December 17 2013
The Pre-ObamaCare Healthcare Market Was No Capitalist Free-For-All
The public outcry from millions of health insurance cancellations was a curveball Obamacare supporters didn’t expect. Swinging away at it, they’ve nearly struck out. First they attempted to call lost plans “junk.” Then they said only a “small sliver” of people would be affected. Finally, the president apologized and attempted to pass the buck to insurance commissioners and companies with a too-little-too-late administrative “fix.”
The one honest progressive talking point left regarding plan cancellations is this: Think of the “greater good,” they say. Consider the other Americans who will have lower premiums and access to insurance they couldn’t buy before ObamaCare. You may have to pay more, but some other people will pay less.
Concern for others and their ability to access health insurance has always been the most salient argument made for overhauling our health care system. Women, young adults, and especially people with pre-existing conditions were painted as the “losers” in the pre-Obamacare world.
And it’s true: Some Americans faced serious disadvantages that Obamacare attempts to correct. But the law’s overcorrections are creating a host of new problems for Americans, from cancelled insurance plans to higher premiums and costs, to the loss of access to doctors and hospitals. Many Americans are realizing that rather than helping people, Obamacare is making matters worse.
Obamacare’s fundamental problem is that it failed to accurately identify the root causes of the problems with American health care before 2009. What was painted as a “market failure” was really no market at all. Our overregulated health sector has long lacked competitive pressures that encourage greater efficiency, more consumer control, and downward pressure on costs. Rather than address this and encourage greater efficiency, Obamacare doubles down on more regulations, and uses government to craft a new set of winners and losers from a political process.
Take Obamacare’s treatment of women. Women have been sold on the law with promises that it will equalize our premiums with men’s, and provide first-dollar coverage for preventative care. That sounds like a good deal, but millions of women are realizing that these coverage mandates and regulations are expensive. And it isn’t just men who are paying for them. A study from the American Action Forum found that the average 30-year-old woman would experience a 193 percent increase in the cost of the lowest-cost plans under ObamaCare.
Women were invited to celebrate coverage mandates, but — not surprisingly — coverage mandates aren’t just limited to maternity care and birth control pills. Obamacare’s “minimum essential health benefits” include 10 categories of drugs and treatments, from mental health to substance abuse, behavioral health and pediatric dentistry, all of which come with added costs.
These coverage mandates simply double down on pre-ACA state-level regulations. Coverage mandates serve only insurers by inserting a third-party payer into transactions for many basic services that could be direct – between doctor and patient. This has destroyed price transparency and price competition in the provision of these services, feeding consumer frustration, and an upward cost trend.
To actually solve our health care problems — and make health care more affordable and accessible for all Americans — we need a new direction.
Each American – male or female – should be free to buy an insurance plan that suits his or her needs. Obamacare cancelled millions of plans because they didn’t meet these federal “minimum essential health benefits.” But government shouldn’t be in the business of deciding what must be in 310 million Americans’ health insurance policies. To allow the most diverse, affordable, and customizable products, states should roll back these regulations, and stick to purely monitoring against insurance fraud.
Tax laws that favor those with employer-provided insurance, rather than in the individual market, have distorted the market and made it difficult for too many people to access insurance and consider a variety of plans. Replacing this unfair system with a universal tax credit or deduction would make insurance more competitive, individualized, and portable.
This change would aid many Millennials who often change jobs, opt for grad school, or become self-employed. It would also benefit people with pre-existing conditions: No one with an illness should feel stuck in a job just because of his or her employer-sponsored insurance.
Other insurance market innovations could provide protections for those with pre-existing conditions like guaranteed renewability or “health status” insurance.
A former supporter of the law recently said, “Of course, I want people to have health care. I just didn’t realize I would be the one who was going to pay for it personally.” Naturally, everyone wants people to have healthcare coverage. No one wants his or her neighbor to suffer.
Obamacare’s opponents, too, are affected by pre-existing conditions and costly illnesses. We have friends and family members who couldn’t buy affordable insurance in 2009. We share liberals’ concern at the problems in our health system. The question is how to solve these problems.
Clearly, Obamacare is the wrong solution. An overregulated system doesn’t need more regulation, but to untangle inequitable tax policies, and introduce consumer control and competition. At this critical juncture, we should not look to swap one set of losers for another, but to empower all Americans to find the best health care in the most efficient, affordable way.
Hadley Heath is a senior policy analyst at the Independent Women’s Forum (www.iwf.org).