Lindsey Graham’s Economic Illiteracy and Why It Dooms His Health Care Policy

by D.J. McGuire

As of this morning (the 25th), the Senior Senator from South Carolina is still pushing  for the woeful health care bill that bears his name. In his latest attempt to win over conservative critics, he exposes himself as being largely illiterate on the microeconomic reality behind health insurance and health care, providing yet another reason for Senators to vote down his bill.

As Graham, McConnell et al attempt to win over Republican holdouts in the center with constituent bribery (Washington Post), Graham himself tried his version of logic to win over Rand Paul. In response to his Kentucky colleague’s criticism that Graham-Cassidy (as the bill is known) largely download’s Obamacare to state capitals, Graham dropped this clanger (same link).

“Rand Paul objects to the taxes,” he said. “But when you look at the bill, Rand, we save a lot of money over time for Medicaid. We put a cap on Obamacare growth.”

With that statement, Graham revealed his economic ignorance. In his mind, less taxpayer money spent on insurance premium support and on insurance in general solves the problem. It doesn’t, not by a long shot. The prices for medical procedures – and their upward trajectory – are left untouched by this bill. Thus, one of the major reasons for higher insurance rates (if not the reason) is not addressed – and based upon Graham’s comment, was never even considered. Either Graham just assumes reducing Medicaid and Obamacare funding will reduce health care spending without resulting in less health care (or less health care quality); or he knows full well what will happen, but is uninterested in the impact. While most of my fellow Democrats will likely assume heartlessness as the default viewpoint of our political opponents, my quarter-century in the Republican Party tells me ignorance is the far more likely culprit. Of course, that wouldn’t make the effect and less painful.

Once again, we are seeing the effect of the health care “debate” in Washington, which has always ignored health care for the sake of health insurance. While the two are obviously closely linked, they are not the same thing. Democrats forget this when they assume expanding availability of insurance will automatically mean better care for all; Republicans forget this when they assume spending less on federal insurance support will have no effect on care.

In reality, someone needs to begin looking at how to create incentives that lead to more doctors, nurses, and health care facilities in this country. We can start by knocking down impediments (Certificate of Need regimes, restrictions on high-skilled immigration, medical tort reform, etc.). If we don’t, all the arguments about insurance will mean far, far, less than people think.

In the meantime, we cannot pretend that we can just reduce funding for Medicaid and premium supports while making incentives suddenly disappear. Economics doesn’t work that way.

D.J. McGuire is the conservative Democrat on More Perfect Union podcast – and sometimes feels like he is the lone conservative Democrat in the country.

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