ObamaCare is a disaster. Here's how to fix it.
The price of ObamaCare premiums are skyrocketing — something like 25 percent for the average premium for many "silver" plans.
This is hardly the only problem with ObamaCare. "Insurers are pulling out, premiums are rising, and many customers are being left with little or no choice of insurance plans," as this helpful explainer from our magazine puts it. Indeed, back in 2010, when the law was passed, the Congressional Budget Office predicted that 21 million people would be enrolled into the law's exchanges by 2016. That figure now stands at just 12 million.
This is something conservatives have warned about all along — that the ObamaCare model of healthy young people being forced to buy insurance to cover the expensive care of sick old people was quite flawed — and for reasons that ought to be obvious. As Avik Roy writes:
[F]orcing insurers to charge their youngest customers no less than one-third of their oldest customers meant that premiums for young people would double, because on average, 19-year-olds consume one-sixth as much health care as 64-year-olds. Mandating that insurers cover a federally prescribed suite of health care services, regardless of whether enrollees need coverage for those services, meant that premiums would go up. Requiring that insurers charge the same prices to the healthy and the sick meant that healthy people in particular would pay more. [Vox]
ObamaCare's combination of mandates, subsidies, and regulations very predictably caused markets to go haywire and become inefficient. But this shouldn't just be a moment for partisan point-scoring. ObamaCare's ostensible goal — to ensure that every American has a safety net when it comes to health care — is a laudable one. ObamaCare's failures will hurt millions of families. This is a serious problem that requires a serious solution.
So, how do we fix ObamaCare? By learning from the same principles that made it obvious ObamaCare would fail in the first place.
As I wrote back in 2014, in an article looking at lessons Americans could learn from the rest of the world on health care, there are a few valuable rule of thumbs. Namely, while health care is a unique sector of the economy in some respects, it still shares a defining characteristic with economic sectors like information technology and cars: Consumer choice and competition bring prices down and increases quality.
From these principles, you can sketch out a plan that would ensure all Americans have access to quality, affordable health care. Marco Rubio's plan would give Americans who don't already have coverage a refundable tax credit that would allow them to buy the health care of their choice, preferably through a health savings account. The idea is to create a market accessible to all Americans, but not try to manage that market like a Soviet premier.
Even more simple: Allow insurers much more freedom in the kinds of plans they offer on ObamaCare's exchanges. Or ensure that people who get subsidies to buy insurance on the market get 80 percent of that money in a health savings account and 20 percent to put toward a plan covering catastrophic illness or injury.
The point is to nudge the American market away from what all health care experts agree is the biggest problem with American health care — a problem that ObamaCare entrenches rather than ameliorates — which is not "government" or "the market" but third-party payments. Whether it's a "private" insurer or the government, when a third party is involved in deciding what you buy and how, the market will go topsy-turvy, because consumers won't be able to exert their power in the marketplace. The business executive David Goldhill explains this perfectly in the single most important article about health care in America. Of course, poorer Americans should get money to buy critical health care that they otherwise can't afford, but the key point is that it should be their money; under ObamaCare (and employer-based insurance, but that is a topic for another day) it is not, actually, their money. It's the government's, or the insurer's, if you can figure out where one begins and the other ends.
Imagine if you bought a car through "car insurance" managed by your employer. As soon as you take competition and consumer choice out of it, the product gets worse and the price tag gets higher. All our cars would look like Soviet relics and cost $1 million each. Car mechanics would make fat six-figure salaries.
This poses a philosophical problem. Progressives say "health care is a right." But what do they mean by that? If they mean that in a wealthy society, the moral thing to do is to come up with a system that ensures that no one is bankrupted by medical emergencies and as many people as possible have access to excellent health care, I certainly agree with them. And sometimes, it seems to be what they say. But other times, they seem to mean something different: Namely, that everyone should have the right to as many health care services as deemed necessary — at no cost.
The problem with that latter vision is that, like communism and ObamaCare, it's a nice idea in theory but the implementation is horrible. And it does seem to be the animating premise of ObamaCare, with its emphasis on third-party insurers, and early calls for a "public option." That people should have "coverage" not just for catastrophes, but for everything.
This is the difference between saying "everyone should be able to afford a car" and "everyone should have a free BMW and free fill-ups." Yes, everyone should be able to afford a car, but some of those cars are going to be second-hand Hondas — which actually do just as fine a job as BMWs for 99 percent of the things we need them for. And while in some cases a BMW is certainly better than a Honda, mostly, selling fancy cars to the rich enables car companies to subsidize their higher volume, affordable vehicles.
The "right to health care" has been the animating fight of the progressive movement since before the New Deal, and it's understandable that they feel very strongly about it. But at some point, they will need to ask themselves: Do they want a system that does 90 percent of what they want, and makes everybody happy, or a system that does 100 percent of what they want, and makes everybody miserable?