The recent Republican bill to replace Obamacare is doomed to failure just as Obamacare failed and the system before it did.
The problem is that a free market system for something like health insurance will never pass the equity test because life is not fair, but everyone in America needs proper health care and insurance. It’s really that simple.
Our free market instincts are strong and mostly correct, but they have stopped us from seeing the truth. And, worse than that, no system created by humans (at least, that the majority of Americans will accept) will ever solve all of the issues surrounding the unfairness of it all. Ever.
The least we can do is create a safety net plan for all Americans of all income levels, so that each of us is insured at a humanitarian level. I now believe that we need to provide a good standard level of care for all citizens, permanent residents, and visa holders – including for pre-existing conditions. It would be funded by taxes already collected by the current Medicaid and Medicare funding methods. We need one Medicaid system, administered at the state level and subsidized by the federal government, or a Medicare plan at the federal level, but we don’t need both. For simplicity’s sake, we could keep both for now. Let’s fund additional costs with a new Value Added Tax (“VAT”) just for health care.
Private health insurers could then provide products to enhance or augment coverage. We allow that with Medicare now and The National Health Service in the U.K. allows for private care insurance that is paid by people through a competitive public market for those who can afford it and are willing to buy additional coverage.
Both Medicare supplemental coverage in the U.S. and private health care coverage in the U.K., work because each system basically works for all and doesn’t pretend to be equitable, which is impossible to balance. But, at least, basic health care is provided for all.
Here’s why I know systems like the NHS work: The premiums for private coverage are shockingly low. A mother and child can get a great private plan for about $150 per month. If those private insurers weren’t doing well financially, you know they would be charging higher premiums, right?
I am willing to concede that the NHS and Medicare are far from perfect, but they get the job done. So let’s agree that there is no perfect plan and one can’t be created in an imperfect world.
So, it turns out that Bernie Sanders got it right in the first place. In an article in The Week, James Pethokoukis reminds us that, ironically, the guy who lost his election bid (Sanders) had the best answer for health care with his “Medicaid for All” plan. Pethokoukis argues that Obamacare was merely a holding place for what would eventually become a single payer system. It’s the natural evolution of our health care system.
And as bitter a pill as that is for a free market Conservative like me to swallow, I think he’s (gulp) right. However, Pethokoukis’ commentary goes wrong when he assumes that this would be a play only made by Democrats. The Republicans must start seeing this basic reality right now and lead the bipartisan charge toward a single payer system.
For those Republicans who are clinging to a free market solution, the following is the most free market plan I can come up with, but it is unlikely ever to be enacted because of the myriad of politics involved:
Currently, insurance is regulated by the states and rates are determined by the numbers (populations and medical conditions) found in each state. To make rates more equitable, we can allow private insurers to cross state lines so that the populations they insure would be closer to real financial probabilities (where insurance rates come from). This would be a very competitive system.
Next, we could pass a massive national tort reform to reduce medical malpractice lawsuits, thereby cutting the costs of so-called “defensive medicine.” You know – all the tests you have to take to get a simple (liability-free) diagnosis. Can you imagine getting that past the trial bar? Dream on…
And my last suggestion is to take health insurance out of its status as an employment benefit. When did that become the norm? It happened as a result of wage-price controls put in place after World War II to stop post-war inflation. Suddenly, a whole system was built around it. Why shouldn’t individuals and families purchase their health insurance the way they buy their homeowners and auto coverage? Take it out of the workplace.
But I’m afraid none of this does anything to make “pre-existing conditions” coverage affordable. Would a private insurer cover a burning building? They could never do that in a way that can be affordable for the market.
The Obamacare solution for this was to make coverage mandatory and impose penalties on individuals and employers who didn’t comply. So, the young paid for the old and employers didn’t hire people to save money, creating an underemployed economy. Many in the country didn’t like these pieces of Obamacare and demanded a change.
Republicans don’t get that their plan is just a warmed over Obamacare plan with a confusing amount of tax credits, rather than a permanent solution. They should go on the offensive and propose a single payer plan.
Luckily, Republicans don’t need to agree with everyone that believes that a single payer system is “fair.” There is a sound economic basis for a national health system for America. Some goods in society are so important that it is difficult to measure how much people are willing to pay for them, so they are offered to all and paid for by all equally. They are called “public goods.”
We keep trying to make health insurance fit a model for some regular product. We keep messing up our economy by creating economic dislocations and unintended economic consequences, because we chose to impose wage-price controls after World War II and employers competing for the newly-returned troops made healthcare a benefit entitlement.
While that worked for businesses then, it doesn’t work for our society some 70 years later. Even if we can’t all agree on the fairness and equality argument, can’t we agree on getting rid of this drag on our economy and make business and the economy more efficient by uncoupling health insurance from the free market?
Let’s not keep trying to solve all of our societal, social, and political problems through health care bills. We need to take this off the table as a contentious political issue and embrace the fact that health care is a public good that must be provided. We’re wasting time, money, and lives in the process. Let’s just put some basic health care out there for the good of everyone and move on to easier issues, like Trump’s tax plan.
Jon Saltzman is the Senior Editor and Publisher of Political Storm.
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