Tag Archives: Obamacare

Doom and Disaster

The glee on the left at the defeat of the Republicans’s, and, more especially, Trump’s Obamacare reform package really knows no bounds. The human Cheeto stands exposed as incompetent and obviously unfit for office. And so on.

Realistically, the Paul Ryan inspired, three stage, series of rather lame changes to Obamacare deserved to die.  It is unfortunate for Trump that he aligned his White House with the bill and that is a mistake he’ll have to live down. But the fact is that the RyanCare version of ObamaCare was, at best, conceptually muddy.

With the withdrawal of this piece of legislation, the US is left with ObamaCare and it is a pretty good bet that this edifice will gradually collapse as its own contradictions and faulty assumptions are worked out in the marketplace. The ongoing collapse of the insurance exchanges, the rise in deductibles and the sheer expense of medical insurance for middle income families all suggest that the ObamaCare model is in increasing trouble. A fact not lost on Trump.

Now there are Panglossian interpretations of the defeat of RyanCare which cast it in terms of clever Trump suckering the establishment Republicans to make way for his own version of healthcare reform. While I suspect this sort of outcome may occur, it will be more an accident than a plan.

The underlying problem of healthcare in the US is the tension between free market principles and the desirability of people having decent healthcare at a price they can afford. Very smart people on both the left and the right have been arguing about this for decades. ObamaCare, for all of its flaws, was a solution which might have worked had the American economy expanded more rapidly. Coming up with a better plan build on the essential structure of ObamaCare, which is what RyanCare attempted to do, was always going to be conceptually muddy and very unattractive to the free markets end of the Republican world. RyanCare was not a better plan than ObamaCare and never aspired to be; rather it was an attempt at “less worse”.

At this point Trump can – as he has threatened – let ObamaCare explode simply by sitting on his hands and refusing to make the adjustments and spend the money needed to keep the exchanges functioning. Politically that might be smart or it might be incredibly short sighted as the voters will be deeply unimpressed when they lose their ObamaCare insurance.

A smarter approach is likely a complete re-conceptualization of healthcare in America and the government’s role in assisting people who need healthcare. There seems to be some consensus that the costs of  “catastrophic illness” should not be entirely borne by the individual and his or her family. And there seems to be a willingness to pay for the healthcare of the poorest people in the society which is, in fact, a welfare rather than healthcare question.

What would happen to the general insurance market if the costs of catastrophic illness was taken out of the mix to be covered by private insurance? The devil is in the details but, in principle, the cost of insurance which did not have to deal with catastrophic health events would go down. Likely quite significantly.

A TrumpCare package which “socialized” the catastrophic end of the risk pool would, in fact, be the thin end of the single payer wedge with some of the efficiencies such a system would create. Trump does not strike me as a free market ideologue and I doubt that thin end would worry him a bit. On the welfare/subsidy side it is not out of the question to essentially buy a set amount of insurance for the poorest people and ensure coverage.

Coming up with a simple, well costed, plan which deals with both expensive illness and poor people would be a huge step forward.

However, I would suggest a third element: a really serious look at how a) the incidence of catastrophic illness can be reduced, b) an initiative to create efficient best practices to deal with catastrophic illness and c) a drive to reduce the costs of treatment for catastrophic illness through everything from the use of single payer drug buying power to tort reform.

RyanCare, like ObamaCare, seemed to want to do far too many things all at once. Doing a few things very well might be a better model for Trump to follow as he cleans up the mess.

 

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Roberts Plays the Long Game

Note that as Roberts explains why these people can’t be regulated, he’s also explaining why the health insurance companies are doomed. (But, you may think, isn’t the mandate upheld under the taxing power? Again, what’s upheld is the tax imposed for not buying insurance, and that’s less expensive than buying insurance, and the money goes to the federal government, not to the insurance companies. Meanwhile — to make it crushingly clear — the insurance companies do have to sell insurance to people with pre-existing conditions. So these people who currently don’t buy insurance because it’s not worth it can start buying insurance as soon as it is worth it, and under the ACA, they can’t be charged more than the people who have been buying insurance all along.) ann althouse

I have not followed the Obamacare case terribly carefully but if Roberts has done what Althouse says he has done he has handed the Republicans a stick with which to beat the administration (health tax) and a hornets’ nest to the administration (moral hazard on steroids).

Basically, you pay the tax for not buying insurance right up until you get really sick and then you pay limited health care insurance premiums which don’t begin to cover the costs incurred by the insurer. Literally, the worst of both world

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