A week or so ago, an Indiana legislator–a Republican– posted a comment to Facebook about the current effort to “repeal and replace” the Affordable Care Act. I know this particular Republican to be thoughtful and well-intentioned; he’s not one of the mean-spirited or rigidly ideological partisans who populate our Statehouse.
His “logic,” however, defied reality.
He began by saying that we are not debating healthcare–we are debating access to health care via insurance coverage and that government should “let the insurance market work.” (Why he thought the distinction significant mystifies me, but okay.)
I am a huge proponent of markets–in areas of the economy where they work. Most people recognize that healthcare is an area where markets do not work; market transactions require a willing buyer and a willing seller both of whom are in possession of all information relevant to the transaction. That definition doesn’t characterize doctor-patient interactions, and it also doesn’t characterize the health insurance “marketplace.”
Even if you assume that all citizens understand the complexities and “fine print” of the policies offered by health insurers, that they all understand the technical terminology employed and are able to make considered opinions about the nature and extent of their desired coverage, you are left with several major problems that cannot be solved by “market magic.”
First of all, most Americans get their health insurance through their employers. They don’t get to participate in the choices involved. (This coupling of insurance and employment is problematic for lots of reasons unrelated to the subject of this post; for one thing, it makes American businesses less competitive in the global economy. But that’s a subject for another day.)
Second, significant numbers of people who do not get their insurance through their jobs–either because they don’t have jobs or their employer doesn’t offer it–cannot afford the coverage they need. (That’s why we have Medicare and Medicaid.) In the U.S., non-governmental health insurance policies are priced to cover expenses that include not just the expected payouts to providers, but the costs of marketing, profits and taxes. Private insurance overhead also includes very substantial salaries paid to insurance companies’ management, costs not incurred by Medicare and Medicaid. Last time I looked, Medicare overhead averaged around 3% while private insurance overhead averaged around 24%.
Third, and most important: markets, by definition, are voluntary. (That “willing” buyer and seller…). Insurance works by spreading risk. If younger, healthier people decide they aren’t “willing” buyers–if only the elderly and sick and people with pre-existing conditions participate in the market–the whole system comes crashing down. Insurers have to charge higher and higher premiums, and policies become more and more unaffordable. That’s why the ACA’s mandate was an essential part of the law.
If we accept the premise that access to healthcare is a human right–and I am well aware that most Republicans do not accept that premise–then people who cannot afford insurance must be subsidized. For the reasons I’ve listed, providing access through “market forces” would add enormously to the costs of the insurance and thus to the amount of the subsidies.
There is a reason other developed nations have pursued a variety of ways to nationalize health insurance; it’s the only way to make universal access cost-effective.
When you deconstruct Paul Ryan’s rhetoric about giving people the “freedom” to go uninsured, and the GOP’s reverential references to “market economics,” what you get is what the Congressional Budget Office described: millions of Americans losing insurance entirely, and millions of others paying much more for much less coverage.
Eventually, Americans are going to have to decide between a system like “Medicare for All,” that pays for actual healthcare, and our current, unsustainable and immensely more expensive insistence upon subsidizing the bottom lines of Big Insurance and Big Pharma in the name of “the market.”
The purchase and sale of health insurance in today’s U.S. can be called many things, but a genuine market isn’t one of them.