Guest Post by Jeffrey Tucker
It’s not just that Obamacare is financially unsustainable. More seriously, it is intellectually unsustainable, even though this truth has been slow to emerge. This has come to an end with President Trump’s executive order.
What does it do? It cuts subsidies to failing providers, yes. It also redefines the meaning of “short term” policies from one year to 90 days. But more importantly–and this is what has the pundit class in total meltdown–it liberalizes the rules for providers to serve health-coverage consumers.
In the words of USA Today: the executive order permits a greater range of choice “by allowing more consumers to buy health insurance through association health plans across state lines.”
Allowing choice defeats the core feature of Obamacare
The key word here is “allowing” – not forcing, not compelling, not coercing. Allowing.
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Why would this be a problem? Because allowing choice defeats the core feature of Obamacare, which is about forcing risk pools to exist that the market would otherwise never have chosen. If you were to summarize the change in a phrase it is this: it allows more freedom.
The tenor of the critics’ comments on this move is that it is some sort of despotic act. But let’s be clear: no one is coerced by this executive order. It is exactly the reverse: it removes one source of coercion. It liberalizes, just slightly, the market for insurance carriers.
Here’s a good principle: a government program that is ruined by permitting more choice is not sustainable.
The New York Times predicts:
Employers that remain in the A.C.A. small-group market will offer plans that are more expensive than average, and they will see premiums increase. Only the sickest groups would remain in the A.C.A. regulated risk pool after several enrollment cycles.
Vox puts it this way:
The individuals likely to flee the Obamacare markets for association plans would probably be younger and healthier, leaving behind an older, sicker pool for the remaining ACA market. That has the makings of a death spiral, with ever-increasing premiums and insurers deciding to leave the market altogether.
The Atlantic makes the same point:
Both short-term and associated plans would likely be less costly than the more robust plans sold on Obamacare’s state-based insurance exchanges. But the concern, among critics, is that the plans would cherry-pick the healthiest customers out of the individual market, leaving those with serious health conditions stuck on the Obamacare exchanges. There, prices would rise, because the pool of people on the exchanges would be sicker. Small businesses who keep the more robust plans—perhaps because they have employees with serious health conditions—would also likely face higher costs.
CNBC puts the point about plan duration in the starkest and most ironic terms.
If the administration liberalizes rules about the duration of short-term health plans, and then also makes it easier for people to get hardship exemptions from Obamacare’s mandate, it could lead healthy people who don’t need comprehensive benefits to sign up in large numbers for short-term coverage.
Can you imagine? Letting people do things that are personally beneficial? Horror!
Once you break all this down, the ugly truth about Obamacare is laid bare. Obamacare didn’t create a market. It destroyed the market. Even the slightest bit of freedom wrecks the whole point.
This is the great hidden truth about Obamacare. It was never a program for improved medical coverage.
Under the existing rules, healthy people were being forced (effectively taxed) to pay the premiums for unhealthy people, young people forced to pay for old people, anyone trying to live a healthy lifestyle required to cough up for those who do not.
This is the great hidden truth about Obamacare. It was never a program for improved medical coverage. It was a program for redistributing wealth by force from the healthy to the sick. It did this by forcing nonmarket risk pools, countering the whole logic of insurance in the first place, which is supposed to calibrate premiums, risks, and payouts toward mutual profitability. Obamacare imagined that it would be easy to use coercion to undermine the whole point of insurance. It didn’t work.
And so the Trump executive order introduces a slight bit of liberality and choice. And the critics are screaming that this is a disaster in the making. You can’t allow choice! You can’t allow more freedom! You can’t allow producers and consumers to cobble together their own plans! After all, this defeats the point of Obamacare, which is all about forcing people to do things they otherwise would not do!
Freedom or coercion: these are the two paths.
This revelation is, as they say, somewhat awkward.
What we should have learned from the failure of Obamacare is that no amount of coercion can substitute for the rationality and productivity of the competitive marketplace.
Even if the executive order successfully liberalizes the sector just a bit, we have a very long way to go. The entire medical marketplace needs massive liberalization. It needs government to play even less of a role, from insurance to prescriptions to all choice, over what is permitted to be called health care and who administers it.
