(1) It obscured the fact that society is not responsible for our health care.
There are many things that people need in order to live their lives. People have always needed the standard basics: Food, water, and shelter. In modern times we translate these basic needs into our livelihood, our housing, and the material goods we need to live. We not only have these needs but ultimately are also responsible for them. We are responsible for our livelihoods, for gathering what we need to live. Our society is not responsible for us making a living. The same is true with our housing; we are responsible for our housing, our society is not responsible for it. The same is true of our health care; we are responsible for this need just as we are responsible for all other of our needs.
One of the driving motives behind Obamacare was the idea that society is supposed to be providing health care; the program was a way to carry that out, a way to achieve that goal. But this idea goes directly against our fundamental responsibilities for ourselves, that we are responsible for our needs. It has become common recently for people to say something like this: "Health care is either a right or a privilege, and since we recoil at the idea that health care is something reserved for the privileged few, it must be that it is a right. And if its a right, then we must be provided with it." The obvious problem with this line of thinking is that makes a basic mistake of reasoning called a false dilemma. A false dilemma occurs when its claimed that there are no alternatives to A or B and so we must conclude one or the other, when its not true that there are no alternatives to A or B; it could be that there is another alternative C rather than just A or B. Its not true that health care is either a right or a privilege and no other option. Its actually neither a right or a privilege, its a responsibility.
But suppose, hypothetically, that it was true that society was responsible for everyone's health care. If this was true, a funny thing happens that undermines the workings of any program to provide for that need. Suppose there is a society of five people, call them A, B, C, D, and E, and suppose these five people were to have the idea that they have a right to be provided health care by their society. Note that this society, just like any other, is made up of its individual members. This society of five is made up of these five individuals and it is not a person over and above those five. But this means that any responsibility that the society has devolves onto the individuals that make it up. So each individual member is faced with a responsibility for every other. Person A is responsible for providing for B, C, D, and E; B is responsible for providing for A, C, D, and E; C is responsible for providing for all the others, and so on. No member of this society can just receive from the others, as each has a responsibility to provide for the others. So in the end any program that tries to carry out a societal responsibility ends up having no choice but to levy that responsibility on its individuals. But this of course is what such a program does not want to do; the big selling point for any program like this is that "it is society's responsibility, not yours."
Also note that for this society of five, another result of the devolution of responsibility is a reflexive responsibility: It turns out that each person is responsible for themselves after all and there is no way to avoid this result. Not only is person A responsible for doing something to provide for B, C, D, and E in the society, it is also still true that A is a member of that society too. So person A is responsible for providing for A, himself, since A is also a member of the society just as much as B, C, D, and E. In the end, the hypothetical case making society responsible for providing for a need doesn't actually gain anybody anything. Each person is still responsible for themselves just as much as they would be if the issue of societal responsibility was never brought up.
(2) It institutionalized past mistakes of policies and regulations.
With any good that we need for our lives, the key to its affordability is its cost. If something costs too much it can't be made affordable. People used to be able to get health care insurance that they could afford, and this was because the cost was relatively low. Over time the cost of such insurance has been driven up, and as it has gone up that has caused it to be unaffordable. A major problem with Obamacare was that it institutionalized the mistakes that drove up the cost of health insurance in the first place. In other words, it made permanent all of the higher-cost-driving factors.
To see how this happened, consider as an analogy options available for car insurance. For car insurance there is the basic liability (covering other people for what you may do to them), basic collision (covering you for what you may do yourself and for acts of nature), and so on. These options are available at costs based on the value of the car and the history of the driver.
But suppose someone says: "Hey, I want more options, as there are other costs involved in having a car that are not included in this insurance package, and what good is having insurance for a car if it doesn't cover those costs too!" These costs, for example, include maintenance, basic repairs beyond a warranty, tire replacement, oil changes, and so on. So suppose this person decides to become an activist for total car insurance: They go to their State legislature or insurance commission and say that there should be laws and regulations requiring that all insurance must cover these other costs too.
