Healthcare Needs Capitalism. Desperately

Healthcare Needs Capitalism. Desperately


Senate Majority Leader Mitch McConnell announced July 18 that the effort to repeal and replace the Affordable Care Act was to be tabled again, this time indefinitely. This leaves the Affordable Care Act, colloquially known as Obamacare, in place for the foreseeable future, barring any attempts at a repeal without an immediate replacement. Such a plan has been rumored, and will hopefully succeed if attempted. 

The political ramifications of this failure are indeed massive if Republicans do not put forth a plan for at least a simple repeal of the ACA, and even if a plan for repeal goes forth the credibility of the GOP has taken a major hit. Currently, the only thing a majority of Republicans agree on is that the ACA needs to be repealed. That is a necessary starting point, but more needs to be done. The Republican Party had eight years to craft a bill to replace the Affordable Care Act, but has failed to properly do so. 

The first obstacle to repealing the ACA, according to Republican lawmakers at the time, was that Republicans were in the minority in the House of Representatives. In 2010, the American people gave the GOP control of the House of Representatives in a decisive victory for the Republican Party, but the ACA remained in place.

When asked why, Republican lawmakers blamed the inaction on their minority status in the Senate. In 2014, the American people gave the GOP control of both the House of Representatives and the Senate, and the ACA still remained in place. When asked why, Republican lawmakers blamed their continued inaction on the presence of then-President Obama, who would veto any repeal legislation.

In 2016, the American people gave the GOP the Presidency, the House, and the Senate in the biggest political upset since Truman defeated Dewey in 1948. Still, the ACA remains in place. 

It is worth examining the extent to which the ACA has damaged both the individual and the macro economy, as perhaps Republican lawmakers have forgotten the exigency of circumstances surrounding America’s current healthcare system. Many may not remember when then-President Obama promised that healthcare premiums would drop 3000% when the ACA passed. He further promised that premiums would drop up to $2500 per year. President Obama seemed to be laboring under the misguided notion that greater government involvement and socialization of a service will somehow make that service better and cheaper, but the average ACA premium increased 105% in the 39 states that made use of the marketplace when compared to the average individual market premiums in those states before the ACA took effect.

More concretely, premiums on increased from an average of $2874 in 2013 to $5712 in 2017. This constitutes one of many broken promises from the Obama administration on healthcare. The GOP missed their chance to get ahead of this label during this new administration--voters chose the GOP as a departure from the status quo of politicians’ broken promises, but Republican lawmakers have failed to deliver so far.

In addition to hurting the individual’s pocketbook, the ACA harms the economy. Obamacare was initially hailed as the final blow in the battle against “job lock,” a phenomenon where an employee is unwilling to leave a job for fear of not finding employer-provided healthcare elsewhere.

However, a study by economists Pauline Leung of Cornell and Alexandre Mas of Princeton published by the National Bureau of Economic Research shows no significant impact on employment after comparing employment statistics in states that implemented the ACA’s Medicaid expansion against states that did not implement the expansion.

Furthermore, Obamacare taxes have totaled more than $500 billion over the next ten years. So, what has the ACA done to the national economy? It has further increased already suffocating tax rates and did not have any impact on employment. 

The United States was built on the free market. Capitalism and competition are part of what has established U.S. economic and political hegemony during the twentieth and twenty-first centuries, but Obamacare does not have any pretense of capitalism or competition. Instead, it establishes regional oligopolies for insurance companies — the CEOs of which are some of the wealthiest of the wealthy.

Leftists claim to support the lower and middle class, and their policies, Obamacare included, claim to focus primarily on the poor. It is therefore ironic that the poor are saddled with skyrocketing premiums while the proportion of states with monopolistic insurance markets--markets with one insurer, that pay the highest price of any market structure--has increased tenfold. The richest of the rich are simply getting richer under Obamacare.

While the Affordable Care Act has done immense damage to the economy and to individual taxpayers, it is undeniable that more people have health insurance than before.

The ACA’s broadening of health coverage is perhaps the only success attributable to President Obama’s legacy legislation, but the essential question still remains: should the government be in the business of healthcare? Even with the ostensibly beneficial expansion of coverage, the answer to that question is no. A major objection to the repeal of the ACA is the apparent loss of coverage under Trumpcare: 32 million people if the ACA is repealed without a replacement. That number is initially alarming.

Approximately ten percent of American citizens losing coverage is certainly not an irrelevant statistic, but the statement is rather misleading. Under the ACA, people are mandated to purchase insurance, while those who choose not to do so are assessed a fine.

Many of those who purchased insurance under Obamacare were individuals that would not normally purchase insurance, but did so to comply with the mandate and avoid the fine.

Even so, there were those for whom it was cheaper to pay the fine than enroll in Obamacare and pay the premium.

Under a repeal of the individual mandate, those who deem themselves healthy enough to risk not purchasing insurance have the option to do so. It is therefore misleading to say that those who refuse coverage are really “losing” coverage that they did not want to begin with.

Despite that, the Congressional Budget Office and other forecasters include those who refuse coverage with those that genuinely are no longer covered despite a desire to be covered.

A more correct statement is that 32 million people will no longer have health insurance. There may be those who are denied coverage by a private insurer for some reason, in which case the government can step in, while others simply take the gamble and refuse coverage. Regardless, there is a free-market solution to nearly every problem, healthcare included.

The first major issue that should be tackled in a free-market healthcare approach is tort reform. One of the main reasons that healthcare costs have ballooned so much is the trigger-happy nature of the medical malpractice system. Because of the great risks to doctors from malpractice lawsuits, a majority of doctors practice some sort of “defensive medicine,” in which a doctor changes their behavior toward patients out of fear of malpractice litigation.

Defensive medicine can take the form of ordering additional tests that are not objectively necessary, admitting a patient overnight for an ailment that may not require more than a few hours of observation, or even avoiding risky treatments when no other options are available.

These practices raise the cost of healthcare, as needless medical procedures are performed solely for the purpose of protecting a doctor against litigation. It has been estimated that the medical liability system is responsible for $55.6 billion dollars of annual spending in the US. Medical liability reform is a critical first step to rein in the cost of healthcare. 

The Affordable Care Act is not affordable for individuals or the nation. Entitlements already make up around 60% of the federal budget, and Obamacare essentially adds another massive entitlement to that mix.

Congressional Republicans have whined for the past eight years that they could get things done in Congress if they only had a majority in both houses and a Republican in the White House. The American people have finally given the GOP what it has been asking for, and it behooves them to take advantage of this opportunity. It may not come again.

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