An Alternative To The ACA Is Needed

The idea driving the passage of the Affordable Care Act was simple and laudable: We must help those who cannot obtain health insurance due to pre-existing health conditions, prohibitive costs, or a combination of the two.  This was to be accomplished by both establishing new mandates regarding coverage and creating a system of subsidies based on income.  In addition, in order to encourage states to broaden their eligibility for Medicaid coverage and allow more low-income individuals to enroll, the federal government would, at least for a few years, cover the increased costs for states that agreed to participate.

Multiple misstatements, confused clarifications, and endless extensions later, we now know that although the idea was simple, its execution was anything but.

Some of the problems were surely the result of overlaying a federal system atop both myriad state insurance programs and a complex private insurance market.  Some of the difficulties were certainly due to ideological differences regarding the proper role of the federal government.  Other compromises were driven by private interests battling to protect their profits.  Add a dollop of hubris and ladle a heaping spoonful of government incompetence on top, and the sagging soufflé that is Obamacare was ready to serve to the American people – like it or not.

There obviously needed to be a way to help those with chronic medical conditions, low incomes, or a toxic combination of the two to afford needed medical care.  However, the much-touted advantages of Obamacare turned out to be, when the American people finally got a look, both oversold and illusory.

The promise that Obamacare, through some financial alchemy never fully explained but presumed plausible, was going to cover everyone, reduce costs, and allow everyone to “keep your plans and your doctors if you like them ” is nowhere near the actual outcome.  In fact, we can now see the magic of Obamacare is instead simply a mix of well-worn public and private sector solutions that are much the same as the promises of those ancient alchemists to convert base metal into gold—less than meets the eye.

The public sector part of the equation is pretty much the same as every public sector solution: pour buckets of taxpayer money on the problem and assure everyone that you know what you are doing.  It is difficult to see this facet of Obamacare is anything other than a massive federal jobs program that will, as is typically the case, take care of itself at our expense.

The private sector component of Obamacare is nothing but Healthcare Economics 101 dressed up in new clothing: lower plan costs by both reducing provider networks and increasing deductibles.  Therefore, in order to make the numbers (sort of) work, Americans had to be forced into plans that in many cases drastically narrowed their choices of doctors and ramped up their out-of-pocket costs.  Whether this is actually an improvement or merely a sham will be decided after we finally figure out whether we can now see the doctors we need at a price we can afford.

Going back to the primary problem that the ACA was meant to remedy, the skyrocketing cost of health insurance, it seems it would have been much simpler to create a system of premium subsidies based on the information already entered into our individual Federal income tax returns—no exchanges, no cancelled policies, and minimal hassle.

If there is a compelling national interest in helping citizens afford needed care, why whip up new systems instead of using those that already exist?  The necessary tax data would have been easily obtainable, and private insurers would certainly have been happy to welcome more paying customers.  The premium subsidies necessary to cover those with pre-existing health problems would obviously have been higher, but those inherent costs would no longer be borne by the individual, and private insurers would still be able charge rates congruent with the expected costs of treatment.

Would this have been expensive?  Yes.  Very.

However, it would have been minimally disruptive and absolutely transparent regarding taxpayer liabilities.  In addition, employers terrified of the costs of Obamacare mandates would no longer be driven to turn us into a nation of part-time workers.  This simplified approach would have been preferable to the ACA beast now lurching across the insurance landscape, and it might still provide a functional fallback position that will allow us to ditch Obamacare – yet still offer coverage to more Americans – while we debate more reasonable alternatives.

Also published in The News-Gazette ( August 24, 2014

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