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Washington Is Never Going to Get Healthcare 'Right'

Obamacare was bad, and its replacements look like a dog's breakfast.

Democrats need to get their story straight.

First they tell us the GOP replacement for the Affordable Care Act is going to doom Republicans at the polls. Democrats in Congress were so confident on the point they even taunted Republicans with the "hey-hey, goodbye" chant.

Then Barack Obama urged lawmakers to summon the "courage" not to repeal Obamacare in remarks he made after receiving the John F. Kennedy Profile in Courage Award.

"Courage does not always mean doing what is politically expedient," Obama said at the JFK Library Foundation, "but what they believe deep in their hearts is right."

That is certainly how political courage is usually defined. But wait a sec—if the GOP health-care bill is so widely reviled, and therefore so politically toxic, then Republicans showed much bravery in passing it. Since they're going to get trounced at the polls for doing so, they must be men of great conviction. Why didn't they get a prize for courage?

The Democrats are right, of course. Leave it to the GOP to foul up the repeal of an unpopular law so badly that Americans decide maybe they like it after all. For years a majority of Americans has opposed the ACA. Now a majority supports it and hates the replacements.

Little wonder, when the replacements look like such a dog's breakfast. The first version was described, accurately, as Obamacare Lite. The new version is not what anyone would consider a quantum improvement. As Reason magazine's Peter Suderman has explained well in The New York Times, it looks less like an attempt to put right all that is wrong with the American health care system and more like a hastily cobbled-together prerequisite for tax reform. By cutting $1 trillion in taxes over 10 years, the American Health Care Act lowers the revenue baseline, thereby meeting certain procedural conditions in the Senate. ("We can't get to tax reform until we do this," House Speaker Paul Ryan said at one point.)

Another factor in the unpopularity of the GOP proposal is the immediate Two Minutes Hate the press launched against it. To judge by the coverage, you would have thought that Obamacare had achieved the Platonic ideal of Pareto optimality by making millions of people much better off without making anyone worse off—and that the House bill would, therefore, make millions of people worse off without making anyone better off (except for rich people, who don't count).

You had to search long and hard to discover that 60 percent of small businesses still want Obamacare repealed. The employer mandate—which requires employers to provide insurance for workers—kicks in at 50 employees. Not surprisingly, a survey of more than 600 small businesses has found that a tenth of them have "reduced hiring in order to stay under the 50-employee ACA threshold for small employers." On top of that, the law adds an estimated $480 to $590 to the cost of each employee each year.

Obamacare also has been a raw deal for young people. As Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, points out: "Before Obamacare, premiums for older people were about five times as much as for younger people. But, under Obamacare, older people can be charged only three times as much as younger people. Since insurance companies could not lower premiums for the old, they raised premiums for the young." A lot.

Premiums are soaring for everyone, in fact. Before leaving office the Obama administration projected they would rise 22 percent to 25 percent this year alone. Gosh, it's almost as if artificially inflating demand by forcing people to buy a product and then giving them government subsidies to pay for it drives up prices.

And yet the state marketplaces set up by Obamacare are imploding; Aetna, which announced last week that it would leave Virginia's individual market, is only the latest in a long line of exits. Facing steep losses, Humana, United, and other insurers have pulled out of all or most of the state exchanges, often leaving consumers with only a single provider.

To be fair, Obamacare has done some good, e.g. by reducing the proportion of uninsured Americans to historic lows. But its gargantuan flaws seem to have been conveniently forgotten because the House GOP's replacement also has gargantuan flaws. So will the Senate bill, whenever it arrives. And so will every other proposal, because no reform ever addresses the root cause of what ails U.S. health care: The nearly universal demand for unlimited medical care, with the bill sent to somebody else through the political process.

Americans simply don't want to face the harsh reality that, like any other good or service, health care is finite and must be rationed. If it is not rationed through prices set by the marketplace, it will be rationed through rules set by the bureaucracy. At some point, one or the other is going to say no. And that's the one word nobody in politics is ever allowed to say.

