WASHINGTON, September 27, 2017 — The congressional debate on repealing the Affordable Care Act (Obamacare) may result in the elimination of that program—an outcome that is increasingly unlikely—but it won’t fix what’s wrong with healthcare in the United States.
After seven years of raging against Obamacare, Republicans don’t seem to have given healthcare much thought, coming up with ad hoc, unimaginative replacements like students writing research papers the night before they’re due.
Anything the GOP manages to pass will leave health insurance cripplingly expensive for many families, and health care ruinously expensive for the non-indigent uninsured.
Imagine that you bought food the way that you buy medical care. Rather than pay for the food yourself, imagine that you bought food insurance, and at checkout paid only your deductible and copay.
The sticker price of milk would cease to have meaning. There might not even be a sticker price, but only your copay price. The insurance company would deal directly with the supermarket to pay for your milk.
If you were told that the price of milk was really $200/gallon, you’d thank your lucky stars that you had food insurance, regardless of your hefty monthly premiums. Your co-pay of $1 would be small potatoes. If the insurance company negotiated the price down to $100, good for them, but you’d have only that
If the insurance company negotiated the price down to $100, good for them, but you’d have only that co-pay to deal with at checkout.
The insurance companies would have incentives to bargain down the price of milk across the board, wouldn’t they? Not necessarily. That scarily high price would help keep consumers clamoring for food insurance. Supermarkets would provide food for free or
Supermarkets would provide food for free or for a reduced price to the indigent in the emergency checkout line, but that line would impose on supermarkets higher costs that they would push onto the insurers and the public. We might respond by encouraging Congress to pass some sort of food insurance subsidy for the poor, helping to pay for it by requiring everyone to buy food insurance, even if they grew their own food or purchased it from co-ops.
It is dangerous to push an analogy too far. “Jesus is the good shepherd,” sweetly smiles Miss Jones, the Sunday School teacher, “and you’re his lambs.” Little Cindy Lou looks concerned.
“Do shepherds raise lambs as pets? I’ve always wanted a lamb, but daddy said they aren’t good pets and I can’t have one.”
“No, dear. They raise them for wool. And they love them very much.” She frowns as Billy and his friends snigger from the back of the room.
“And lamb for Easter dinner,” says Cindy Lou. “That’s what mommy fixes every year. Is Jesus raising us to sell and be eaten?” She looks suddenly horrified. “Is Jesus a cannibal?!”
There are of course some important differences between our hypothetical food insurance and real-world health insurance. Insurance covers us in the event of low-probability accidents, but we buy food on a regular basis. I’ve tried to cut costs by getting my children to eat lawn clippings, but they refuse to eat anything but food, and lawn clippings aren’t food. Surgery, on the other hand, is something we don’t buy unless compelled by circumstances to do so. Some people go a lifetime never needing a surgeon.
Surgery, on the other hand, is something we don’t buy unless compelled by circumstances to do so. Some people go a lifetime never needing a surgeon.
So the idea of food insurance is absurd, but it underlines some issues with our healthcare system:
- Even without government involvement, we don’t actually buy most of our healthcare in markets. There are no prices, no comparison shopping, no market signals to tell us what the true cost is.
- By eliminating the market element of healthcare, we give both providers and insurance companies incentives to let costs rise, and few disincentives for doing so.
- The problem may not be that insurance is too expensive, but that we rely on it to pay for most of our healthcare.
- The solution may not be to expand insurance coverage but to restrict what it actually covers.
Consider some areas of healthcare not typically covered by insurance: eye-care, plastic surgery and dental care.
Eye surgery has become increasingly routine as a substitute for corrective lenses. At the same time, the cost of that surgery has remained stagnant or fallen. New techniques and technologies have driven up the cost of oncology services, but they’ve pushed down the cost of eye care.
They’ve done the same for dental care and plastic surgery. Preventive care in dentistry is so good that few people under 20 can fully understand Dustin Hoffman’s ordeal in The Marathon Man, and orthodontic care is commonplace even among the lower income levels.
The analogy has its limits. It’s unlikely that the elimination of insurance would push the price of neurosurgery down to consumer electronics levels. But to focus on expanding insurance coverage is wrong-headed, as is the common horror of introducing market elements into the provision of medical care. Healthcare may be a necessity and a human right, but then so are food, clothing and shelter. The general availability, quality and cost of none of those would be improved by making their provision a function of insurance markets.
If you want to make something more expensive and more difficult to obtain, make the prices disappear behind a third-party veil, then pretend that they shouldn’t matter in the first place. Doctors, hospital administrators and insurance companies will be happy to indulge you in your fantasy. So, apparently, will Congress.