“What to Do When ObamaCare Unravels”

It looks increasingly likely that ObamaCare will fail, and not even mostly because of the website problems. If it does fail, what comes after it matters tremendously to human well-being. If more government intervention and centralization follow, the damage will be awful. But if freer markets in healthcare and health insurance follow, not only will costs drop and quality rise in those markets, but the demonstration (once again) of the blessings of liberty should carry over to other markets and policy areas.

With so much at stake, what can we do to make freeing those markets more likely than further constraining them? Above all, we need to get free-market alternatives into the public awareness. We need to inform ourselves of those alternatives and then inform others who will listen. We need to get the ideas out, so that when the politicians start looking for what’s next, the ideas are ready at hand.

A great place to go for free-market alternatives is the work of John Cochrane. Go to Cochrane for the “Ah-ha! I get it now!” about what ails American healthcare and what should be done to cure it. As I said in an earlier post, I can’t recommend highly enough his essay, “After the ACA: Freeing the market for health care.” It’s illuminating and entertaining to boot.

For a quicker introduction to his ideas read his Christmas Day opinion piece in the Wall Street Journal, whose title I take for this post. Read the whole thing if you can, and recommend it to others. Here are some highlights:

The unraveling of the Affordable Care Act presents a historic opportunity for change. Its proponents call it “settled law,” but as Prohibition taught us, not even a constitutional amendment is settled law—if it is dysfunctional enough, and if Americans can see a clear alternative.

This fall’s website fiasco and policy cancellations are only the beginning. Next spring the individual mandate is likely to unravel when we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance. … There will be scandals. There will be fraud. This will go on for years.

Yet opponents should not sit back and revel in dysfunction. The Affordable Care Act was enacted in response to genuine problems. Without a clear alternative, we will simply patch more, subsidize more, and ignore frauds and scandals, as we do in Medicare and other programs.

There is an alternative. A much freer market in health care and health insurance can work, can deliver high quality, technically innovative care at much lower cost, and solve the pathologies of the pre-existing system. (my emphasis)

We need to free up markets for health care provision and for health insurance, both of which are “strongly protected from competition.” First Cochrane addresses health care:

There are explicit barriers to entry, for example the laws in many states that require a “certificate of need” before one can build a new hospital. Regulatory compliance costs, approvals, nonprofit status, restrictions on foreign doctors and nurses, limits on medical residencies, and many more barriers keep prices up and competitors out. …

We need to permit the Southwest Airlines, Wal-Mart, Amazon.com and Apples of the world to bring to health care the same dramatic improvements in price, quality, variety, technology and efficiency that they brought to air travel, retail and electronics. We’ll know we are there when prices are on hospital websites, cash customers get discounts, and new hospitals and insurers swamp your inbox with attractive offers and great service. …

Only deregulation can unleash competition. And only disruptive competition, where new businesses drive out old ones, will bring efficiency, lower costs and innovation.

Then he addresses health insurance:

Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.

People want to buy this insurance, and companies want to sell it. It would be far cheaper, and would solve the pre-existing conditions problem. We do not have such health insurance only because it was regulated out of existence. Businesses cannot establish or contribute to portable individual policies, or employees would have to pay taxes. So businesses only offer group plans. … (emphasis added)

Rather than a mandate for employer-based groups, we should transition to fully individual-based health insurance. Allow national individual insurance offered and sold to anyone, anywhere, without the tangled mess of state mandates and regulations. Allow employers to contribute to individual insurance at least on an even basis with group plans.

We need to debunk the claim that the only alternative to ObamaCare is going back to the status quo ante:

ObamaCare defenders say we must suffer the dysfunction and patch the law, because there is no alternative. They are wrong. On Nov. 2, for example, New York Times columnist Nicholas Kristof wrote movingly about his friend who lost employer-based insurance and died of colon cancer. Mr. Kristof concluded, “This is why we need Obamacare.” No, this is why we need individual, portable, guaranteed-renewable, inexpensive, catastrophic-coverage insurance.

Cochrane recognizes the problems of regulatory capture and the selfish pleading of special interests who have a stake in the current system. They will make it hard to move toward more freedom of enterprise:

While economically straightforward, liberalization is always politically hard. Innovation and cost reduction require new businesses to displace familiar, well-connected incumbents. Protected businesses spawn “good jobs” for protected workers, dues for their unions, easy lives for their managers, political support for their regulators and politicians, and cushy jobs for health-policy wonks. Protection from competition allows private insurance to cross-subsidize Medicare, Medicaid, and emergency rooms.

But it can happen. The first step is, the American public must understand that there is an alternative. Stand up and demand it.

Here is another link to the article. Let’s spread the word.

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4 Responses to “What to Do When ObamaCare Unravels”

  1. Dan says:

    I find that getting involved in any sort of politics to be hopeless and corrupt. The fundamental problem with this health care debate rests upon why so many are addicted to handouts? Everyone is from the State governments and private corporations to senior citizens and everyone in between. ObamaCare will unravel but I imagine something worse will happen.

  2. Jon Isham says:

    H: Via what legislative path is ObamaCare – now the law of the land – likely to fail? Ish

    • Jonny, I think the enrollment of young and healthy people may fall short of the number needed for the insurance companies to pay the claims of the older and sicker. If so, insurance companies will either withdraw from health insurance or raise premiums so high there would be a public outcry so loud that Congress would respond. I don’t know what path Congress might choose, but I fear it would/will be as ill thought-out as the ACA itself. I dread that they might just take it over.

  3. […] Let’s hope he is right, and get free-market alternatives into the public awareness. […]

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