Obamacare Won’t ‘Solve’ Uninsured Problem, Either

June 29, 2012

Yuval Levin at National Review Online reviews some of the practical effects of yesterday’s Supreme Court decision:

Combined, these two rather arbitrary acts of revision mean that if the CBO reassesses the law’s effect on the number of Americans without insurance (which it certainly will do) using the same methods it used originally, it is likely to find a much smaller reduction in the uninsured.

The scope of its projected reduction of the uninsured and the (already false at the time) assertion that it did not raise taxes on the middle class were of course essential to the bare and narrow passage of Obamacare.

(Hyperlink in original.)

A common liberal response to criticism of Obamacare is to say, Oh, yeah?  What’s your solution, then?  How would you solve the problem of millions of Americans without health insurance?  This is an inapt response in a number of ways.  (1) The fact that some people have not obtained a certain insurance product does not per se represent a problem (why the focus on insurance rather than on health outcomes themselves?), but more to the point,

(2)  Obamacare does not solve this problem, either.  See above, and below.

(3)  As Thomas Sowell says, there are no solutions, only trade-offs.

If a given proposed “solution” would do more harm than good, then it should not be enacted, and critics should argue against it whether they have any alternative to offer or not.  In that situation, the status quo is their alternative, and is actually a better idea than the proposed “solution”.

Nevertheless, conservatives do have alternative proposals for health-care reform—for example, fixing certain inequalities in the tax code so that we can move away from employer-centered health insurance and toward consumer-centered insurance.  As Mr. Levin points out, many of these ideas are discussed at length in this National Affairs article.  A doctor at PJ Media offers more ideas in this much shorter piece.  I don’t necessarily agree with all of them; the point is that conservatives have many other ideas for health-care reform.  The phenomenon of conservatives’ having ideas is not some late development in reaction to Obamacare, either—as the National Affairs article points out, President Bush was proposing fixing the tax code to move away from employer-based insurance back in 2007, for example.

Related entries:

Meanwhile, in other Obamacare commentary:

  • A few sarcastic conservatives are wondering how liberals would feel if (under the same constitutional logic that upheld Obamacare) Congress passed a law requiring everyone to own a gun.  (This Web site is bigger, but this one said it first.)  This isn’t as far-fetched as you might think—we’re told that Swiss men really are required to own a gun from age 20 to age 30.
  • Given that Chief Justice John Roberts had to rewrite the law (not a judge’s job) to find it constitutional, Deroy Murdock had a great line:

To paraphrase former House speaker Nancy Pelosi, the Supreme Court had to rule on Obamacare so we could find out what’s in it.

  • In that piece, Ramesh Ponnuru also had a great line, agreeing with my remark yesterday that Roberts might be a wily one (though, as it turns out, not necessarily in our favor this time):

He acted cleverly. He also acted less like a judge than like a politician, and a slippery one.

Note that because the Supreme Court did not strike down Obamacare, the noxious HHS mandate remains, and will take effect before the election—in just about thirty days, actually.  Yesterday’s ruling resolved the lawsuits from half the states over other aspects of Obamacare, but there are now 23 more lawsuits over the HHS mandate, on behalf of organizations and individuals, to protect their freedom of conscience.

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36 Responses to “Obamacare Won’t ‘Solve’ Uninsured Problem, Either”


  1. […]  Thank you “M. Chillingworth” for linking to me and others on this!  (I really like your approach to blogging, as well!) Share […]

  2. swissecon Says:

    Great article, I have to say!

