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Letter from America | 7
ObamaCare:
What’s The Story?
by Charles Lewis Sizemore, CFA
So, as a percentage of the overall economy, the
United States government already spends as
Chief Investment Officer,
much on health care as the UK and Canada. The
Sizemore Capital Management LLC
difference is that while the UK and Canada
manage to afford universal coverage on that
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budget, the United States covers only the elderly
and the poor. Meanwhile, the rest of the country
relies on private insurance or, in the case of
roughly 20% of Americans, on no health
insurance at all.
Referring again to Chart 1, private spending,
Medicare Part D, the prescription drug scheme paid by patients and insurance companies, more
T
he American political scene has for seniors, was the biggest expansion of the than doubles the total amount of health
been a bit more cantankerous federal government’s role in the health care spending in the United States to a combined
than usual these past few months. industry since Lyndon Baines Johnson’s original 15.3% of GDP – vastly more expensive than
In fact, it’s been downright hostile, creation of Medicare and Medicaid - that is, until anywhere else in the world. And as both
with congressmen and senators ObamaCare. statistical measures and casual observation attest,
being shouted down by angry This month, we’re going to take a look at the the average American is not any healthier than
constituents in their town hall meetings and the President’s plan and at the various arguments for the average European or Japanese citizen. (We
President himself – quite incredibly – being and against it. We’ll cut through the propaganda find it almost mind-boggling that Japan —
accused of sanctioning state-sponsored “death of both sides and will do our best to present the despite its enormous population of elderly
panels.” issue fairly. citizens — spends barely half what the United
The source of all of this controversy is, of States does relative to GDP.)
course, the Obama plan for health reform. To Obama’s Rationale So, it is understandable why Mr. Obama
Britons and Canadians, the health care question Many Americans fear that the President’s plan considers health reform a priority. The current
has already been answered. In order to make will push the country into a government- system is absolutely indefensible. There is no
health care universal, both countries opted for controlled, socialised
socialisation, as have many continental European medical system. But what Chart 1: Healthcare Spending as a % of GDP
countries. But the American response has been few seem to realise is that
considerably more muddled, reflecting certain we are essentially already
paradoxes in the American ethos. Americans there, at least by some
have a historical mistrust of the federal measures.
government and of large federal projects, The governments of
preferring instead to keep most power at the level Canada and the United
of the individual states. Large, centrally Kingdom spend 7.0% and
controlled programmes are seen as going against 7.3% of their respective
the American tradition of limited government GDPs on health care (See
and personal freedom and responsibility. Chart 1). The United
But this same country, which claims to fear States, via Medicare,
government meddling in the free market, has the Medicaid and other
two largest public health schemes in the world in smaller programs, also
Medicare and Medicaid – both of which got a lot spends 7% of GDP – 7%
bigger under the presidency of George W. Bush, of a considerably larger
who was at least nominally an advocate of GDP at that, it should be
market solutions. Mr. Bush’s addition of remembered.
www.investmentinternational.com September 2009 Investment International
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