The Obamacare Trap

As Republicans set about repealing Obamacare all they talk about is fixing it with “market’ based solutions. Were they awake in basic economics class? 

An efficient market requires sellers who are not acting under compulsion.  A functioning market needs buyers who can walk away when the price is too high. Being sick is the epitome of compulsion. Healthy people don’t go to doctors and who is going to walk into a Doctor’s office with a kid with a broken arm, or a lump in their breast, or pain in their liver, and then walk out because the price is too high? Health Care consumers are not in a position to put price pressure on Health care providers. 

As a country we have tried for decades to encourage Insurance companies to fill the role of pressuring Health providers to be more efficient and cost effective. But Insurers and the Health Care providers negotiate deals that are good for both of them, while the consumer foots the bill and Health care costs continue their relentless climb.

Republicans beat Democrats over the head with criticism of Obamacare for the last six years. It worked well enough to allow Republicans to grab control of both houses of Congress four years ago and maintain it in this last election, despite the fact that last time the Republicans controlled both houses of Congress (1995–2007) they blew up the middle east and then blew up the world economy.

Now as they turn from celebrating their most recent victory it is beginning to dawn on some of them they have painted themselves into a corner. Voters like the big government mandate parts of Obamacare (for example protecting those with pre-existing conditions or kids staying on the parent’s plan until age 26). What they don’t like are the “market” parts of Obamacare - for profit insurers raising rates or bailing out of a market because they can’t make a profit and have little control over health care costs.

It flies in the face of their ideological beliefs but they should consider that maybe no market based approach rooted in our existing system of for profit insurers and providers will be an improvement. History suggests the only way Health Care for profit works is by catering to the wealthier parts of society and leaving the rest to fend for themselves (or get all their health care in the most expensive place - the emergency room - at public expense). That’s what we had before Obamacare. We paid twice as much per person for health care as any other country in the world, with lousy results (measured by infant mortality and lifespan). People in dirt poor communist countries (like Cuba) where they spent less than a dollar per person compared to every $10 we spent lived longer and had lower infant mortality rates.

Ironically Republicans could turn for inspiration to the some of the big blue coastal states who realized decades ago profit and health care don’t mesh well. They created regulatory schemes that allowed non profits that focus on health maintenance to thrive. They have blossomed under Obamacare because the insurance and the health care are linked within the same non-profit entity. They can work for efficiency at both ends of the process, and don’t have to worry about investors clamoring for bigger profits. They are also motivated to help people stay healthy, instead of making their living off of curing sick people.

In 2010 Republicans, upset that they lost control of Congress, tried to undermine Obama by undermining Obamacare instead of trying to help make it work. If they had worked at making it work then they certainly would have had a better grasp of what they were getting into when they started talking repeal. But now that voters have had a taste of Universal health care, even a badly designed version, there is no going back.

There is little the Republicans can feasibly do, politically, that will affect me personally. My Health care comes from an HMO. Its pretty inexpensive and as a consumer I am very happy with what I have. I wish I could help all the folks who will be hurt by the turmoil we are about to experience but I voted and my views did not prevail.

But I am concerned politicians desperate to save face will try to distract us with misdirection - start a war or otherwise create distractions and leave us with bigger problems than just health care. I think back to 1971 when President Nixon used wage and price controls to distract the public from the fact he took the country off the gold standard so he could print money to pay Viet Nam war debt without raising taxes. That played a big part in the most ferocious bout of inflation and high interest rates in modern US history over the next decade. Luckily for the Republicans it was Democrat Jimmy Carter who got caught in the storm, not a Republican. As the storm was receding Ronald Reagan walked in the door and to this day Republicans fervently believe the growth of the 1980’s was caused by Reagan’s tax cuts rather than to the fact he happened to be the guy in the oval office when a perfect storm of positive economic factors converged (rapidly falling inflation and interest rates coupled with rising productivity from the baby boom generation moving into their productive years).

But I feel like there isn’t much I can do that will not be counterproductive. My Republican friends are pretty well inoculated against facts and history by the media outlets they rely on, talking to them just causes them to withdraw deeper into their  ideological comfort zone. Sometimes in life you need pain to break out of a comfort zone that is not working, so until enough voters in Red States suffer enough pain to move beyond slogans and ideology I don’t think there is a whole lot those of us in Blue states can do. We just have to take care of ourselves and our families and be patient.