than that. For one thing, we have a tiered tax system, so 10,000,000 people pay an average of $50 each, but it divides out differently than that. For another, private health insurance carries as much if not more overhead as government insurance does… and if they don’t private health insurance is looking to turn a profit where the government would be looking to break even… but actually I do think it will cost the country MORE to socialize health care than the status quo. Not because of bloat, but because of the 1,000,000 people who NEED the $500 operation, right now (making numbers up, but the point is valid) only 250,000 have coverage or the means to pay for the operation, so 750,000 make due WITHOUT the operation. Or they have it because the hospital can’t refuse care, and then default on the payments, and we the taxpayer end up paying for it anyway.
    The issue comes down to, in real life terms, whether you think 10 year old Tommy should die of an untreated infection because he was born to a poor family who can’t afford proper health care, so that XYZ corp can post $0.01/share more in profit for Q1, and whether 12 year old Jane should have rotted out teeth because her parents companies don’t provide quality dental coverage, so that Joe Wealthy can bring home $10500 every two weeks instead of $10000 every two weeks. Republicans don’t like to talk about it in those terms, but that really is what it comes down to.
    Nationalizing health care may be a zero or negative sum game, but it’s downright shameful that a nation as advanced as the United States has large segments of the population who can’t get proper health care because they can’t afford it.
    Oh and by the way, one last point, in some cases you can “drive down costs” by being bigger. Not that I think our government is that skilled, but ask Wal-Mart suppliers what Wal-Mart can do to them in terms of driving down costs. I’m sure private health care and drug companies are scared to death of this sort of outcome, but it is there.

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