This total car insurance sounds like something that would be really nice to have, but the problem is that such insurance is going to be really expensive. Each factor and each risk that insurance must cover has a cost to it. For each additional thing that regulations require insurance to cover, there will be an additional cost. Sooner or later each small item that must be covered adds up to a high cost, which of course very few people will be able to afford.
This is exactly what has happened with health insurance. It used to be an option to get such insurance that would cover the things likely to happen to you, but that didn't cover everything that could possibly happen to you. Then over time State regulations required insurance to cover some more possible risks, which drove up costs. Then more regulations were passed, which required more coverage, which drove up costs more. And this went on until the cost was too high for many people to be able to afford.
Ultimately, then, a fundamental failing of Obamacare is that it didn't address the problem of high costs through State regulatory actions; it left those regulations unchanged. The only solution to high costs through regulation is to decrease and control regulatory requirements, which of course it did not do.
(3) It didn't actually reduce costs, but just moved costs from one point to another.
Insurance is a contract by which someone agrees to cover a risk of a certain kind to a certain amount in exchange for an agreed price. The contract price is the amount that the insurer requires in order to cover the risk; the insurer doesn't much care how they get their price, just that they get it somewhere and somehow. To the insured person, however, the distribution of the cost makes a lot of difference. A problem with Obamacare was that it made it look like insurance was cheaper by shifting the cost of it from one location to another, but at the same time left the total sum cost no less than before, which means it was not cheaper at all.
Consider an analogy that illustrates how costs can be shifted from one point to another. Suppose we get the idea that quality of housing is so important that we are going to set some high specifications for everyone's house. Suppose we require that each house have a minimum of 1,000 square feet per occupant, and a minimum of one bathroom per every two occupants, and so on and so forth. Now these are high specifications and will result in high construction costs. Suppose it turns out that under these specs the average house will cost $400,000 to build. Now many people will say: "I would like to have such a house, but I can't afford that much. I can only afford maybe a $100,000 house." OK then, here is what we will do: we will still make you buy such a house but we will make this possible by having the difference between the cost of the house and the amount you can afford (that difference being $300,000) be covered with tax-generated funds. In other words, you put up the $100,000 and the remainder of $300,000 will come from the government.
This may sound like an attractive option to the person who only has $100,000 and looks to get the $400,000 house; but sooner or later they will realize something. If the remainder $300,000 comes from the government, where does the government get this amount? Its gets it where it gets everything else: Through taxes. Where does tax money come from? It comes from people. The funds for the house buy-down comes from taxes which come from the people who are the house-buyers. So in the end the entire cost of the average $400,000 house will have to come from the average household. The cost of the house was moved from one location to another: Instead of the normal cost of the house, its the discounted cost plus the tax-funds required to buy it down. But these two numbers are the same. And either way the average household pays that cost, whether through the normal means or through the taxes.
But this is exactly how Obamacare worked, moving costs from premiums to premiums-plus-taxes and making it look like the overall sum was less when it wasn't. The average household still pays the same, just through different points. And so it completely failed on the issue of reducing costs.
Now of course there were some people who said: "I am not the average household; my taxes for my buy-down are much less than the cost of it, so that means other people were paying for the majority of my buy-down." Even if this was true for some, the actual cost of course was still the same even when moved onto others, and moving the cost onto others is moving it around to different points. Moving costs around doesn't reduce them. And, in addition, note that all the "other people" were busy enough paying taxes for their own buy-down let alone other people's, so in the long run you can't expect all the "other people" to get you what you want.
Now as a side note we have to realize that a whole lot of people did not see the cost of the tax-funded buy-down coming at them because they did not see their overall taxes increased. This was because the full taxes required to make Obamacare work were not levied at the same time as the program was in effect. But that didn't change the fact that the buy-down was tax funded. While the full taxes were not being levied, the costs of the program were being charged to the national debt. But that of course means that the total charge is still to taxes, since taxes are required for the coverage of the national debt.
(4) Not only did it not reduce overall cost of insurance, it actually increased that cost.
