Monday, July 9, 2012

The Healthcare Band-Aid

With the Supreme Court’s decision upholding President Obama’s healthcare reforms, opponents must now do what they should have done from the beginning—make the case as to why the change is misguided. No longer can legality or constitutionality be used as a shield, and no longer can the Court be relied upon to save us from our own bad choices.

First though, I must admit that there is an internal logic to the healthcare reforms (as described by the 4 judge “liberal” majority of the Court that believed it was authorized under the commerce clause). I’ll explain.

The problem with today’s healthcare is that it is very expensive. This is due in part to the law (signed by President Reagan) which requires hospitals and doctors to treat all patients, even if they do not have health insurance. These people may not have insurance for a variety of reasons: pre-existing conditions, too expensive, or they simply choose not to. To cover this expense, health insurance providers increase their premiums across the board, which results in higher insurance premiums.

The solution, according to the new law, is to get everyone insured. This is done in two parts: first, make sure that insurance companies are required to accept people they formerly wouldn’t. This is done by means of prohibiting denial based on pre-existing conditions and extending coverage to children on their parents’ plans until they are 26. The plan also has built-in subsidies for those who can’t afford insurance.

However, this will increase, not decrease costs, since it is adding more expenses for insurance companies. So to decrease costs, it is necessary to get those people who would otherwise choose to not buy insurance (as opposed to those who want it but can’t get it) into the insurance rolls. Their participation, since they are healthy, will bring the costs back down. This is where the individual mandate/tax comes in. It creates a requirement/financial incentive for those who would otherwise not purchase health insurance to buy into the system, thus lowering costs across the board.

Now, that’s the plan (in an abridged version). It is not centralized health care. It is the use of financial incentives in an attempt to get the citizenry to go in a specific direction. In large part, that is what made it originally appealing to conservatives (remember, the individual mandate was the conservative response to the single payer system proposed back in the 1990s).

But it suffers from two errors are central to the entire scheme.

First, it confuses healthcare with health insurance. Even if the plan is a success (i.e. decreases the number of uninsured people), that doesn’t mean that medical care will be either better or cheaper. In fact, health insurance companies right now are one of the primary reasons true healthcare is such a mess. And some doctors who have gone to a cash-only business model and refused to deal with health insurance companies have seen significant decreases in their costs, which in turn, makes their services more affordable. Health insurance is a means to a quality healthcare system; it is not the end goal. And focusing solely on insurance, rather than the underlying issue of healthcare, misses the mark.

Second, the bill’s solution to health insurance expense is not to seek ways to lower that expense across the board. Instead, it simply accepts high costs and seeks to redistribute them. This fails to get at the heart of the problem, which is that health costs are extraordinarily high and rising. There are proposals that address this central issue, but the Obama reforms do not.

The current reform is a Band-Aid, a superficial solution that does nothing about the deeper healthcare problem. It should be exposed as such. What our healthcare system needs is real reform.
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