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It is very nearly astonishing that the Left-leaning Economist would even admit there is anything wrong with the ACA. Generally speaking, the Left has steadfastly refused to even consider that their heroic legislation had even the slightest flaw, preferring instead to vilify detractors as being in favor of sick people.
So let's see if the Economist is able to accurately represent both the law and its flaws.
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America’s health-care system remains dysfunctional, but it could be made better (The subtitle contains a subtle leftist meme, "America's health-care system," which suggests that it is an entity as opposed to an industry.)
It is now nearly a year since the roll-out of Obamacare. The launch was a shambles, and Obamacare is a totem for every American who hates big government. Republicans will deride it, yet again, in the mid-term elections. (The implication is that Republicans are out of bounds for being anti-ACA, and that they should shut up about it.)
Obamacare is indeed costly and overcomplicated. (And ineffective and ill-conceived and punitive and...)
Yet it is not to blame for America’s health mess, (Let's see what the author says is to blame.)
and it could just contain the beginnings of a partial solution to it. But that will only happen if politicians treat health care like a patient: first, diagnose the disease, then examine whether Barack Obama’s treatment helped, and then ask what will make the patient better. (This is a job for politicians? Really? The same politicians who created the mess?)
A quick check-up
Begin with the disease. At the core of America’s problems with health care is a great delusion: it likes to think it has a vibrant private marketplace. (America thinks this? America is an entity with singular thoughts? In actual fact, very few, if any, think we have a "vibrant private marketplace." Almost everyone acknowledges that the healthcare system is broken. As we will see, the author likes to give unsupported assertions as if they were fact.)
In fact the country has long had a subsidy-laden system that is the most expensive and complicated in the world, (This is what conservative have been complaining about for decades!)
with much of the government cash going to the rich, (Unsupported assertion. Government healthcare cash went to the rich? What does this even mean?)
millions of people left out and little individual responsibility. ( A free market, something we haven't had in decades, relies on individual responsibility. It is government intervention that has discouraged this and created our present problems. Healthcare has been heavily legislated and regulated, where government spent $.47 out of every healthcare dollar. Government forces insurance policy language and coverage, strictly limits choice, and dictates pricing and access. All of this is contrary to the free market.)
America devotes 17% of GDP to health care, (Again note the implication that America is a singular entity, which "devotes" spending to this or that. The phrasing almost sounds like there's a deliberate allocation of America's collective money by some governing body.)
compared with 9% in Britain, yet nearly 50m Americans were uninsured in 2012 and life expectancy is slightly below average for a rich country. And the taxpayer foots much of the bill: government health spending per head in 2012, before Obamacare’s main provisions took effect, was 50% higher than in Britain, which has a nationalised health system. Some spending, such as the huge Medicare programme for the elderly and Medicaid for the hard-up, is obvious. But much is opaque. (The author is swerving into the truth here. Much of the healthcare system operated totally outside the marketplace.)
Employer-sponsored coverage is tax exempt, costing the government at least $200 billion a year. (This is nonsense. Declining to tax something simply means those who were going to be taxed get to keep their money. This does not "cost" the government, as if government should tax something simply because it isn't.
In addition, taxation does not happen in a vacuum. Taxes are an additional cost, which means money that could be spent elsewhere by those who actually possess it, gets turned over to the government instead. These economic effects filter all throughout the economy. And we know that taxation discourages the activity being taxed. That's the reason for tobacco taxes, isn't it? So if government taxed employer-provided health insurance benefits, fewer people would be insured, correct?)
These subsidies fuel health-care inflation (No evidence for this. In fact, just the opposite. Not taxing something means it costs less.)
and favour rich employees, who would pay higher taxes if they were compensated with wages alone. (Because it's always better to make sure the rich pay more. Notice in this equation that nothing helps the lower wage worker. The "inequality" is remedied by advocating more tax on the rich.)
Just as bad, roughly half the population finds that their health insurance is tied to a job; this makes it harder for them to switch employers. (This was the intent of government and unions, to force eeevil employers to take better care of their employees. Now we have to "rescue" employees from the clutches of employer-provided heath insurance using government?)
Rising premiums come out of wages; health-care inflation is one of the main reasons why pay for the average American has stagnated. Meanwhile many of the uninsured are free-riders: young people who do not buy insurance but rely on costly emergency rooms if something awful happens.
The system seems designed to encourage waste. (Once again, government meddling has unintended ripple effects.)
Doctors are often paid for every test or invasive procedure, rather than for keeping patients well. (I wish the author would connect the dots. Why do doctors do this? Because of malpractice lawsuits! Tort reform, anyone?)
Patients don’t know what anything costs, and the bill will in any case be settled by a third party, so they don’t haggle. (They can't haggle. And there is no benefit to haggling, because it doesn't change what the customer pays.)
Prices can be sky-high and vary wildly. A mammogram in New York may be less than $100 or more than $1,700. No matter what the Republicans say, this is not a free market in any normal sense. (Um. It is just the opposite. It is the Left who maligns the healthcare system on the premise that the free market failed and healthcare cannot be left to market forces. Thus we have ACA. Is the author really this clueless?) But what about the treatment?
Ironically the “socialist” Mr Obama did not do the one thing that might have cut taxpayers’ costs dramatically: introduce a European “single payer” health-care system (with ideally some small treatment user fees to deter overuse). (Note that the author puts "socialist" in quotes. The addition of the quotes is designed as a diminutive so as to poo-poo the idea that ACA is socialist. In fact, the ACA is socialist. There is really no such thing as socialist/not socialist. It is not an on/off sort of thing. Therefore, we are perfectly justified in deeming any particular economic feature as socialism, even if the system in which it appears is not socialistic. We are talking about principles, you see, and socialistic principles, wherever they appear, are worthy of being reproached.)
