Here's to your health! (Obamacare, pt. 2-- what I would have done instead.)
(Obamacare, Pt 1 is here.)
A little while back I posted that I was against Obamacare. I prattled on about its flaws and then promised to offer up what I would have done instead. Initially, I thought this would be easy, I thought I had honed my talking points pretty well, as a result of numerous debates and discussions with all sorts of different folks. Hah! After much thought, I have decided that all of my original ideas were wrong, or at least not necessary yet. What triggered my self-doubt? A blog post on The Next Great Generation, in which the writer talked about how health insurance companies don’t really have to compete, because they are protected from federal anti-trust laws. WHAT? Well, the author was right. So now, armed with this new info, here’s what I REALLY think I would have done if I had been in Obama’s shoes about a year ago.
But before I get into my Plan, let me start by laying out what I believe works in general:
• Free markets governed by clearly written laws with reasonably clear consequences if you break them
• Decentralized power
• Equal rights
Now, against these principals of mine, here is what I think was wrong with health insurance BEFORE Obama.
• No free markets
• Centralized power
• No equal rights
Here’s why I think these conditions existed in health insurance. It all started during WWII (from Wiki):
“Employer-sponsored health insurance plans dramatically expanded as a result of wage controls during World War II. The labor market was tight because of the increased demand for goods and decreased supply of workers during the war. Federally imposed wage and price controls prohibited manufacturers and other employers raising wages high enough to attract sufficient workers. When the War Labor Board declared that fringe benefits, such as sick leave and health insurance, did not count as wages for the purpose of wage controls, employers responded with significantly increased benefits.”
As anyone with any common sense whatsoever knows, price controls distort markets and lead to far more trouble then they solve. To experience firsthand the effect of a price control, place a pot of water on boil, seal it, and open a steam valve. As the room starts to get too steamy, go ahead a put a price-control on steam and watch it magically disappear. When you wake up in the hospital with shrapnel wounds, as yourself if a price control was really the best idea you could have come up with. But I digress…
So there we were, back in the 1940s, enacting price controls and experiencing that nice short-term result -- companies could now attract workers – but setting the stage for catastrophe.
Next we passed the McCarran–Ferguson Act, which, according to Wiki, “exempts the business of insurance from most federal regulation, including federal anti-trust laws to a limited extent.”
Together, these two acts of government (sure, corrupt government, but ALL government is corrupt) created a situation that was not cool.
How these two factors affected free markets:
Wage controls distorted the health insurance market by in two ways: expanding the market for health insurance and hiding its real cost. McCarran-Feingold distorted it further by allowing near monopoly power within states, and encouraging behavior that would be illegal under the nation’s anti-trust laws.
How these two factors created centralized power:
As the majority of Americans sought jobs with big companies providing health insurance, those companies gained tremendous clout and were able to negotiate deals that gave their employees great coverage, at the expense of everyone else. McCarren-Feingold centralized power, by allowing state level monopolies to maintain their monopolies with practices that would be illegal under anti-trust law.
How these two factors affected equal rights:
Unless I work for a company such as IBM or GE – any big company will do – I am a second-class citizen in the health insurance market. I think this is discrimination. As for McCarren-Feingold, it pours biohazard waste all over equal rights, by allowing insurance companies to pick and choose their customers, based on what is going on genetically with people (unless, you are of the anointed and work for a big company).
So, given all of the above, what would I have tried to do if I were Obama?
Well, I would have done the hard work of changing McCarran-Ferguson by writing a new federal law to override it. My federal law would have been simple: states could still regulate their own insurance, but federal anti-trust laws would stand tall, forcing real competition and innovation, not the lip service we see today. (And we KNOW it’s lip service, because health insurance companies don’t really have to compete.)
And that’s it. Following my repeal of anti-trust protection, health insurance companies would beat each other bloody, and I would simply sit on the sidelines for a few years and watch what happens as the distortions of McCarren-Ferguson fade and a clearer picture of the market emerges. THEN, with a clearer view of what health insurance could actually be in a market-driven system, I would either leave it all well enough alone, or seek to pass some new laws to address true problems
Just to remind you, here’s what Obama did: First, he completely ignored a — maybe THE — fundamental flaw of our health insurance system and simply proclaimed that he knew that the system needed to be fixed. (This is akin to being aboard a ship that is taking on water and announcing that the ship MUST be made to sail more efficiently, but without acknowledging the leak.) Then he delegated the responsibility of figuring out how to fix the system to others. Then he exhorted everyone in government that doing something was better than doing nothing. Government complied in spades. And today, we have a multi-thousand page document that “reforms” health insurance.
What a joke.
Obama fixed nothing , in my opinion, and most likely made things way worse. And he did this because he neither understands nor believes in markets, decentralized power or the communal benefits of individual rights. Rather, he believes in central planning, centralized authority and community over individuals.
And I think he’s wrong.