Freedom or coercion: these are the two paths. The first works; the second doesn’t.
After all, traditionally, politics is supposed to be “the art of the possible”, isn’t it? Fantasy is fine for Disneyland.
“Allowing choice defeats the core feature of _______________”
You can use this sentence for most, if not all, of the programs thought up by the Left.
I suppose the bottom line, is that almost all of their ideas are obviously bad – and nobody of even average intellect willing participates in them.
Which brings us to the necessity, from the Left’s perspective, for both their beloved invasive Police State and their pathological quest for civil disarmament.
Isn’t the free market all about choice?
And isn’t the American health care system a result of its free market?
Seems a thoroughly confused narrative.
Socialized medicine has proven, all over the world, in democracies and dictatorships, in rich and in poor countries, to keep health care costs down.
Yet over and over again – Americans keep getting hung up on ideology rather than results.
It is no coincidence that the biggest campaigners against nationalized health care, for generations, have been the institutions that profit from the present health care situation in America: pharma, physician, hospitals, health insurance companies.
I sincerely hope Trump surprise us more often like this.
I agree that there should be some advantage to endeavoring to live a healthy lifestyle. Drug, alcohol, Tabaco free vegans should pay less. Motorcycle riders should never be cared for by the general population. But. the young should be forced to care for the old and the healthy should likewise bear the burden of the sick. We will all age, and, we are all just a twist of fate away from cancer or a serious accident.
For those who think otherwise, I hope you will pay for your own care if you get sick and age.—Or just die.
Every middle class working person who has zero company participation regarding the expense of health insurance is and has been before and after AHA , Obamacare up the financial creek should they get sick , I mean white eyed roll back clinging to life by a thread without a half a MILLON in spare change in the couch and under the console in the car they will be bankrupt or dead that’s reality ! BUT if they were or are married to many government employees all they must concern themselves with is getting well . Thanks to that middle class indentured tax slave that contributed to the tax base that subsidized government employees healthcare .
I know for many things have changed a great deal but for most private sector employees the coverage is unaffordable . Reality Sucks
No house insurance company will insure you if you repeatedly burn down your house. No car insurance company will insure you if you repeatedly crash your car. Why the fark should anyone expect a health insurance company to insure you if you repeatedly over eat, abuse drugs and alcohol or light up cigars and cigarettes?
Or drive a car live in a city etc … where or when do we say no to health care for those who cannot afford it . That is the point , I understand contributory negligence so if you have sex and get pregnant no health insurance coverage . People can and do become deathly ill through just plan bad luck . I did not smoke was in the gym 3 to 4 times on an average week played a physical sport into my forties and still got white eyed roll back deathly ill without 3 years of maintenance therapy at $3 Grand a month and surgery and follow up care at $286 Grand and approximately $12 thousand a year in drugs to stay healthy I would not be alive and working part time now after 42 years of full time . Luckily my wife’s employer maintains a great health insurance plan that her productivity paid for my last employer laughed at health insurance , the one before that dropped payments when one person came down with cancer making it unaffordable for anyone not still at home with mom & dad and then there was the good old union benefits as a steel worker “POOF” to that also . I do not mind paying just not being gouged and taxed so others do not
” People can and do become deathly ill through just plan bad luck . ”
Yup, and they should be insured without penalty.
“Now, thanks to the Affordable Care Act, health insurance plans can no longer deny anyone coverage for their pre-existing condition”. https://www.hhs.gov/healthcare/about-the-aca/pre-existing-conditions/index.html
It was nothing but more of Obunghole’s redistributionist control freak agenda.
There were no reforms. It forced people to buy plans designed by control freaks.
The Mayo Clinic and others had reform ideas that would have cut costs about 40% and involved freer markets, not diktat from socialist shitheads who had never had a private sector job (92% of Obama assistants).
It was another plan to gain control over people through healthcare, eventually forcing psycho analysis and medicating under threat of legal sanctions. More and more invasive questionnaires by “medical” authorities with criminal sanctions for refusing to tell the “doctor” how many guns you have and it would have gone downhill from there I assume.