Instead he tried to tweak America’s system in two ways—to expand coverage and to reduce costs. ("He" tried to tweak? Does the president now have the constitutional authority to make law? And, these tweaks, actually, these major interventions into the free market, are not so innocuous as the author implies. They constituted a systemic revision of how health insurance was delivered, procured, and what would be covered. Tweaks? Hardly.
And it is worth noting that healthcare does not have to be "Single Payer" to be socialistic.)
So Medicaid now covers the not-very-well-off as well as the truly poor (at least, in Democratic states), (Medicaid is not the ACA, and anyone who gained insurance via medicaid is not an ACA success.)
and Obamacare bans insurers from charging sick people higher premiums. (Which has no basis in the concept of insurance. This feature does not follow insurance actuarial rules, it does not collect money or pay benefits according to sound financial insurance practices, and it is not tied to any known economic principle. It is, quite simply, a welfare benefit.)
To expand insurers’ pool of patients and keep costs down, it required Americans to buy insurance or pay a penalty. (Oh, of course. This is not socialistic at all. A definitely free-market concept...)
To make insurance-buying easier, Mr Obama introduced (He did what? He wrote this all up, instituted it, and "introduced" it to us?)
online exchanges where people can shop for a health plan, and offered subsidies to those who cannot afford one.
The results are mixed. Practically every competent health-industry lobbyist managed to insert a line protecting the services his paymasters provide—so Obamacare is too costly and too complicated, but it is doing a little better than it is given credit for (see article). The share of uninsured 18-64-year-olds has fallen from 18.5% in the second quarter of 2013 to 13.9% in the second quarter of 2014 according to a survey. (It was just announced that ACA enrollments are 7.3 million instead of 8 million previously claimed. And the CDC has a different number for 2013, 15.3%. Further, the total number of uninsured in the U.S. is 13.4%, which equals 41,540,000. This is after a year of mandatory insurance, a blast of advertising, billions of dollars spent on Navigators, and the help of a complicit media.
But beyond that, no one says how many of the 7.3 million were already insured, and simply changed to ACA for the subsidies, or were forced to change because of their existing non-compliant plans.)
This is probably due mostly to the expansion of publicly funded Medicaid, rather than people flocking to the Obamacare exchanges, on which people buy their own insurance. Encouragingly, health-care inflation has also fallen back, though that may largely be because of a weak economy.
So what would make American health care better now? Since its failings lie more within the system than with the president’s attempt to reform it, health reformers should concentrate on three areas that could make its flawed market work better: directing handouts towards the poor rather than the affluent, nudging individuals to take charge of their own health care, and making sure that prices are transparent.
Injecting the right people
For a start, Congress should move towards scrapping both the tax break for employer-provided health insurance and the requirement that firms offer it. Those savings (Savings? For whom?) could be used to help cover subsidies for the poor. (A tax increase to redistribute money from one set of taxpayers to another. Now that is a novel idea. What original thinking, what brilliance!)
Without the tax distortion, employers would pay higher wages instead of benefits (They would? What fairytale land does the author live in?)
and workers would shop around for the best value health plans. (By choosing from one of the three carriers on the exchanges... Whaaa?)
That is already beginning to happen. Flawed though they are, Obamacare’s exchanges could be the foundation of a new model. (The exchanges are already a new model. In typical leftist fashion, failure does not deter the leftist from doubling down on it. It isn't because the idea is bad, no, it's because it wasn't executed properly, it wasn't funded enough, or the right people weren't doing it. So we just need more. More taxes, more laws, more government involvement, more control, more mandates. We just don't have enough government!)
Employers are already making employees pay more of their own individual health costs upfront. (Employers are? Whaa? Each exchange plan is $6350 out-of-pocket. Each exchange plan contains a mandated package of coverages, exclusions, and conditions. It is the ACA itself that is forcing people to spend money on their healthcare. Total and complete nonsense!)
A worker who has to pay the first $1,000 of his annual bills out of his own pocket is far more likely to shop around. (Wait, it's now a good thing?Paying more out of pocket is an inducement to shop around? I'm confused.)
And as patients become more like consumers, health-care providers are improving their game (see article). (I'm even more confused. We WANT people to be more like consumers? We WANT a free market concept? We WANT consumer-driven healthcare? By increasing the amount of government involvement? By subsidizing premiums? By passing 1900 pages of legislation? This makes no sense at all.)
Walmart and other retailers are selling basic medical services more cheaply and outside usual hours.
Reform will work only if prices are transparent. (This is more nonsense. Price transparity is not the driving factor of cost savings. All this simply means is that the consumer should be able to see how much he's being overcharged. Since everything is controlled, he has no recourse. The ACA has rendered the consumer powerless, and more of the same will not change this.)
This is where antitrust and other competition authorities could come in. (Yes, of course, the answer is more government.)
Cosy deals between hospitals and insurers that suppress price information should be barred. The government should release more data on the price and quality of doctors. In April it published doctors’ charges for treating elderly patients, but largely withheld the most useful information, such as data showing doctors’ treatment of specific patients over time. (Price information is irrelevant if the consumer is powerless to do anything about it. Reimbursements, coverages, and policy features are mandated. Markets are restricted. People are forced to buy insurance even if they don't want to. None of what the author proposes will have any effect whatsoever, because the author has not properly identified the problem.)
Obamacare’s effects will not be fully understood for years; but it will never be the core of the problem. (Being fully understood is not a requirement. It is understood enough to know it is a colossal failure. And it is indeed the core of the problem, if the core of the problem is government meddling in the private lives of Americans.)
If America wants to stick to the idea that it has a health-care market, then it should focus on trying to make it more like a market—with prices, competitors and some form of choice. (Which is exactly the opposite of what the author has advocated all through the article.)
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