Thanks to more than 70 years of
government meddling, the American healthcare system was already broken
long before Obamacare came along. Decades of massive subsidy programs
have accelerated price growth and favored certain monopolistic health
care providers that cater to government programs. Governments have also
limited supply of basic coverage by imposing an endlessly growing regime
of regulations on the industry. Prior to the 1960sbefore the
introduction of Medicare and Medicaidhealthcare prices had been stable.
They have since exploded.
July 19, 2017
Republicans Never Grasped the
Healthcare Challenge
The problem is the insurance system.
RYAN MCMAKEN
It was hard to get excited about the Republican plans for repealing and
replacing Obamacare. And now that the effort has failed, it’s hard to
feel especially sorrowful.
In typical fashion for the Republicans, there was never any solid message
as to what exactly a repeal of Obamacare meant, or what should be done to
replace it, if anything. The various bills offered up were a
constantly-shifting myriad of suggested policies, most of them extremely
milquetoast and wonkish. Not surprisingly, the public never managed to
care about them.
Even casual observers could see that the so-called repeal was never
anything more than some tinkering with policy meant to provide a
political victory for Republicans while doing little to improve the lives
of average Americans.
The Senate version, for example, only slightly trimmed Obamacare taxes
while adding an onerous provision providing bailoutspaid for by
taxpayersto huge insurance companies. Rand Paul may have been right when
he suggested the Senate plan was even worse than the Obamacare status
quo.
The Senate leadership has now shifted to promoting a repeal-only plan,
but the repeal-only proposals do little to actually address the problem
of upward spiraling healthcare costs generated by government mandates and
subsidies.
Obamacare was seen as a solution by many because it created new ways to
subsidize healthcare, which would allow for the expansion of more
government-subsidized medical services. Obamacarein theorypaid for more
subsidized healthcare by forcing young healthy people to buy insurance
they didn’t want or need.
If the GOP managed to pass a repeal-only plan, costs would continue to
increase rapidly, but the GOP would then be stuck with the blame for
cutting subsidies and “reducing access” to healthcare. Thus, it’s not
hard to see why many Republicans from swing states continue to be
reluctant to support repeal.
The Pre-Obamacare World Is Nothing to Pine For
Thanks to more than 70 years of government meddling, the American
healthcare system was already broken long before Obamacare came along.
Decades of massive subsidy programs have accelerated price growth and
favored certain monopolistic health care providers that cater to
government programs. Governments have also limited supply of basic
coverage by imposing an endlessly growing regime of regulations on the
industry. Prior to the 1960sbefore the introduction of Medicare and
Medicaidhealthcare prices had been stable. They have since
exploded.
The ways that the healthcare system is structured, regulated, and
controlled by state intervention are so vast and varied as to be
impossible to even describe in limited space. The very fact that we think
of healthcare as a type of insurance is itself a government creation, as
is the entire licensing and regulatory monolith that so severely limits
services.
Because of this, returning to the status quo of eight years ago would
hardly be a victory for freedom and free markets. Moreover, the United
States has been one of the biggest spenders on healthcare in the world
per capita. With the exception of Norway, Luxembourg, and the
Netherlands, the United States tops every other nation in terms of the
size of its healthcare welfare state. These trends pre-date
Obamacare.
What the GOP Should be Doing
If GOP politicians really wanted to do something to improve access,
reduce costs, and generally improve the lives of Americans, they’d quit
with the grandiose repeal schemes. They’d simply focus on passing reforms
that open up healthcare markets to competition, and allow consumers to
circumvent the subsidized and regulated healthcare system.
It’s true that reducing subsidies -- which themselves drive up prices by
increasing demand -- are still political suicide for many elected
officials. But, the supply side of healthcare offers immediate
opportunities for reform.
What can be done?
First of all, it is important to lessen the reliance on the insurance
model of healthcare. The use of insurance as the primary means for
distributing healthcare services is largely a post-World-War-II
government invention, and thanks to government created tax and regulatory
incentives, the insurance model has displaced ordinary market
transactions in which consumers pay a fee for a service.
Many have been trained to recoil in horror at the thought of reducing the
role of insurance, of course. Thanks to the power of the status quo, many
now equate the idea of health insurance with healthcare itself. And yet,
this is not true in any other industry -- even those that are necessary
for life’s basic necessities. There is no “food insurance” for example.
Auto insurance exists, but is nothing like health insurance since it
covers only rare accidental events.
Cash-for-service industrieswhether groceries, or mobile phones, or
dental care -- continue to see increases in quality while prices remain
far more stable than healthcare prices. Food budgets, for example, now
take up less of our overall household spending than was true in the past.
We certainly can’t say the same for healthcare.
To wean us off the insurance model, tax codes and regulations must be
changed to stop giving preference to the use of insurance by employers.
Tax-free health savings account must be expanded and tax credits for
healthcare spending must spread. Flexibility for group coverage must be
expanded beyond employer-based healthcare, and markets must be opened to
more providers willing to be flexible and meet these needs.
Simultaneously, governments must get out of the way so service providers
can compete and expand. We already know this will happen thanks to
facilities like the Oklahoma Surgery Center which openly and
competitively lists its prices for services.
Unfortunately, healthcare providers -- and potential healthcare
providers -- are limited by government fiat in the number of facilities
that can be built, the number of personnel that can be licensed, and the
types of drugs that can be prescribed and imported. Americans will travel
to other counties such as India to find lower-cost care from foreign
doctors. But those same doctors are kept out of the United States by
immigration and licensing laws. Healthcare facilities cannot be built in
many places without special permission from state and local
governments.
If one wanted to construct a system that kept healthcare prices high,
this is a way to do it.
On the other hand, reducing costs, increasing flexibility, and moving
beyond the insurance model should be the focus for healthcare reform
going forward.
https://www.theamericanconservative.com/articles/republicans-never-grasped-the-healthcare-challenge/
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