Friday, October 4, 2013
Some Thoughts on Obamacare
As surely as the whole world must know by now Washington is currently roiled in controversy over President Obama's signature piece of legislation, the Affordable Care Act. A bill to fund the operations of the federal government is stalled in Congress as conservative Republicans seek to derail implementation of the act. As we write the federal government is partially shut down.
For those who live elsewhere and have not experienced the American healthcare system firsthand, traditionally most Americans have received health coverage through their employers. The government provided tax incentives, and the employers would purchase coverage through private insurance companies, which would then pay claims on a fee for service basis.
The system, however, had serious weaknesses. One of them is that it left some persons completely without health coverage, for not everyone worked for a company that provided health benefits. To remedy this hospitals were legally required to treat everyone regardless of ability to pay. The poor would show up in emergency with minor ailments because that was the only place where they could receive care. The hospitals, in turn, would engage in cost shifting, overcharging patients with insurance to cover the costs of treating those without it. But probably the worst feature of the system was its inability to control costs. The inflation rate in the health care field ran into double digits year after year, in good times and bad, for decades. Insurance companies tried every means possible to rein in costs, but to no avail. The health care industry simply had no incentive to economize.
What is ironic about the current impasse is that the health care plan so detested by conservative Republicans originally began as a conservative alternative to socialized medicine. In 1989 the Heritage Foundation, a conservative think tank in Washington, produced a plan called A National Health System for America. In October of that year Dr. Stuart M. Butler gave a speech at a medical college in Tennessee explaining the plan. He reviewed the problems with the healthcare system at that time, dismissed several alternatives, including government-funded systems, and then outlined the Heritage Foundation's plan. Among other things he said that one of the aims of the plan was that "All citizens should be guaranteed universal access to affordable health care." In order to make it work the plan required an individual mandate to buy insurance. "Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent that is able, to avoid placing demands on society by protecting itself." ("Assuring Affordable Health Care for All Americans"). Four years later, in November, 1993, Republicans in Congress introduced two bills in Congress to reform the healthcare system along the lines suggested by the Heritage Foundation. Massachusetts finally enacted such a plan in 2006, signed into law by Gov. Mitt Romney, a Republican.
Significantly, during the Democratic primaries in 2008 Barack Obama opposed the idea of an individual mandate. It was included in the federal law when it was finally enacted, however, and survived a Supreme Court challenge (on the lame pretense that the fine for not purchasing coverage was really a "tax").
The plan is a bureaucratic monstrosity, and has several serious flaws. It attempts to add additional participants to the existing system, but it is hard to see how it will manage to finance this. It is also hard to see how it will hold down costs. In order to work it must have maximum participation from those who are young and healthy, but it is not at all certain that they will sign up. The plan as the potential to become a fiscal disaster.
We think that it would have made more sense to have gone with a single-payer national health insurance plan. Coverage would be extended to everyone, and it could be financed through a combination payroll / self-employment tax, at a flat percentage of income. It would be simpler to administer, and have a more stable financial base. There would be no controversial "mandates," and yet everyone would pay into the system and everyone would be covered.
Let's repeal "Obamacare" – replace it with a single-payer national health insurance plan!
Related blog posts:
The Social Agenda of the Tea Party
Capitalism and Christianity - I
Capitalism and Christianity - II