Straight Talk on Healthcare

Alexandra F. Baldwin

In 2009, Democrats passed President Obama’s signature healthcare plan – the humorously named Affordable Care Act – under the guise of a few major promises. First, they promised to extend health care access to large numbers of people who currently had, at best, limited access to care. These included people who didn’t think health insurance was worth buying previously (Pro tip: learn what the word “afford” means), or people who were disqualified because of pre-existing conditions.

The second major promise was that overall healthcare costs would fall. Not, as they have since retroactively pretended to have claimed, that the pace of increases would slow, but that costs would actually fall. The President went so far as to specifically claim that the average family would see an annual premium decrease of $2,500.

The first promise has largely been kept. Whether by incentive, subsidy or threat of penalty, there are substantially more people who are now covered by health insurance that allows them greater access to the health care system. When extolling the virtues of the law, this is invariably the first point raised by Democrats. It is an objectively true and unquestionably positive benefit of the ACA: lots of people can now go to the doctor who could not previously do so in a practical sense.

The reason they can, of course, is because Obamacare mandates that someone else pay the doctor. Generally, that “someone” is a combination of other policyholders and taxpayers (mostly very wealthy taxpayers). This gets us to the second promise, which has decidedly not been kept.

The claim that insurance premiums would fall was, on its face, a ridiculous assertion, and was noted as such at the time. Democrats claimed that we could provide health care products and services to 30 million people who previously had not consumed them, charge those people less than the cost of those services (otherwise they’d have already been insured) and somehow reduce the overall amount of money that we spent on health care. The ACA, in the broad sense, attempted to “fix a broken system” by making that system bigger. Seven years of history has confirmed that this idea was as stupid as it sounded at the time.

Fast forward now to 1:30 a.m. this morning, when the Senate, on an almost strictly party-lines vote (Rand Paul flipped, Diane Feinstein seems to have gone to bed) voted 51-48 to repeal Obamacare. In the context of everything we have heard for the last seven years, this vote is hardly a surprise and is notable only in the fact that the Senate stayed up until 1:30 a.m. to do anything other than raise money.

Fear not, though, folks, because these Republicans have vowed to keep the “good” parts of Obamacare and only repeal the bad ones. The good ones include the provisions for people with pre-existing conditions and mandating that insurance companies allow children to remain covered by their parents’ health care until they are 26 years old. The bad parts include the mandate that everyone buy insurance, the taxes used to pay for all of the new care consumed and, most importantly, the fact that the whole thing is super expensive.

If you follow the logic, Republicans’ current plan has two parts. The first is to cut the amount of money flowing into the system (special taxes included in the ACA and the premiums paid by people who bought coverage because it was mandated). The second is to maintain the amount of service covered under existing insurance plans – the people who drop out, after all (those who bought only because of the mandate) are paying more than they are consuming, otherwise, they wouldn’t be dropping out.

So, we continue to provide roughly the same level of services, but there is less money coming from healthy people or from taxpayers to pay for it. Who, then, do we think is going to pick up the slack in paying for those services? There is really only one payor left: the people who continue to pay premiums to be covered by that insurance. I probably don’t need to tell you what is going to happen to their insurance premiums…

Republicans, in other words, are totally and completely full of shit.

What Democrats refused to admit in 2009 and Republicans refuse to admit today is that there are only two ways to actually reduce health care costs. We can either consume less health care, or we can pay less for the health care services we consume. Our policy debate, however, almost always ignores these two areas and focuses instead on moving costs from one payor to another. Obamacare went the step further of increasing the amount of care we consume, both by adding new people and by mandating that additional services be covered.

How might we consume less health care? In our current system, there is really only one way: by telling people they can’t have it (or, more accurately, that their communally paid-for health insurance plan will not pay for it). Since we have nothing in our current group insurance system that discourages consumers or physicians from extraneous services (and quite a bit that actually encourages such services), our only hope is that the payors – insurance companies – simply start telling people “No.” As best I can tell, Democrats are unwilling to deny anyone any healthcare service under any circumstances (that is maybe a bit hyperbolic), and Republicans are unwilling to deny coverage for anything other than abortions, sex change operations and birth control (which is almost certainly a net cost saver).

There is something of a vicious cycle here. Health insurance premiums are rising, which increases the expectation of users that they will be able to see whatever doctor they want for whatever test or treatment whenever they choose. That kind of consumption demand makes premiums rise even further. Users demand that more and more services be paid for out of the collective pool, which just makes the collective pool get more and more expensive. Lather, rinse, repeat.

All of which is a long-winded way of saying: without a dramatic revamping of the way we consume and pay for healthcare, we’re not going to consume less healthcare. There is little marginal cost to patients to use services, marginal benefit to doctors and hospitals to provide them, and nobody with any real say in the decision-making process with an incentive to cut back on expenditures.

Likewise, there aren’t a whole lot of ideas on how we might make current health care services cost less without having to tell consumers that they can’t have what they want. Sure, there are people (mostly on the left) who think the government should control pharmaceutical prices, but they grossly exaggerate how much that really contributes to cost, and they ignore the obvious impact of lower prices on future innovations in pharmaceuticals. At the same time, there are people on the right who even more grossly exaggerate the effect of malpractice costs (and associated defensive medicine) and certain therapies and procedures that they find morally troublesome.

Obamacare provided a lot of people with a means of paying for health care that they previously did not have. It paid for it by spreading those costs, directly and indirectly, onto all taxpayers and participants in health insurance plans, making those plans more expensive. Republicans are currently claiming that they can maintain that level of service for all (or most) of the people who benefited from Obamacare, maintaining the current service levels and quality of care for general insurance participants, and by relieving the cost pressure than all of that new coverage created.

As far as I can tell, their proposal is to rely on “magic.”

Healthcare is really expensive. It is really expensive for a lot of reasons, all of which boil down to the simple fact that Americans expect to receive unlimited access to high-quality care on very short notice and they don’t want the cost of that care to influence their ability to get it. For the moment, we are perfectly willing to allow our politicians to lie to us about the prospects for achieving that without costing an ever-ballooning fortune.

For eight years now, we have been subjected to the alternate reality of the Democrats’ healthcare ideas. Now, it’s the GOP’s turn to offer platitudes and promises rooted firmly in the world of make-believe-o-nomics. Care to take a guess at the kind of discussions we’ll be having in 2020 or 2024 about healthcare in America?