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  • Longtobefree||

    Washington is never going to get anything 'right'. All we can hope for is for them to stop trying to 'get stuff right' that they have no business playing with. The constitution (attempted to) limits what the feds can do, because all those racist, sexist, old white guys knew what a mess it would be if things got out of hand.

  • Microaggressor||

    because no reform ever addresses the root cause of what ails U.S. health care: The nearly universal demand for unlimited medical care, with the bill sent to somebody else through the political process.

    And, you know, political constraints on the supply of health care.
    You artificially increase demand, without lifting the constraints on supply, you get higher prices. It's not rocket surgery.

    These higher prices are a de facto head tax on the middle class; the lower class gets subsidies (welfare) to conceal the burden, but if you're just above that threshold you're seriously shafted. You might call this a regressive tax that puts health care out of the reach of more people, working class people, due to unaffordable deductibles. The more the lefty media ignores the hardship caused by the higher prices, the more blood is on their hands. Replace the image of (R)s pushing grandma's wheelchair off a cliff with Obama pushing millennial skateboarders off a cliff, with a speech bubble that says "We're going to lower your premiums by an average of $2,500 a year".

  • JFree||

    You artificially increase demand, without lifting the constraints on supply, you get higher prices. It's not rocket surgery.

    Hunh?!? This increased demand has nothing to do with economics at ALL. There is no limit or constraint on the increased demand of 'everyone else pays for what I want'. Therefore, there is no possibility that 'increased supply' will do a damn thing re prices.

    And the reality is that increased demand is not really because of gummint - but because of insurance. Insurance itself has become the vehicle for everybody endeavors to live at the expense of everyone else. Even if insurance were totally private and 'free market', it would remain everybody endeavors to live at the expense of everyone else

  • BYODB||

    I don't think you understand insurance JFree.

  • JFree||

    Health insurance is not like any other.

    With life insurance, you buy a fixed benefit - and you don't get the benefit.
    With auto insurance, you don't get to repair a Porsche for the price of insuring a Hyundai (and most of it protects others from your actions anyway).
    With liability, you insure someone else from your own actions.

  • swampwiz||

    No, folks do not get "shafted". ObamaRomneyHeritageCare has a floor of premium cost that acts as an implicit tax that at most adds in about 15% (aside from some step functions that when smoothed out are less than this 15%) until folks fall off the cliff at 400% of poverty income. And a way to fix this is to NOT give a tax cut to the wealthy, but instead redirect general funds to make this implicit tax lower.

  • Rebel Scum||

    "Courage does not always mean doing what is politically expedient," Obama said at the JFK Library Foundation, "but what they believe deep in their hearts is right."

    Something something marriage something something man & woman...

    He's such a putz. And yet, people slurp up this bs.

  • Philadelphia Collins||

    "The Constitution doesn't guarantee the right to make a profit."

  • Radioactive||

    but congress can surely mandate a loss...

  • Adamsmith1776||

    The best thing for Republicans would be to have Democrats in the Senate block the GOP Plan. Preliminary filings with Virginia show fewer insurers and an increase in premiums of 20+% The death spiral is upon us, and the Solid Democratic opposition prevents movement, there will be hell to pay this December. if the GOP plan passes, then they get stuck with the death spiral, which is already in place.

  • Radioactive||

    Death Spiral...band name?

  • Griffin3||

    Album name, already done.

  • Citizen X - #6||

    "Architectis" has to be the least threatening metal band name since Okilly Dokilly.

  • swampwiz||

    You neglect that even with its warts, ObamaRomnerHeritageCare has more supporters than detractors. It took its possible repeal, with an assist from an atrocious replacement plan, to get that support, but it's here, and its supporters are extremely motivated to turn out in 2018. A lot of these new supporters were long term detractors that trusted that the Republicans would replace it with something marvelous and now feel betrayed.

  • Citizen X - #6||

    "Has been determined"? Hell, just try and stop 'em.

  • Chili Dogg||

    "To be fair, Obamacare has done some good, e.g. by reducing the proportion of uninsured Americans to historic lows."

    Yes, we have to congratulate Obamacare for forcing millions to buy something they didn't want. And don't forget, Mussolini made the trains run on time.

