January 15, 2011

What problem, exactly, does Obamacare "fix"?

By What problem, exactly, does Obamacare "fix"?

With the new Republican House, Americans are waiting to see whether the Patient Protection and Affordable Care Act, otherwise known as "Obamacare", will be repealed, repaired or defunded, or, what may be more likely, rejected by the courts in either PLF's suit against the administration, or one of the twenty (or so) other cases now banging around the nation's courts. 

And while any of those scenarios for putting an end to Obamacare may be cheered by many, it still does not diminish the belief by many that the heretofore current healthcare system has problems with both costs and coverage.  At the same time, most Americans also believe the quality and delivery of medical care in the United States is second to none.

The problem, at least to those who care about creating a solution, is how to tackle the former problem without impacting the latter.

At present, beyond bald unsubstantiated assertions, Obamacare's proponents have not offered any  sound explanation as to how Obamacare resolves this dilemma. Even on the surface, it is pretty clear that mandating specific levels of coverage for everyone, limiting payments to an assortment of caregivers and caregiving facilities, and requiring that everyone has access to both insurance and medical care, does not even begin to deal with these issues in any rational way.

Americans are thus beset by the conviction that they are going to end up paying more for worse, and less, care. This conviction has been exacerbated, if not indeed proven, by announcements from a number of large U.S. companies, such as Boeing, Lockheed, and AT&T, that tax changes within the bill will cause them to take significant charges against their earnings (thus impacting shareholder returns), that they will start requiring their employees to cover a greater share of the cost of insurance, that insurers are planning premium increases, and that some employers are considering dropping medical insurance altogether to save money, and let their employees purchase coverage through state-run exchanges (a result which also seems to be at the heart of Obamacare:  pushing everyone into a version of the "single-payer" or "public option.")

Even more, the continued granting of numerous waivers by the Administration to companies like McDonalds and Jack-In-The-Box from Obamacare’s minimum coverage requirements underlines pretty clearly that the cost-shifting and minimum-coverage mandates create a situation in which the overhead costs of running a business under Obamacare simply cannot be compensated for by other operational savings even within large entities, and in particular within those entities where wages are low, profit margins tight, and competition fierce. In other words: in today’s economy, virtually every single American business.

These are pretty peculiar consequences of the law, given that Obamacare was sold on the idea that its proponents were sympathetic to and primarily trying to "help" the uninsured.  What is Obamacare’s solution to insure the uninsured?  Simply to force those uninsured (with limited exceptions) to buy insurance!  The catch, of course, is that insurance companies must now accept everyone who applies, including those who are clearly going to require expensive medical care due to pre-existing conditions. In the end, then, the only real innovation of Obamacare to the current state of affairs is that all taxpayers and all insurance rate-payers, even those who have no interest in purchasing insurance and who may never use or need it, are going to have to pay for the increased costs of covering everyone.

That being the case, it is just a little disingenuous to have Kathleen Sebelius express outrage when insurance companies react to Obamacare’s mandates in a perfectly rational way: by raising rates to cover these additional costs, or by pulling out of unprofitable markets. What else can they do, if Obamacare’s only source of funding for additional costs is to force unwilling citizens to buy insurance?

The administration has conceded quite clearly that the coverage mandates cannot begin to be paid for unless they can force every American to subsidize the cost of other people’s care. As the government stated in its brief in responding to Virginia’s challenge to the insurance purchase mandate: "without full market participation, the financial foundation supporting the health care system will fail, in effect causing the health care regime to ‘implode.’"

In trying to justify Obamacare as a legitimate exercise of Congress’ authority to regulate interstate commerce, the government, on behalf of Ms. Sebelius, made a further point: "a person cannot simply elect to avoid participation in the health care market. It is inevitable, in her view, that every person—today or in the future—healthy or otherwise—will require medical care. The Minimum Essential Coverage Provision simply provides a vehicle for prompt and dependable payment for such services if and when rendered."

Of course, the government’s characterization on this point is a quaint subterfuge, since that is not how insurance works: those who pay now pay for those who consume now. There is no guarantee, in Obamacare or anywhere else, that an insurer, or indeed any doctors, will be around if or when an individual may need care years or decades down the road –- hardly what one would characterize as providing for "prompt and dependable payment" when the need arises.

One could go on and on, but the problems of Obamacare do not end-–or even begin–-with its constitutional difficulties or even with its attempt to redistribute the costs of healthcare onto those who do not want or need it. It begins with a Congress that is less interested in sweating through the hard work needed to solve real problems than operating on the unfounded assumption that it can simply vote medical care into costing less than it does, and making care available where it simply does not exist.  We are truly operating in "LaLaLand" if Obamacare is Congress' best answer to our current healthcare woes.

In other words, Obamacare is merely a symptom of a greater ailment, and the disease is hubris.  We have already seen how successful our government, at all levels, has been in tackling the country's economic woes; we can only hope Obamacare is terminated before it really sees the light of day.

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