Consider again the above analogy of a house price buy-down program. Under normal circumstances, a $400,000 house costs a buyer $400,000 directly. Under a tax-funded house buy-down program, a $400,000 house still costs $400,000, its just that the average buyer pays part of that total sum through direct payments and the rest of that sum through taxes. But there are costs involved in the buy-down program that have not been accounted for yet, namely the cost of the program administration. To carry out this buy-down program, government will of course hire on many people who are said to be involved in carrying out the program. This additional overhead, in addition to any overhead the house-builder has, must be paid for somehow. Because the program is government-run, that amount would have to be paid for by taxes.
As before, this is exactly the same scenario with health care insurance. Under normal circumstances what you have pay for insurance is premiums and other fees. Under an idealized buy-down program (with no program costs) what you have to pay is premiums and other fees plus taxes to cover the buy-down. But under real circumstances, since there are always program costs, you have to pay premiums and other fees plus taxes for the buy-down plus taxes to cover the administrative costs. So yet another problem with Obamacare was that it increased insurance costs overall.
(5) It created a very difficult "Catch-22" dilemma.
One of the features of Obamacare was a requirement that people get health insurance, with the thinking being that this is similar to a requirement to get car insurance for driving a car. On the surface this is clearly a confused requirement, as mandatory car insurance covers other people for what we do to them rather than for what may happen to us. So if you strictly follow the analogy with car insurance, we should be required to get health insurance to cover other people for what we may do to them. But that's not what is at issue; the issue is covering ourselves. Another theory behind the mandatory requirement is that we must be forced by law to be responsible for our health care. But that of course is confused too, as we do not need to be so forced by law to be responsible, since we already are. We do not, for example, need a law to require us to be responsible for our livelihood, as we already are.
The extreme "Catch-22" situation arose because of the requirement to get health insurance while simultaneously driving up the cost of it. If law is going to require something, it is extremely unreasonable to also drive up the cost of that requirement. To require by law, for example, a basic amount of car liability insurance to cover others, it has to be that this is at a cost that can be handled by the average driver.
(6) It missed out on a golden opportunity for fundamental reform.
We are responsible for our health care and really need an affordable option available to us for health insurance. But this means an option of insurance which covers only the things that are likely to happen to us, not everything that may possibly happen to us. Not everyone will choose this option, some will still go for a high-cost option that covers all possibilities. But to be able to afford something means having an option of a low cost, and low cost in insurance means limits on coverage. State insurance regulations must allow such low-cost options. One thing that Obamacare badly missed out on was the chance to correct this problem. It could have struck at the heart of the problem by attempting to override State regulations that effectively prohibit low-cost insurance.
Now clearly there are some serious Constitutional objections to Congress trying to override State regulations of any kind that have to do with business relationships. Traditionally business organizations are governed by the laws of the States in which they are based and in which they operate. The federal government is not concerned with business organization matters. These matters are only concerns of the States affected by the operations of a company. Even so, what Congress could have done with Obamacare was to attempt a show-down with the States that would have ended up playing out in the Supreme Court, and this Court could have then acted in a decisive way on the precedent in, of all things, the Roe vs. Wade decision.
Whether you agree with it or not, and whether it makes any real sense or not, the essence of the Roe vs. Wade decision is this: People have a right to themselves and a responsibility for themselves, and because of this, the States have no grounds for heavily restricting what they do with themselves. As a result of this line of thinking, the Supreme Court struck down most restrictions the States had in place on abortions.
This decision could have been a useful precedent in this health insurance context in the following way: Suppose Congress had attempted to push through an override of the State regulations on health insurance. Many of the States would have pushed back with the argument that this was not constitutionally allowed. The issue could then have been taken up by the Supreme Court which could have then said this: Just like in the Roe vs. Wade case, people have a right to themselves and a responsibility for themselves, and because of this, the States have no grounds for heavily restricting what they do with themselves. And as a result, any heavy restrictions the States have with regard to health insurance regulation must then be unconstitutional. In the end, the States must allow almost any form of insurance to be available in contexts where people have to be responsible for themselves, even the low-cost insurance that only has limited coverage.
That was an opportunity that was missed.
(published 7/6/19)
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