Economists and Bloggers React to Obama's Heath Care Speech

Here's what some of the top economists and economics bloggers are saying about President Obama's heath care reform speech delivered yesterday to the House and Senate:

Megan McCardle, The Atlantic
So, the speech. Here's what we've got: Guaranteed issue. Community rating. Portability. Exchanges. Mandate. Deficit neutrality. The public option is negotiable. In other words, virtually nothing that we haven't heard before. The most powerful parts were the beginning and end, but I wonder how many people were watching by the end...However, I think the line he's taking is smart. Start over and do it on a bipartisan basis, which polls well. Don't add another layer of hard-to-understand bureaucracy. Don't break the budget. They're putting out a platform of modest, easy to understand reforms.

Paul Krugman, The New York Times
Will this [speech] do the trick? It's easy to be skeptical — how much difference can a speech make, anyway? But the big problem on health care these past few months has been the sense that Obama had lost control of the issue — that the shouters and cynics had taken over the debate. Now, finally, we have some leadership and clarity from the president. And maybe this is all it takes to turn the tide.

Ryan Avent,
Mr. Obama delivered a good speech, as he usually does. But I doubt he won over many converts. At least not in Congress, where the debate has become too polarized...Some of it sounded very Clintonesque—the setting up of markets where companies and individuals could buy insurance. Much of it sounded defensive, an attack on the many lies—let's call them what they are—that have been spread about the plans being considered. Some of it was surprising, like Mr. Obama's strong defense of the public option, which came shortly after the White House said he would not insist on it. But I don't think the state of the debate has changed. Most Republicans are still hell-bent on opposing reform. And the Democrats are still counting votes in the Senate.

James Surowiecki, The New Yorker
It's hard for me to see how the principles Obama laid out...can actually be meaningfully gamed, precisely because the requirements seem pretty black-and-white: community rating, out-of-pocket spending limits, requirements for the kinds of treatment that must be covered, and no rescission. Of course, the devil is in the details. But if we get something along these lines, coupled with an insurance exchange, it should make it much harder for insurance companies to compete by engaging in bad behavior, while creating an incentive for them to compete along the lines we want them to compete on: better customer service, better access to providers, and so on. I realize this will be a long way from a single-payer system (which from an economic point of view has always seemed to me the most sensible way to provide insurance). But I think it's a mistake to underestimate how much it would improve things.

Gerald F. Seib, The Wall Street Journal
To address middle America's cost concerns, [Obama] kept the price tag of expanding coverage to nearly all Americans at $900 billion over 10 years—plenty hefty, but lower than some other plans. And he proposed something new: a "fiscal trigger" that would require the administration to produce more spending cuts if medical expenses aren't being tamed. Meanwhile, for activists on the left wing of his party, who know how to beat the drums for action, the president said he still likes the "public option," or the government-run health-insurance alternative (even while suggesting he wouldn't fall on his sword to get it)...That mix of messages certainly was designed to shoot the narrow gap between right and left in Congress. But it also is structured to move through a similar opening for action in public opinion. That opening got narrower over the summer, but it didn't disappear.

Ed Yardeni, Dr. Ed's Morning Briefing
[In his speech], President Barack Obama tried hard to move toward the center on this controversial issue. In my opinion, he is still left of center...I didn't hate his speech because it includes most of the relatively noncontroversial talking points that might be a good place to start as a reasonable compromise...President Obama has been known to distance himself from liberal friends and liberal ideas when they no longer suit his needs. Last night, Mr. Obama indicated that he is willing to sacrifice the public option.

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