Affordable Care Act – Repeal – Replace – Fail !

Photo by Fibonacci Blue

Photo by Fibonacci Blue

I have not posted for quite a while, but felt like I needed to speak up when I saw what the Congress had come up with to repeal/replace the Affordable Care Act (ACA or Obamacare).  I am so disappointed that these politicians had 8-years to think about this… and, they utterly failed.

The Plan

Here’s the plan.  Congress is proposing to keep most of the ACA in place and eliminate the mandatory purchase of health insurance; and further subsidize healthcare purchases by offering tax credits for people who buy insurance.  The rest of the ACA will continue to be in place.

The Good

To their credit, congress did get rid of the mandate to purchase insurance.  This could create a black-market for health care.  If this black-market grows large enough, it could create a free-market for health care services that drive prices down.  Unfortunately, this black-market will probably not grow because only about 20 million will be attempting to purchase healthcare services through this way.  About 170 million would still be using the faulty employer-benefit / insurance model.

The Bad

Congress has completely forgotten the middle-class worker and small business owner who will have to pay for all of the subsidies they want to pile on top of the already heavily subsidized ACA.  As Bill Clinton said during the 2016 presidential election, “So you’ve got this crazy system where all of a sudden 25 million more people have health care and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It’s the craziest thing in the world.”  Congress has now doubled down on government subsidies that will need to get paid by someone… and that someone will be the same someone that paid in the ACA.  The same people Clinton mentioned in his statement… the “people who are out there busting it”.

The Ugly

What bothers me most of all is that our politicians are terrible economists.  They have no clue what is causing the rise in health care costs.  This is evident by the failed policies they keep coming up with (Democrat or Republican).  They don’t understand that a free-market economy could dramatically reduce our costs and eliminate the inherent moral hazard in paid-for health insurance and healthcare.

The Real Issues

Here’s the problem.  Most Americans are paying high healthcare costs.  They are paying high insurance premiums and high deductibles.  The current plan from Congress does nothing to remedy these problems.  So, let’s look at why our healthcare costs are high:

  • The U.S. obesity rate is almost double other developed countries (66% vs 37%)
  • Between government, insurance companies and medical service conglomerates, our overhead cost to administer healthcare is outrageous (25%-US vs 12%-Canada)
  • We are paying for tests and procedures we don’t actually need.  “$750 billion—about 30 percent of all health spending in 2009—was wasted on unnecessary services
  • There is no competitive pressure to reduce costs on medical procedures.  I doubt you even shopped around for the last expensive procedure you had done… because your insurance is paying the bill.  Did you know that a routine colonoscopy can range from $840 to $4,400 in the same city?
  • Government is mandating the scope of insurance we must purchase; even if we don’t want or need it.
  • Many people don’t take care of their health because they know that they will not have to pay their own medical bills.  I understand that there are many people who live a healthy life and still end up with cancer or another expensive disease that’s not their fault.  But many expensive health-related operations can be avoided by healthy living.
  • Large employers are dominating the negotiating power in healthcare benefits.  In the depression, wages were limited by many private sector companies (don’t ask me why). At this time, employers started offering benefits to attract quality employees.  This practice morphed into a market today that heavily favors employment with large companies because they will provide a great benefits package.  I am not opposed to this, per se.  But it causes a major imbalance in the negotiating power of the individual who wants to purchase health insurance.

Sadly, a single-payer or universal healthcare program would be infinitely better than the ACA or the currently proposed healthcare system.

Unfortunately, Congress’s plan only addressed one of these issues.  To be clear, I don’t have the answers.  But at least I understand the problem.  I would really love it if you can try to share this message to as many as you can.  Maybe our politicians will listen to you.