    Maybe I should add two things:

    (1) The other day I posted an article by Milton Friedman that you might want to read and add to your post: http://swissecon.wordpress.com/2012/06/06/health-insurance/

    (2) In Switzerland we have an obligation to buy insurance since 1996. Health insurance costs about 150-300 dollars per person and covers everything above 500 dollars per year (very rough description). Overall, I do not think the Swiss system is all too bad. Costs are moderate and access to high-quality health care is basically 100%.
    Note, the government only forces people to buy a predefined basic health care package from any of the private insurance companies (they have to offer this package to everyone). Everything else is up to the consumers.
    You might dislike this intervention but overall the system works pretty well. Maybe because the government intervention is limited and because we do not have many of the American system’s flaws. I am an economist but not dealing with health economics ;)

    Best from Switzerland,
    swissecon


    • Swiss Econ,

      Thank you, you’re very kind!

      I agree, Mr. Friedman made great points.

      I agree that if the government’s role is limited to what you describe, the Swiss system is much better (the government interference much more limited, and presumably the health outcomes significantly better) than America’s system will be under Obamacare.

      (a) However, I would still consider it an offense against liberty for the government to tell men that they must buy health insurance, and to tell the insurance companies what that insurance must look like. I would rather live a free man even if it meant worse health outcomes. (I doubt it would, but the principle is what it is.)

      (b) I also observe that it seems to be at odds with the Milton Friedman piece you recommended. If the government is mandating that health insurance cover everything that costs more than c. $500 a year, then the government is forcing insurance to be a common way to pay for medical expenses, rather than a safeguard against extremely high expenditures in case of emergency. Here is part of Friedman’s description of this situation:

      We generally rely on insurance to protect us against events that are highly unlikely to occur but that involve large losses if they do occur—major catastrophes, not minor, regularly recurring expenses. We insure our houses against loss from fire, not against the cost of having to cut the lawn. We insure our cars against liability to others or major damage, not against having to pay for gasoline. Yet in medicine, it has become common to rely on insurance to pay for regular medical examinations and often for prescriptions.
      . . .
      If [the government had not prevented it], the insurance market for medical care would probably have developed as other insurance markets have. The typical form of medical insurance would have been catastrophic insurance (i.e., insurance with a very high deductible).

      Of course he is talking about America there, not Switzerland; the problem is (if I understand correctly about Switzerland) common to both countries (though perhaps worse in America?). In that case, the government is distorting the market in a way that makes people rely more on third-party payment than they otherwise would. When Friedman refers to “third-party payment” in this piece, he seems to be thinking primarily of employers, or the government, but as far as I understand it, the insurance company itself also represents a third-party payer, attended by the same problems as any other. In other words, all other things being equal, we would expect costs to be higher or quality of care to be lower, or both, if the insurance company is paying than if the individual consumer himself is paying. We tolerate that price and consider it worth paying, because insurance is very useful in case of emergency, but a free market would perhaps reserve insurance to those emergencies, while the government in America (and Switzerland?) is making insurance a part of much or most medical care.
       
       
      Best regards,
      Chillingworth

      • Snoodickle Says:

        You would rather live free even if it means worse health outcomes (for persons other than yourself). Don’t forget that last part.

        So you consider it an affront against liberty that the state of Ohio requires you to purchase car insurance if you wish to drive?


      • I was thinking primarily of health outcomes for myself, but yes, since you mention it, it’s out of the question to deprive one man of his natural rights just to give another man a couple more dollars’ worth of material wealth. Was it right for white people in nineteenth-century America to hold black people as slaves (depriving them of their natural right to liberty) for the sake of better wealth outcomes for themselves? Would it have been made right if it had also resulted in better wealth outcomes for the slaves? if it had also resulted in better wealth outcomes for some third group?

        State-mandated car insurance seems easily distinguishable to me (people opt in by deciding to drive a car and use the state’s network of roads, and it’s mandated for others’ protection, whereas Obamacare requires insurance for one’s own protection, and to give an artificial government-mandated crutch to a formerly private industry), but if you want to argue that we shouldn’t be forced to purchase liability insurance for our cars, either, I’m open to that argument. Convince me.

      • Snoodickle Says:

        So you would agree that it is out of the question to allow companies to destroy the environment (and thus deprive me of my natural right to be able to breath clean air and drink clean water) for a couple more dollars of material wealth. Ha!

