Thursday, November 19, 2015

This is What Happens When You Address the Symptoms Instead of the Cause

Since Obamacare first passed in 2010, I have said that its focus on expanding coverage rather than reducing costs is akin to treating pneumonia with cough medicine instead of antibiotics. While it's true that pneumonia causes people to cough a lot, the coughing itself is caused by the pneumococcus bacteria. If a doctor identified the real problem as the patient's cough, rather than the bacteria causing the cough, her prescribed treatments would be ineffective, and potentially fatal.

Similarly, Obamacare's architects' identification of the health insurance "coverage gap" as the problem has proven similarly ineffective. (The cost of insurance in general continues to explode, but in the exchanges set up by Obamacare, millions of now-nominally insured people can't afford to use the insurance they're officially "covered" by because it's so expensive.) It may also prove fatal.

UnitedHealthcare, America's largest insurer, has officially given notice that it's seriously considering pulling out of the Obamacare exchanges altogether, because the poorly conceived system is just too damn expensive.
UnitedHealth Group’s chief executive, Stephen J. Hemsley, said ... it is pulling back on marketing its exchange products, as open enrollment is currently under way for plans that will take effect in 2016. And the insurer said it is “evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.” UnitedHealth had previously expanded its exchange offerings to 11 new states for 2016, and said in October it had around 550,000 people enrolled.
Tens of millions of people didn't have insurance largely because it was too expensive for them. Focusing on reforms that bring the cost of health care down (including treating health insurance like actual insurance, meaning pooled risk funds used only to cover catastrophic costs, rather than a general third-party payment system) would make insurance less expensive, which would entice people to buy it. Thus, the coverage problem would be solved naturally, using the same market forces that closed the "automobile coverage gap", the "cell phone coverage gap", or the "TV coverage gap" (cars, cell phones, and TVs being, of course, items that were once luxuries but which are now ubiquitous, even among the poor -- all without coverage mandates or government assistance).

Instead, we have a system that not only doesn't address the actual cause of the problems it was ostensibly designed to fix, but actually makes those problems worse.

Because this is government and not the market, though, true reformers now have to face both the inertia inherent to any existing policy and the entrenched special interests who have a stake (financial, ideological, or both) in Obamacare remaining the way it is.

Ain't politics grand?

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