Laura Tyson has made a claim so ludicrous that it rivals her 2009 prediction, as the then-chair of President Obama’s Council of Economic Advisors, that if Congress passed Obama’s 2009 stimulus package unemployment wouldn’t rise above 8 percent. Of course, Congress did pass it and unemployment eventually hit 10 percent.
Her new claim, made in an opinion piece with Lenny Mendonca, former director of McKinsey & Co., is that the real legacy of Obamacare will be that it spurred innovation. “We think that [future historians] will focus on how ‘Obamacare’ encouraged a wave of innovation that gradually tamed the spiraling costs of a dysfunctional system, even as millions of previously excluded Americans gained access to health insurance.”
Where to start!?
Her examples of “innovation” were the requirement that doctors transition to electronic medical records—which actually was part of the stimulus package, not Obamacare—the growth of Accountable Care Organizations (ACOs), and the requirement to pay doctors and hospitals more if they practice medicine like the government dictates.
Tyson may live in the Ivory Tower of the University of California, Berkeley, but surely she still has access to news and policy reports that explain just how poorly those innovations have faired—especially the “meaningful use” of electronic medical records.
And, of course, Tyson claims the catalyst for her perceived innovations is government money—the Obama administration’s source for real economic growth. “The Centers for Medicare and Medicaid Services … has just announced its second round of grants—$665 million to 28 states, three territories and the District of Columbia—to encourage innovations in health-care delivery.”
In fact, the Obama administration has handed out billions of dollars to spur innovation. And when companies, including ACOs, take the cash and claim to have met their targets, the administration pats itself on the back and says “mission accomplished.”
To be fair, restrictive and punitive legislation can produce a type of innovation—just as American World War II POWs became very innovative when trying to survive under the punitive restrictions and limitations of the prison camps. And Obamacare is both restrictive and punitive.
But survival innovation is much less productive and efficient than free market innovation. Most economists understand that—except Laura Tyson.
January 13, 2015