Obamacare is not the problem


At the inception of the Affordable Care Act, Republicans were very vocal against it, expressing many lofty and creative ideas, but did not produce any solid proposal that each of us could look at it, and then compare how my particular health situation would play in Obamacare and how it would be in the health care policy proposed by GOP. Six years later, they still do not have a plan. It is puzzling, as GOP politicians criticize Obamacare endlessly and try to repeal it repeatedly. They did not prepare any rock-solid, meticulous alternative because – it appears – that despite all the lofty talk about implementing market forces to lower the cost and enhance patients’ choices, in their understanding of the economy and politics, GOP elites do not differ much from their Democratic colleagues. In other words, if they went into the nuts and bolts of designing a well-functioning health care policy, they would not arrive with anything much different or much better than Obamacare.

When looking for a replacement of Obamacare, one needs to go back and analyze again the original problems that Obamacare tried to fix. About 16% of the population did not have any health insurance. As a nation, we spend on medical care 17% of our GDP, whereas it hovers around 10% in most other industrialized countries. However, despite spending more, in health factors such as life expectancy or infant deaths, we trail behind them. Also, there are huge discrepancies in access to quality health care. For example, an individual who failed society and ended up in prison has access to better health care than an individual following the American dream of working independently, who despite buying health insurance through his whole life, as soon as he encounters some serious health problem, would be priced out of the system expediently due to preexisting conditions.

When trying to find out why we had these problems and how we should resolve them, we should not look at health care. The answer is in the response to the fundamental question as to what America should be all about. It reaches back to the basic ideas of individuals’ freedom and small government, which led to establishing the United States of America in the first place.

In all other industrialized countries, to a lesser or greater degree, health care is a public service. The roots of this concept reach back almost 300 years to the times of the Enlightenment, when wise monarchs decided to treat their serfs better. Since then, this approach evolved into resolute governments taking care of many problems of their citizens, health care being one of the most important. The founders of the United States were inspired by the European Enlightenment, but they rejected the very idea of a good ruler taking care of his or her subjects. In 1776 the people of America decided that they would be better off by freeing themselves from the government handling their affairs. Applying this approach to the health care of today, it would mean that buying insurance, seeing doctors, staying in hospitals and buying medicine should be a matter of independent contracts between individuals needing and offering health care. The role of government should be only in securing that all parties involved would have equal protection from bad market players. In other words, health care should be handled the same way as the sale of other goods and services.

The obvious objection is that a doctor’s visit is not comparable to seeing a car mechanic; hence, the question arises whether the free market can provide an affordable, equal-quality health care. In the report heralding Obamacare, the President’s Council of Economic Advisers presented the shortcomings of our pre-Obamacare situation as a result of failures of the market system, and recommended more government programs. Republicans claimed that market-based solutions would be better. Taking the pro-market approach consequently would require telling Americans that the greed-driven doctors, clinics, hospitals and pharmaceutical industry would serve the public’s needs much better than when micromanaged by the government. Most of the GOP leaders do not believe that this could be done or cannot imagine how it could work. Those who can see this as a valid option have no courage to tell this straightforwardly to their constituents. The reason is simple: The free market does not have a good reputation in the U.S. today. I often hear that people support it as long as it is regulated; ergo, it is not free.

Returning to the diagnosis of the Council of Economic Advisers, the alternative opinion could be that the market forces did not work because they were already stifled by the yoke of government regulations. Consequently, the solution should be not in increased government involvement, but in the opposite, in loosening the government oversight.

Many may object, believing that this would never work. Not ignoring the need for a more complex response, let us focus here just on two aspects: the definition of health insurance and on preexisting conditions.

The lengthy text of the Affordable Care Act details the health insurance market but never defines what health insurance is. The reason is that gradually what is called health insurance had been mixed with health maintenance plans. Comparing it to a car, it is practical, and now legally required, to have car insurance to cover the cost of accidents. But most of us have not been buying maintenance plans that promise to pay for routine repairs. If health insurance had been defined, it would become obvious that it should cover only unpredictable medical needs when the cost exceeds a certain threshold. All other health care needs should be out-of-pocket expense. To secure the ability to pay when needed, people could buy separate health maintenance plans, or have Health Savings Accounts. Just by defining health insurance, one can change the paradigm of the whole health care industry.

Also, current insurance plans are sold for one year. A calendar year is a convenient term for the insurance companies’ accountants. It has no correlation with the human life cycle. In the free market environment no sane person would ever buy a health insurance policy lasting only one year. In its concept, a lifelong health insurance policy is akin to an annuity, a product that insurance companies already sell and for which they know how to calculate the risk. In the present political environment, no sane insurance company would offer lifelong health insurance, as this would mean an obligation that can last for 100 years when, at the whim of politicians, the calculations can change every election. Only with the government staying out of the health care industry, would people be able to buy lifelong health care policies. When selling lifelong health insurance, the insurer would be able to make the most money by collecting premiums from customers living healthily and for very long. Their greed would motivate them to assist us with the best ways to get what we all want, a long and healthy life.

Unfortunately, this is unlikely to happen soon. By the mainstream intellectual and political elites, the proponents of the free market are perceived as weirdos, having very little popular support. This is strange, considering that freedom is the most cherished American value. Somehow the connection was lost that the economic freedom, best manifesting itself in the free market, is the most important one, as it gives individuals financial independence from the government apparatus. After all, this is how America became great in the first place. It is worth noting that the man claiming to “make America great again” sees his role as an enlightened European monarch from the beginning of the 18th century, as someone not yet touched by the American ideas of 1776.

For Republicans attempting to replace Obamacare, the Affordable Care Act is not the problem. Americans’ love-hate relationship with the free market is.

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