James A. Morone, of Brown University and Brookings, writes,
The ACA itself has two large programmatic components. One is a classical Republican idea: health insurance marketplaces. The other expands a program from the Democrats’ halcyon days: Medicaid. The red half of the law tries to tap the magic of market capitalism; the blue half grows the kind of Great Society government program much loved by liberals. The compromise –which might point to the future of American health care—puts the red and the blue together in an unanticipated way.
I object to characterizing health exchanges as “the magic of market capitalism.” To me, health insurance marketplaces run by the government are no such thing. As we are seeing, health insurance exchanges turn the insurance companies into government-run utilities.
If you want market-oriented health insurance, then leave health insurance to the market. Do not put it on a government exchange.
Professor Morone may ve correct about where health insurance in this country is headed. However, such a “compromise” will be an unmitigated defeat for market principles. Corporatism is not capitalism.
I guess we’ll find out if there’s any magic in a market that neither party can legally walk away from, thanks to the individual mandate and the guaranteed issue clause. Color me skeptical, though.
Insurance companies are run by people. They are opportunistic, like the rest of us.
Give them access to a grasping, crony-capiatlist Socialist like Obama, and they will line up to get more customers at higher rates. To do this, Obama and his fellow Democrat tyrants had to pass a law that requires everyone to sign up or pay a penalty, offering a limited range of plans. This is the government giving monopoly power to select insurance companies, under the slogan of providing health care for everyone.
The government gets a hidden tax, payed by the healthy to support the poor and sick. The main point is that the tax is unbounded and hidden in the new insurance premiums, with profits to insurance companies and more power and campaign contributions to politicians.
But, remove ObamaCare and the monopoly, and then the insurance companies will return to competing for business. Insurance premiums will go back to what they were, as much as state meddling will allow.
Remember that health insurance is/was a highly regulated and distorted product, packed with required coverage for special interests such as chiropracty and accupuncture, arranged by corrupt state politicians.
The federal and state governments have already broken the free market in health care. Our policy makers have already designed a system of price controls that doesn’t work. Their solution is to cover up this failure by blaming “the market”. The “market” is short for the freedom of people to produce and cooperate among themselves, always delivering value and achieving efficiencies that government cannot match.
That freedom is what the government has taken and is taking away, in favor of higher hidden taxes and rationing. Our leaders have been buying votes with lavish promises of what the government will deliver. Their plan is to put us all in one boat, then make us pay for their promises to prevent that boat from sinking.
Obamacare Bails Out Medicare.
The magic of the market can’t exist where markets don’t exist, and markets don’t exist in healthcare. It takes government to create markets, the self organizing capability is an illusion. Health exchanges are a basic attempt to simulate one, but insurance itself is contrary to markets by interposition of a third party. The exchanges begin the process through standardization of benefits and terminology, and the barest indication of prices for still widely varied products. What they don’t do is create open markets in costs. This is because healthcare depends extremely heavily on price discrimination and the only way of preserving this is hiding prices from the customer, largely through insurance. Markets can only be created through the abolishment of insurance along with many other licensing restrictions and supply limitations, but all we have are calls for markets without consideration of what is necessary to actually create them.