  • Chili Dogg||

    Is it OK to mention the 7 to 8 million who paid the penaltax because they chose not to buy HC insurance? And the penalty for their choice was brought to them by "pro-choice" politicians! The irony!

  • Restoring the Dream||

    Hinkle hits it on the head- health care spending is not outside the laws of economics, no matter how much anybody bitches.

    "Medical insurance" is much more closely related to a saving plan or a mortgage. Almost everyone will need it eventually, so the insurance model is incorrect. What's needed is catastrophe insurance from a young age, plus savings for eventual costs. You can put off the savings for a while, but then you need to finance a lump sum. Otherwise, you can't get the card that lets you get treated. You go to a charity place, or one that will finance you, or you croak. It's all up to you; the rules were made clear at the beginning. Charity can be depended on to provide for the truly poor; if you don't believe that, try studying some American history. If we were all free, there would be much less need for charity in the first place.

  • swampwiz||

    Folks won't accept relying on "charity". And the problem with saving up for eventual use is that what do folks who get the misfortune of having to spend their savings early? OOPS!

  • mortiscrum||

    Cracked.com had an article today about things to avoid doing when arguing. One of them was "don't make your entire argument insults/tear downs of another group/idea."

    I see an awful lot of that around healthcare. People love to attack the ACA, the ACHA, Medicare, Medicaid, etc., but rarely do I see any of these people attempt to come to grips with the issues of healthcare: everyone needs it, no one can afford it. Somehow, every other country of similar means has figured out a decent answer to this conundrum. America can't. It's puzzling to me.

  • NotAnotherSkippy||

    The vast majoritu can afford it because they get it through their employers. And do you consider the VA to be decent care? Because that's exactly what NHS and the canadians have. Got an urgent need in Canada? No problem, we'll just buffalo you or rochester you or seattle you...

  • Myk||

    The US has no waiting. Because my insurance isn't in COBRA since FMLA wasn't used up and the extension wasn't used up before surgery to get the job back was scheduled. It makes me feel good that although the rabble may end up killing me by denying care someday they will get sick, they will lose their jobs, they will go broke and they will end up in the same boat.

  • mortiscrum||

    Funny, many people on Reason have sited employer sponsored healthcare as one of the primary drivers of healthcare costs, and something that really needs to be changed for the system to improve.

    I'm not advocating for any system in particular. I'm saying that America is entirely unique in our management of healthcare, and what we spend is the primary metric that sets us apart.

  • swampwiz||

    Yes, all these other countries have figured out that Medicare-For-All in some form or another is what works. The reason we don't quite have the political will for it here is because of the historical accident of employer-provided coverage - ironically something that free-market supporters realize distorts the system because of its tax-free, 3rd-party payment aspect.

  • IceTrey||

    Because getting it right means not being involved with it at all.

  • CZmacure||

    Washington is never going to get anything 'right'. All we can hope for is for them to stop trying to 'get stuff right' that they have no business playing with. The constitution (attempted to) limits what the feds can do, because all those racist, sexist, old white guys knew what a mess it would be if things got out of hand.
    Sent from Honest Jvzoo Reviews and bonus

  • tlapp||

    All the problems the existed before Obamacare was passed will unfortunately be the best we will ever experience again. Government will never get their hands off the political power they grabbed with it's passage and the phony "repeal" bill doesn't relinquish one iota of that power back where it belongs, with the individual.

  • JFree||

    What does this even mean? I worship the free individual as much as anyone but I admit to being confused re health.

    Do you mean that the individual should be free to decide all the parameters of their own medical care? That is what the US system is designed to do and why it costs so much. We don't ration or impose much of anything at all on people's decisions.

    Do you mean individuals should be free to spend their own money and only their own money? Well OK but be honest. That just means you want to exacerbate the current trends - those wealthier than doctors can get whatever they want and will oppose all change, the middle-class gets squeezed into submission, and the poor have Third World life expectancy. Just to give an example:

    Today, a 50-year old woman in the lowest income quintile has the same remaining female life expectancy as Libya/Bangladesh - in the 2nd quintile that of Russia/China - in the middle quintile that of Turkey/Brazil/Mexico. Only the top two quintiles are comparable to other wealthy countries.

