Friday, March 10, 2017

Obamacare, repealed and replaced

Health care is in the news this week. The U.S. has a seven-year-old law, the Affordable Care Act (ACA), that

  • requires individuals to buy federally approved health insurance;
  • requires health insurers to insure all comers; and
  • subsidizes insurance premiums on a sliding, income-based scale so that even those of modest means can pay.

The ACA is colloquially named Obamacare after the president who championed it, and it seems to be failing. The ACA is a complicated law, not all of whose details and outcomes I know; but I do know that Congressional Democrats, refusing to compromise during 2010, chose to enact the ACA with zero Republican support. In 2010, every single Congressional vote in favor of the ACA was cast by a Democrat. Democrats unnecessarily rammed the ACA down Republicans' throats.

Now in power, Republicans are coughing the ACA up.


Modern health care is expensive. It is costly. It can save your life and, when it does, you'll be glad for the care, but, oh, the price! Americans spend 17 percent of GDP—one sixth of everything the U.S. produces—on doctors, hospitals, pharmaceuticals and the like. Seventeen percent. That's a lot.

That's just what health care costs, though, right? Answer: apparently not. The French spend 12 percent of GDP on health care, the Germans 11, the Japanese 10, the British 9. We spend 17. All those other countries seem to achieve life expectancies as long (or longer) and infant-mortality rates as low (or lower) than we do. Americans can congratulate themselves on avoiding the putative horrors of European-style socialized medicine, about which there is indeed much to dislike, but if costly American health care really were that much better on average, wouldn't one expect the life-expectancy statistics to reflect this? If the statistics don't, then what does that tell us?

Well, statistics can tell all kinds of things. For example, statistics can tell that Coloradans are leaner and smarter than Mississippians, which really only says that Coloradans are whiter than Mississippians. So you have to be careful. However, 17 percent versus 9 percent ... that's a pretty big difference. As far as I know, no one has ever demographically adjusted the British number so as to prove that Britain's health outcome is objectively worse. What we do know is this: Britain's health outcome is cheaper. It's a lot cheaper. So is France's. So is nearly everybody's, all across the First World.


But Britain has socialized medicine! Socialized is never cheaper, is it?

Answer: no, socialized is never cheaper, or at any rate is seldom cheaper. Free markets beat socialism on price and quality practically everywhere, at nearly everything.

The only trouble is, the U.S. hasn't had a substantially free market in health care since the Truman administration of the 1940s and 1950s.

What we have had is an accidental oddity, employer-based health insurance. During World War II (in which the U.S. was at war 1941-45), with so large a fraction of the skilled labor force under arms overseas, employers were forbidden by law to bid up wages among the scarce civilian labor that remained in the U.S.; but a chink in the law allowed employers to offer employer-paid health insurance in lieu of raised wages. Employers did that, the federal tax code allowed them to deduct the premiums as a business expense, and the employer-based system took root.

The results were rather weird. Under the employer-paid system, if you lost or left your job, then you lost or left your health insurance. If you were unhealthy, no insurer would then insure you but at exorbitant rates. Physicians lost incentives to hold down costs whenever distant insurers were paying the bills, which progressively caused insurers to take over the management of physicians' practices. Physicians' wages rose, and costly malpractice lawsuits further drove up the price of care. A growing number of Americans could no longer afford health insurance, nor qualify for work at an employer that could afford it.

Even weirder was this: if, lacking insurance, you paid the doctor cash for his services, he'd bill you 50 to 100 percent more than he'd have billed the insurer, even if you paid on the same day you received the service! I never figured out exactly why this was, but it wasn't like anything else, and it wasn't funny if it was, say, a $3000 MRI scan. Building supplies never worked that way, nor automobiles, nor attorneys' counsel, nor any other product or service of which I know. Only health care. Undoubtedly, the reason was some obscure, complex, government-regulatory dynamic. It was spooky. If you were sick and uninsured, it could be frightening. And no one could rationally explain to you why it was the case.


During 20 years preceding the ACA, Congressional Republicans had ample opportunity to try to alleviate the aforementioned costly weirdness of U.S. health care. Apparently having little idea what to do, Congressional Republicans let the problem fester, while insinuating that ordinary citizens harbored socialist sympathies if they had the temerity to ask about the problem; so, when Democrats finally decided to have a go at the problem, some of us Republican citizens who would otherwise have opposed the Democrats were half-inclined to afford the Democrats the benefit of the doubt.

Now that Congressional Republicans are again in power, they're perplexed. The ACA is inefficient, bloated, bureaucratic, paperwork-intensive, confusing and (even in the short term) unsustainable; but it has nevertheless solved some real problems—particularly for sick people who change jobs—which Congressional Republicans had long lacked the courage or imagination to address. Congressional Republicans seem to wish that they could repeal the ACA and simultaneously restore all the good features of health care from 2009, 1959 and 1929, without retaining the problems from any such year. Since such a wish is little more than magical thinking, Congressional Republicans don't seem to know what to do.

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