        As to state-mandated car insurance, it is the same concept as state-mandated health insurance. It’s all about cost-shifting. People need to be financially responsible if they cause an accident (so that they don’t shift the costs of the accident to innocent parties), just as people need to be financially responsible if they get sick or suffer a catastrophic injury so that they don’t shift the costs to innocent parties. If a person doesn’t have health insurance and shifts his health costs to me, he is impinging upon my liberty, is he not?


      • “So you would agree that it is out of the question to allow companies to destroy the environment (and thus deprive me of my natural right to be able to breath clean air and drink clean water) for a couple more dollars of material wealth. Ha!”

        I see that you haven’t come to any deeper or more thought-out understanding of liberty or rights than before. Pity.

      • Snoodickle Says:

        I ask you again, if a person recklessly passes on his health care costs to me, and thus imposes upon me an undeserved financial burden, is he not impinging upon my liberty?


      • Can you articulate more specifically how he “passes on his health care costs” to you? Do so, and I suspect that you will have your answer.

      • Snoodickle Says:

        The hospital that treats him goes without payment, or takes a reduced payment at best, and therefore increases the price of its services to compensate for the loss, and therefore I have to pay more for my health care.

        If you want to defend liberty be my guest, but at least be consistent about it.

      • Snoodickle Says:

        http://content.healthaffairs.org/content/4/3/67.full.pdf

        It’s even worse than I thought! Even if hospitals don’t increase the cost of my health care (which surely some do), they are instead laying off workers and limiting charity work. Thus, persons who willfully lack insurance are inarguably agents of tyranny – their wanton neglect leads to not only increased health costs, but to people actually losing their jobs! Do you not care about their liberty? If you can coherently defend a person who can afford insurance but refuses to purchase it causing a responsible citizen to lose their job, I would just love to hear it. This should be a classic.


      • Worse and worse. If one person’s actions cause a second entity to choose, in a free market, to charge customers more for a service than it otherwise would have, that person has not impinged on those customers’ liberty; he has caused their prices to go up. Once again, liberty doesn’t just mean “everything I like”.

        If the government is forcing the hospital to treat patients who can’t pay—as, in fact, it is, under a 1986 federal law—then the government is impinging on people’s liberty.

        Your linking to the piece you did, however, really takes the cake. As it explains in the summary on the very first page, it addresses primarily the impacts of government “cost-control schemes”. It names names: “. . . Medicare and many Medicaid programs changed payment methods and paid hospitals less for serving their patients.” The problem you describe is a creature not of private choices or free markets so much as of previous governmental attempts at solving all our problems, specifically in the area of health care. Do you agree that Obamacare is likely to have unintended consequences and do great harm? If not, what makes you think the latest utopian scheme is any different from the countless others that have been tried before?

      • Snoodickle Says:

        Just so we’re clear, what again is your definition of “liberty?”


      • I’m glad you asked. This one gets its own entry.


    • Apropos of reflections on how America’s government interferences compare to Europe’s, this line from Mark Steyn seems pithy:

      Indeed, citizens of many Continental countries now have more — what’s the word? — liberty in matters of health care than Americans. That’s to say, they have genuinely universal government systems alongside genuinely private-system alternatives. . . . It is the perverse genius of Obamacare that it will kill off what’s left of a truly private health sector without leading to a truly universal system.

  3. Snoodickle Says:

    Isn’t multi-payer that relies on non-profit health funds, with an opt-out provision for people who want to purchase private insurance, the best solution to this dilemma?


    • If by “non-profit health funds” you mean private charitable organizations, such as the Catholic hospitals that have helped care for the sick since time immemorial, I agree, the government should stop trying to shut them down. They’re great.

      If you mean more broadly that the solutions (to the extent that such a thing exists) to most of our problems lie not in the government but in free citizens making free choices, again, I agree. As someone has remarked with respect to the economy, so also with so many other things: The government can’t create it or make it good; the best we can hope for is that the government will refrain from ruining it.

