Obamacare has us on the road to socialized health insurance

By | March 14, 2019

Some Republicans just want President Trump to shut up about Obamacare repeal. As reports trickle out that the White House is quietly hatching an Obamacare replacement, some in the GOP establishment want Trump to stop reopening the wound of healthcare policy and to just leave things as they are.

But things cannot be left as they are. The nation’s healthcare system is heading off a cliff, at the bottom of which is socialized healthcare. It may merely be socialized health insurance, known as “single-payer” healthcare or “Medicare for all.” It may be an even more fully socialized healthcare system as in the United Kingdom, where doctors are agents of the state.

The Left knows the U.S. is on this trajectory. They know Obamacare is an unsustainable failure, which is why they have moved on to campaign for further changes. The real debate in the Democratic Party is not whether to create socialized health insurance for everyone, but whether to bar people from also buying private insurance. Regardless of whether former President Barack Obama and the bill’s congressional authors intended the 2010 law to work, or instead to throw the nation toward the cliff of socialized healthcare, that’s where things are now headed.

Republicans have two choices: to reform healthcare in such a way that kills Obamacare or else to brace for the crash at the cliff’s bottom.

Obamacare never offered equilibrium, and it can never provide it. Obamacare was blended as an unstable solution, attempting to combine market forces with a safety net. The law’s “exchanges” are marketplaces, but they are markets tied up and weighed down with a suffocating tangle of regulations which the authors attempted to offset with subsidies. Price controls and mandates in these marketplaces are supposed to transform “private” health insurance into a safety net in a way that has made the plans not actually function as insurance at all, because they made it illegal for insurers to price in risk.

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Such a system cannot work. Insurers cannot make a profit while also playing by all the rules Obamacare laid out.

And the result has been a tempest-tossed market where insurers drop out of Obamacare exchanges, eroding the one force — competition — that can provide patients and customers with real value and savings.

So Obamacare must be replaced. If the replacement is not to be authored by Bernie Sanders or Alexandria Ocasio-Cortez, it will have to be authored by Republicans. There’s a fair political debate about the politics of rolling out a repeal and replace plan in the months before a presidential election — healthcare has shifted from being a positive for the GOP to a negative. But the GOP needs a plan at some point.

Conservative healthcare reform would begin with two facts. First, healthcare cannot function like other markets because of the moral consensus that we cannot leave people without it. Americans broadly find it unacceptable to let people die because they cannot afford an available treatment. They also frown upon the idea that a person should go poor because he has cancer. Thus, the U.S. needs a safety net to help people receive treatments they cannot afford.

Second, market competition among both providers and insurers is the only way to provide most people with affordable quality healthcare.

In order to make these two premises work together, lawmakers must separate the healthcare safety net from the healthcare market. This may involve expanding Medicaid while deregulating private insurance. It may involve abolishing the preferences for employer-based insurance. It may involve government reinsurance as a safety net for private insurers.

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We hope the think tanks and White House economists are smart enough to create a plan that diverts from the ruinous road to single-payer. Any successful plan will include the two things healthcare needs: a robust safety net and a vibrant free market, without trying to mix them together.