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    Washington Post's Obamacare Miracle

    On Christmas Day, the Washington Post editorial board miraculously characterized Obamacare as "free-market economics" at work. This glorious gift of the media elves surely would have lifted the spirits of the Santa Claus administration. Unfortunately, the elves missed the mark in several areas, leading to work that looked more trollish than elvin.

    First, it bears repeating that what we had before Obamacare was not the free market. Health insurance is one of the most regulated industries, and between Medicare, Medicaid, veterans' benefits, local programs, and benefits for government employees, the government was responsible for about 48% of all health care spending in the US in 2010.

    That number doesn't even reflect the pervasive market distortion of tax benefits for carrying employment-based health insurance, which gave us the health insurance industry and the third-party payer model in the first place. Some call those "tax expenditures," but they are really just perverse incentives that warp the health care market and make it less efficient and affordable.

    By spending so much money and using tax policy to favor medical spending, the government increases the cost of medical care by an amount that cannot be calculated without several layers of guesswork.  It is clear, however, that government policy affects every medical transaction, even the ones in which no money changes hands.

    It was not a free market in any way, and is even less so under Obamacare. But don't tell that to the editors at the Post.

    On The Affordable Care Act’s free-market economics

    FIRST, PRESIDENT Obama’s Affordable Care Act (ACA) forced millions to switch their insurance plans. Now,critics say, those people can’t keep their doctors, either. Another broken promise? More proof the ACA is a disaster?

    Not quite: As with all of those canceled policies, this “outrage” isn’t good evidence that the law is flawed, no matter what the president may have promised.

    It's not that critics are saying people can't keep their doctors, it's that people can't keep their doctors, at least not while fulfilling the mandates of the law. In California, for instance, 70% of doctors are not participating in Covered California plans. 

    The Post's first clue that Obamacare is not an expression of the free market should have been that millions were forced to change their health plans. In a free market, no one is forced to do anything. That's why it's called "free."

    The phrase "As with all of those cancelled policies" blithely tosses away the problem of currently 6 million and as many as 129 million plans that could eventually be cancelled and replaced by the "better" Obamacare-compliant plans. The unstated talking point is that while the plans were, in fact, cancelled, it was only to provide the now uninsured with "better" plans. I can stop putting "better" in quotes once I say that the plans are considered better by the far left because the plans include all the hot items from their dorm room echo chamber bobblehead sessions. 

    However, as the Department of Health and Human services has now admitted, many of those plans are unaffordable. As a result, people who had insurance before it was made affordable now can't afford it. As WaPo puts it,

    The issue is that some of the people who must switch health plans are transitioning into policies with narrow networks that don’t always include the doctors, hospitals and other providers they used before. Anecdotes have emerged of people parting with physicians they’ve trusted for years.

    By using "some," "don't always," and "Anecdotes," the Post editors hope to imply that only a small subset of people will be affected -- as if the eggs shouldn't care what it takes to make the omelet. 

    Yet, even for people who have never switched plans, this sort of thing happened well before the ACA; insurers constantly negotiate with providers over inclusion in coverage networks and payment rates.

    Insurance plans changed and were sometimes discontinued before the ACA, but not on this scale. And there is a fundamental difference between insurers deciding on their own that they need to reconfigure their product line to better compete for customers and the government mandating the change.

    The editors go into the many mandatory coverage features of Obamacare, which raise the functionality of the insurance, while inevitably increasing its purchase price. They then continue with the heart of the problem:

    For the uninsured — a huge portion of those who will be on the ACA’s new marketplaces — any of those would be a step up.

    Those previously uninsured are a red herriing with respect to canceled policies. 

    There is no step up. If you were uninsured before Obamacare, it's because you either didn't have the money to spend on health insurance or you didn't want to spend it that way. If you didn't have the money before, other things being equal, you still don't have it. The kind of policy you're likely to get, covering wellness visits and such, is likely even with subsidies to cost more than the cash price for the "free" stuff, not even considering that you will still have to pay 30% to 40% of the cost of care in co-payments. 

    It's the millions of people with cancelled health plans with whom we should be concerned, because they probably bought health insurance they were concerned about their health.

    After factoring in government subsidies, many transitioning off policies they had in the individual insurance markets will have a good deal, too.

    And many will not. But people aren't "transitioning off policies," they're having their policies cancelled and then being forced to find new ones. As HHS said, in many cases they can't find anything they can afford. And those subsidies aren't coming from nowhere -- they're being paid for, as with every other government expenditure, with taxes, borrowing from future taxes, or printing money.

    The ACA won’t leave everyone better off. There will be a few people who will end up having to pay more than they used to for access to networks of comparable size. There are also some places that don’t have enough competitors in the marketplace, which means some people won’t have every option.

    The snide tone comes through, despite the attempt to be even-handed. But looking behind the smug condescension, I'm struggling to think of anyone better off under the ACA. And certainly, the lack of competitors in many areas will lead to abuses which the Post's fellow travelers will happily blame on the free market.

    But now we come to the really miraculous part.

    Still, Republicans, many of whom claim to favor market approaches to expanding health-care coverage but oppose excluding patients with preexisting conditions, can’t credibly balk at the natural results of competition organized under those very principles.

    Republicans should continue to oppose forcing unworkable regulations on the market, and allowing people to wait until they're sick to buy insurance is unworkable, raising prices for everyone and straining the definition of "insurance."  Republicans should instead advance state-level programs and charitable arrangements that approach the problem in a way that doesn't distort the entire market.

    But taking the Post's statement as it is, just because some Republicans favor market-based solutions and have accepted the left's pre-existing condition arguments, and even if we were to accept the laughable notion that Obamacare represented a free market solution, that doesn't mean that even they can't reject Obamacare. It's not the only possible solution, and it's one that comes with excessive baggage.

    Rather, Republicans tend to favor treating the rare exceptions (people whose health status makes them expensive to insure) with special case programs. 

    The ACA isn't some natural market factor. It's the heavy hand of big government forcing its will on the market. In their hubris, the central planners believed they could design a market that's better than the free market. They could not, and now are scrambling to offer tweaks to fix their unfixable scheme. 

    No one can expect low premiums and near-unlimited service, particularly in a system designed to spread costs around so that the sick and the old can finally obtain decent health coverage from private insurers. That’s not a mistake. It’s economics.

    And there you have the real miracle: someone in the pro-Obama media finally told the truth: Obamcare is "a system designed to spread costs around," that is, to redistribute wealth. It is not a free market system, or anything based on one. 

     

    2 comments
    Edwin Loftus
    12/30/2013

    But, Loren ... If Big Brother says that a heavily controlled and subsidized market is a "free-market", then "free-market" means; a heavily controlled and subsidized market.

    lheal's picture
    Loren Heal
    12/30/2013

    Doubleplus good point.