The debate in Washington carries on. Although a deal on the debt ceiling may be fast approaching, word is that it is meant only as a deal that buys more time for the continuing resolution and funding for the American Care Act to continue. The debate needs to be swung back from the terrible side effects of a government shut down and returned to the reason for it, attempting to repeal the American Care Act. To this end, I present this essay as an argument to why having stringent criteria for the insurance industry renders the industry inept and incapable of solving the original problem America had with healthcare, the cost.
The problem with the ACA or Obamacare is that the application of this perfect world scenario, as with many policies that look good on paper, is entirely impractical in practice.
In our present economic state, not only are many young people (and proportionately healthier) either unemployed or underemployed, the Consumer Financial Protection Bureau estimates that people under 40 owe 67% of the roughly $1.4 trillion that Americans owe on school loans. That’s on top of an average of several thousand dollars of credit card debt. The ACA is predicated on people who can scarcely afford the extra cost to subsidize care for small percentage of people that can neither afford insurance but also require large sums of money for their care.
In the present insurance system, younger, healthier people can purchase insurance for cheap, very cheap, and that money in premiums which rarely goes directly to healthcare for the insured can then be transferred to the populace that needs, helping subsidize their expenses so that premiums can be held below what the market would otherwise dictate. In a truly free market, people who do not need a lot of health care coverage would not be willing to spend a lot on health care coverage. The presented solution in the ADA? Force them to spend a lot.
Thus enters the government and the exchanges, forcing the disparity of premiums paid for by a healthy person and an unhealthy person to shrink to next to nothing. The trade off for the healthy is that they are now covered for a plethora of expensive drugs, services and procedures (i.e. birth control) that do very little to curb human behavior but pass more of the expense to people who would otherwise not need these services. Again, the government is dictating the conditions of which these 'markets' work.
Thus enters the government and the exchanges, forcing the disparity of premiums paid for by a healthy person and an unhealthy person to shrink to next to nothing. The trade off for the healthy is that they are now covered for a plethora of expensive drugs, services and procedures (i.e. birth control) that do very little to curb human behavior but pass more of the expense to people who would otherwise not need these services. Again, the government is dictating the conditions of which these 'markets' work.
This makes the health exchanges entirely non-progressive. The people in the equation that are spending much more now then they have in the past, people who can't afford more coverage and people that don't need more coverage. A 40% 'Cadillac' plan taxes and other provisions will help people who spend more money on health care coverage spend less. Even though in the current system that is money they freely hand over into the system.
The Government solution? Tax the rich more through a progressive tax code, then subsidize the poor who can't afford their new plans. Creating the criteria and ground work for an insurance industry that offers basically the same coverage, excludes no one, and allows money to walk from the wealthy down to the poor.
Many people, such as Jon Stewart, would look at this and cheer. Now insurance is little more then a middle man from the organization who is controlling the flow of money and dictates the criteria of care. Why not drop the failing insurance aspect of healthcare and convert to a single payer system? We'd save 10-15% and I'm sure the million or so employees of the industry would find new work in no time. Perhaps not a nightmare scenario if you have no problem handing over an entire industry to congress and whomever is in the White House at the time. Insurance is only a good deal when it actually works like insurance. Using insurance to pay for routine care and predictable healthcare needs makes it no longer insurance, but cost pooling. And once we change to a single payer system, it is almost impossible to go back.
Another flaw is that, by design, the ACA uses insurance to pay for routine healthcare services and distorts price signals and increases costs through layers of administration. ObamaCare’s requirements that insurance pay for even more routine care, especially for those who don't need it, than before codifies the fundamental flaw in the “insurance” (actually cost-pooling) “market” that we have today.
Instead, ObamaCare exacerbates and mandates everything that’s wrong with our current system while attempting to transfer costs in the exact wrong direction, from old and rich to young and poor. This is both extremely inefficient and completely unfair. The only thing that would make this worse is if Congress attempted to raise the fines for opting out enough to actually cover the enormous shortfall young people opting out in droves would create. Adding another dimension to the great scale that must find balance for an optimal and well funded healthcare system.
Many people, such as Jon Stewart, would look at this and cheer. Now insurance is little more then a middle man from the organization who is controlling the flow of money and dictates the criteria of care. Why not drop the failing insurance aspect of healthcare and convert to a single payer system? We'd save 10-15% and I'm sure the million or so employees of the industry would find new work in no time. Perhaps not a nightmare scenario if you have no problem handing over an entire industry to congress and whomever is in the White House at the time. Insurance is only a good deal when it actually works like insurance. Using insurance to pay for routine care and predictable healthcare needs makes it no longer insurance, but cost pooling. And once we change to a single payer system, it is almost impossible to go back.
Another flaw is that, by design, the ACA uses insurance to pay for routine healthcare services and distorts price signals and increases costs through layers of administration. ObamaCare’s requirements that insurance pay for even more routine care, especially for those who don't need it, than before codifies the fundamental flaw in the “insurance” (actually cost-pooling) “market” that we have today.
Instead, ObamaCare exacerbates and mandates everything that’s wrong with our current system while attempting to transfer costs in the exact wrong direction, from old and rich to young and poor. This is both extremely inefficient and completely unfair. The only thing that would make this worse is if Congress attempted to raise the fines for opting out enough to actually cover the enormous shortfall young people opting out in droves would create. Adding another dimension to the great scale that must find balance for an optimal and well funded healthcare system.
In any of these scenarios though, there is one key element that is missing. None of these issues actually do anything to lower the overall cost of healthcare, the ACA simply transfers the burden of deciding who pays how much for what level of care out of the hands of the people and free markets, and fully into the hands of the government. And anyone who thinks that government efficiency can drive the cost down, I ask you to look at local property tax rates now and 100 years ago, states sales taxes now and then, federal income taxes. Government does not find the cheapest way to do anything, they are experts in finding new things that we can't live without, usually something that has such little demand that it can't exist as a private enterprise, and then charging everyone for it, regardless of who it benefits. The savings of removing insurance from the equation will be replaced with and expansion of the IRS, and premiums will simply become another tax.
Imaging it, every hospital, every doctors office, every medical researcher at the behest of one government, there would be no profit in medicine, and without profit, the desire to create a new drug, a new life saving device, falls to those altruistic few. It's not that the government does not give dollars to research and development of new medical technologies, but we would forfeit almost all the sources of advancements that aren't funded by the government. You think that the lack of research occurring during a shutdown is frightening, In a shutdown occurring in a single payer system, all research would cease.
Meanwhile, payouts for Medicare are dropping, funding for Medicaid is being pushed on the states who can't afford it. Hospitals and doctors offices can't afford to take too many patients with government coverage. Fewer doctors are becoming available as the number of people with coverage increase.
That is what is lost in the current battle in Washington, while pictures of war vets going through barricades and park rangers closing, well, everything. The topic that Ted Cruz spent 20 of his 21 hours addressing has been lost, and unless we can find a way to dictate the debate and steer it back to this topic then the goal of preventing the transfer of our entire healthcare system over to one entity will be lost.
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