      • Snoodickle Says:

        No, but those are cool too. What I mean by not-for profit health funds is funds that cover a certain geographic area (the more localized the better), and cover every person’s medical costs within that given area, unless those persons wish to opt out and purchase private insurance.


      • You’re still avoiding saying plainly what you mean. Are these hypothetical “non-profit health funds” funded by the government? Are they owned or run by the government?

      • Snoodickle Says:

        They are funded by taking a small percentage of every worker’s wages in that geographic area, which are paid directly into the fund. They are managed by private entities, but because they are non-profit, these entities have no conflict of interest with the covered citizens, as do for-profit insurers. The government never touches the money, and has no role in the process other than ensuring compliance with the wage deduction, and allowing courts to review benefits denials, which won’t usually be a problem because of the lack of conflict of interest.


      • So, in plain terms, you’re recommending that the government force everyone to buy this product that one may or may not want. No, I don’t think that’s acceptable. I can’t say until it’s tried whether it might (because of the conflict-of-interest theory you mention) result in better health outcomes (though I have reason to doubt it—the government would be creating a quasi-monopoly in each geographic area), but as I suggested above, it’s not worth trading away our liberty even if it means a marginal increase in material comfort.

      • Snoodickle Says:

        You must have missed the part about being allowed to opt out to purchase private insurance. Oh, and it does lead to better health outcomes.

        http://www.marksdailyapple.com/the-worlds-healthiest-countries/#axzz1zrjcWQix


      • Would people be able to opt out of paying for it, or only of using it? If the former, why must the government have any role at all in these non-profits you envision? If the latter, your answer to my argument is no answer at all.

        Speaking of which, that “source” you linked to—are you joking?

      • Snoodickle Says:

        No, but feel free to offer specific rebuttals to the list he proffers and to the book he wrote.

      • Snoodickle Says:

        You raise a good point, the government need not have any role in the non-profit funds, except for making the insurance companies non-profit. Do you actually think that for-profit insurance companies are going to voluntarily change their business models to eliminate all profits?


      • But in your model, the government doesn’t force all insurance companies to become non-profits; ordinary for-profit insurance companies continue to exist, and anyone can “opt out and purchase private insurance” from them—you’ve said so twice now.

      • Snoodickle Says:

        I was merely responding to your question “why does the government have to be involved at all?” If the government is not involved, non-profit insurance won’t exist, because there will no incentive to create it. Have you ever heard of a non-profit insurance company being created in the United States, for example?

  4. Tevyeh Says:

    An interesting point, via Joshua Hawley of the Daily Caller:

    “Making the mandate a tax has at least one other effect. It makes repeal easier. Now that the mandate has been deemed taxation, it can likely be jettisoned through use of the reconciliation process — meaning the Senate will need to muster only a bare majority for repeal, not 60 votes.”

    http://dailycaller.com/2012/06/28/john-roberts-surprising-decision/#ixzz1zFRuNRED

    I know precious little about Senate procedure, but is Hawley correct?


  5. […] (H/T Swiss Economist who originally linked to the article, and who posted a comment about it on Enjoyment and Contemplation). The article is somewhat long but definitely worth reading, especially in light of the recent […]


  6. […] “Obamacare Won’t ‘Solve’ Uninsured Problem, Either” […]


  7. […] “Obamacare Won’t ‘Solve’ Uninsured Problem, Either” […]


  8. […] care (H/TSwiss Economist who originally linked to the article, and who posted a comment about it on Enjoyment and Contemplation). The article is somewhat long but definitely worth reading, especially in light of the recent […]


  9. […] care (H/TSwiss Economist who originally linked to the article, and who posted a comment about it on Enjoyment and Contemplation). The article is somewhat long but definitely worth reading, especially in light of the recent […]


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