Unless you’re the most die-hard clinger to Obama’s legacy, the consensus is Obamacare was an unqualified failure. The only question now is what to do about it. The Republicans have put forth their plan, at least the first phase of it. The awkwardly-named American Health Care Act got low scores from the Congressional Budget Office. Of course, this is the same CBO the projected Obamacare would cost less than half this year what it actually does.
Obamacare needs to be replaced. What do we replace it with? Here’s a novel idea. How about the free market?
That’s not meant to be flippant. The free market lowers cost in every other imaginable sector. Cars are cheaper because of competition. Groceries are cheaper because of competition. So are clothes and houses. All of these are arguably bigger necessities than health insurance. Notice I said health insurance and not health care. There’s a big difference.
Healthcare is what we need when we’re sick or injured. Most of us—the vast majority of us—don’t need that on a daily basis. What we do need is transportation, shelter, food, and clothing. Only the most ardent socialists would argue that the government needs to provide those for us. Only the most ardent communist would argue that the free market hasn’t brought the cost of those necessities down.
So, why can’t the Republicans quite trust the market?
Good question. I suspect it’s the same Republicans who talked about how great capitalism was then bailed out the banks and the auto industry. These people are called Keynesians. That is, they subscribe to the economic theories of British economist John Maynard Keynes. Keynes believed the free market was great until it didn’t work, and then you needed the government to come in and bail it out. The free market is always preferable to government intervention.
What the Republicans all need to understand is the problem with health insurance isn’t all the government’s fault. Somewhere along the line the patient was disconnected from the product. HMOs are largely to blame for that. We became accustomed to paying a $10 or $15 co-pay for an all-you-can-eat buffet of health services. The result was higher healthcare costs.
Let me put the cookies on the low shelf. Let’s say you were able to drive into the dealership and get an oil change and pay a $10 co-pay. Who pays the other $40 or so? What if you could buy a new set of tires and pay a $10 co-pay? The last time I bought tires they were around a grand for a set of four. Who pays the other $990? The short answer is you do. It wouldn’t be long before your auto insurance went through the roof.
We were on the right track with health insurance. The market was moving us to higher deductibles and lower premiums. That’s basically where health insurance started. Remember? It was called ‘major medical’ or ‘hospitalization.’ Instead of paying for every oil change and new tire it paid for the big things, like a major accident. And healthcare was reasonably affordable.
Now we have an even better tool called HSAs, Health Savings Accounts. You can use pre-taxed dollars to save for that ‘major medical’ expense. The problem with Obamacare was not only did the deductible skyrocket, so did the premium.
The market would fix that. Let insurance companies do business across state lines, just like auto insurance. Let the market drive down the high cost of health insurance. Then we’ll worry about those who can’t afford it.