    A 50-year old man in the lowest income quintile has the same remaining male life expectancy as Pakistan/Tunisia - in the 2nd quintile that of Iran/Colombia. The top 3 quintiles are comparable to other wealthy countries.

    Most people think this current situation sucks - since at all levels we pay a ton more than anywhere else.

  • swampwiz||

    Heck, when the framing of ObamaRomneyHeritageCare was looking at setting a up a board of experts to review what works for efficient cost, Caribou Barbie and her idiot comrades in the Red Team derisively labeled that as "Death Panels" - so all you free-market yahoos can blame HER for ORHC not doing anything about costs.

  • JFree||

    Yeah - well until Dems have the guts to be honest and overtly talk about cutting Medicare costs, then it is 100% certain that selling 'free this that and everything' in order to buy votes ain't gonna do shit. But hey - keep playing your stupid partisan games like a good hack.

  • LLL||

    1. Healthcare is not a right.
    2. The federal government has no constitutional obligation or moral authority to provide or guarantee healthcare to anyone, in any way, shape, or form.
    3. Healthcare and health insurance are not the same thing.
    4. Hospitals, doctors, pharmaceutical companies, and health insurance companies all have a moral right to earn profit on the services and products they provide.
    5. It is reasonable to expect those with pre-existing conditions to pay more for their health insurance.
    6. The government's regulation and subsidization of the health insurance industry makes private health insurance less competitive and less affordable.
    7. Obamacare is wrong on both economic and philosophical grounds.
    8. Trumpcare is wrong on both economic and philosophical grounds.

  • swampwiz||

    And a party that has what you have just stated in their platform will get SLAUGHTERED in the election.

  • Dallas H.||

    As evidenced by the 1000+ seats they've picked up over the last years in opposition to Medicare.

    Nice try, you Correct the Record dead-thread fucker.

  • Myk||

    "5. It is reasonable to expect those with pre-existing conditions to pay more for their health insurance."

    Welcome to death panel 101. Sick people are too busy being sick to be rich, and all their money goes to the hospitals, doctors, pharma and insurance companies so even if they were rich they won't be for long. Let's require the impossible for them to get healthcare so when they die from a lack of healthcare we can pretend it wasn't our policy that did it, we gave them an option, be rich.

    It's sad so many only see $$$ and ignore the Hippocratic oath that says what the actual morality of medicine is and dictates that their murderous way will NEVER happen.

    The moral obligation is for society to pay the sick guinea pigs today for the better care they'll get when it's their turn to be the guinea pig. If you want free market healthcare don't accept any research that happened on anyone but you, you get leeches and amputation.

  • swampwiz||

    The existential problem is that the employer-provided coverage system happened by accident, and since it has a lower-than-average actuarial cost (i.e., because employers tend to hire healthy folks instead of sick folks), and has the benefit of being tax-free in both income tax & FICA, it has generally been a good system for folks that work in decently-paid jobs at large corporations. Of course the yang to that ying is that the individual market has been a complete disaster.

    And the idea that employer-provided coverage is acceptable must be held up as a goal that the individual market must meet. The original thinking by THE HERITAGE FOUNDATION was that coverage be mandated for folks who aren't in the employer groups, but alas when ObamaRomneyHeritageCare actually put this in, it turned out to be unpopular and politically impossible to implement (at least implement with any teeth). The only solution I can see that does not include "Medi" and "For-All" (e.g., "Medicare-For-All" or "Catastrophic Medicaid-For-All", etc.) is to support the individual market insurers so that the most that anyone pays is the same that a large corporation would pay for its average employee. Yes, young folks won't like it, but they already don't like the fact that the coverage they get from their employers are hogged by their greybeard colleagues.

  • kevinq||

    the solution is for everyone to opt out of health insurance. Pay as you go. If disaster strikes you just make payments to hospital and doctors instead of ins co. I will never buy ins until I get to buy what I want and good value for my dollar. When few buy ins, things will change.

  • kevinq||

    we must get rid of CON laws! (certificate of need)

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