Ignorance on health care policy is the pre-existing condition of both political parties. For the past four election cycles, Republicans lied to us about repealing Obamacare and finally allowing a market-based system built on competition to flourish. Now they are officially running in November on the same platform as Democrats on health care, the defining economic and fiscal issue of our time.
While the GOP base is captivated by the Kavanaugh saga and the spectacle of GOP leaders fighting on this one issue, we have forgotten about the biggest betrayal of all: Obamacare. Republicans not only lied to us about repealing Obamacare when they controlled all three branches, they have now championed the core elements of the law, thereby making the entire premise of Obamacare a consensus. By ceding the entire narrative on health care, they have committed the ultimate malpractice by exonerating the Left from blame for hurting consumers. Quite a feat indeed!
Just before the House left town for the entirety of October, Rep. Pete Sessions, R-Texas, the chairman of the pivotal Rules Committee, introduced a resolution proclaiming that those with pre-existing conditions should have “access,” under any GOP Obamacare replacement, to plans that essentially codify the community rating regulation of Obamacare. Now, obviously Republicans are done with health care anyway, so this issue is, unfortunately, moot. But it’s jarring is that Republicans continue to echo the Democrat talking points without educating voters on how we got to this point and who is at fault. This follows comments made by Mitch McConnell a few months ago: “Everybody I know in the Senate, everybody is in favor of maintaining coverage for pre-existing conditions.”
There is a pre-existing condition plaguing committee chairmen and leaders of both parties who preach government-run health care. That condition is grave ignorance of how we got to this point with such a dysfunctional health care system.
We are told by the chief intellectuals and policy experts that we must destroy health care and the medical insurance market for everyone because of those with pre-existing conditions. But the entire discussion over repealing Obamacare hinges on one reality that everybody refuses to discuss.
I’m often asked: What is the conservative solution to pre-existing conditions? While there are many solutions put forth (read my ideas here or listen to this podcast), we fail to ask the first question: Why do we have a problem with pre-existing conditions and access to health care in the first place? Once we answer that question, the solutions, at least for future generations, will be self-evident.
The first thing is to recognize that the world is not a utopia and there will be a certain percentage of people who are chronically ill and in need of costly treatment that can’t be provided exclusively through the traditional insurance market. However, the best way to deal with pre-existing conditions is to isolate and minimize the problem — that is, to lower the cost of health care itself (minimize the problem) and to deal with the chronically ill separately, rather than increasing insurance rates on everyone (isolate). The only way to do that is by empowering the consumer to control his own health care and risk-pooling decisions (insurance or other alternatives) rather than empower a government-insurance cartel to price-fix us all into oblivion.
Ask yourself the following questions: Why is it that a young adult or even a parent on behalf of an unborn child can’t purchase a general casualty insurance plan similar to life insurance that would cover catastrophic medical needs, if they arise, in the form of indemnity payments? The plan would be guaranteed renewable as long as it’s locked in before the individual gets sick, when the insurance is still actuarily sound. Or how about health status insurance? This is Professor John Cochrane’s idea for purchasing an insurance of status that would pay the difference in new premiums if the policy holder develops a serious chronic illness.
One more question: Why do we need to insure against so many routine contingencies that don’t even require rocket science to treat? Why are the charges for so many commonplace medical services and products so prohibitive over and beyond the market demand?
The answer to all of these question is that through a series of government actions beginning in the ’50s and ’60s, the government both regulated and subsidized market forces out of the health care industry. The medical insurance cartel has been empowered, through subsidies, the tax code, Medicare, Medicaid, and price-fixing laws, to have a monopoly on the delivery of care, obfuscate all price transparency, and prevent both the consumer from enjoying any innovative competition and providers from offering direct care or other forms of insurance, such as general casualty insurance or health-sharing associations.
Through the health insurance tax exclusion for employers, the government put $270 billion per year into the pockets of the insurance cartel. The employer tax exemption did a number of things aside from reducing wages: It put individuals at a disadvantage for purchasing insurance compared to employment groups; it exacerbated the pre-existing condition problem by tying people to specific jobs and specific states for coverage; it made insurance not just a catastrophic backstop but the primary manager and price-fixer of all of health care, thereby jacking up the price of health care on all services that shouldn’t even need insurance. Coupled with the growth of Medicaid and Medicare, Obamacare, and other endless subsidies geared exclusively toward the traditional concept of insurance rather than alternatives, the money in health care is all with the cartel, which largely manages the government programs, instead of the consumer being king.
Worse, through their government-granted monopoly, they create hold-harmless clauses in contracts with providers that prevent doctors from offering life-saving treatments to those willing to pay out of pocket unless they are covered by the cartel.
With this brief history lesson in mind, it’s no mystery why our national expenditures on health care have popped from $27 billion in 1960 to over $3.3 trillion today. Assuming health care would rise at the same rate as the rest of the economy, that number would be under $250 billion today.
The amalgamation of all these factors is why in some ways our system of venture socialism – government control funneled through a phony “private” sector – is worse than even European socialism in terms of certain outcomes. Yet Republicans have wrongly taken ownership of the status quo rather than pinning this tail on the donkeys.
In a world without politicians pushing a hybrid of “private” sector and socialism to empower themselves and their lobbyists, we would have a normal market in health care where, especially with the advent of the internet, consumer pricing is king. Everyone would shop and pay for all their routine to mid-level medical needs and submit the larger bills beyond a certain cost to their health-sharing association, casualty insurance, or unregulated (and unsubsidized) traditional medical insurance. No third-party payers would be in charge of price-fixing or have the ability to get between you and your doctor and cause people to die by controlling the supply and demand of service.
This way we could spend a fraction of the public funds we are already spending to prop up the insurance monopoly over all consumers to directly pay the bills of those who are in need. And given that the pricing will be directly between the consumer and provider, what is now millions of dollars could be hundreds of thousands, and what is now hundreds of thousands might only cost $10,000. Just ask Dr. Keith Smith of the Oklahoma Surgery Center, who is already practicing direct care and working with health sharing or other direct payment methods.
Oh, and by breaking the government-cartel monopoly, we would save hundreds of billions a year on administrators. Imagine not sending a third of our health care dollars to MBAs instead of MDs!
None of these congressmen from both parties virtue-signaling over pre-existing conditions are asking the question of what we’ve gotten for $1.6 trillion in annual government spending on health care. If we flushed $1.6 trillion down the toilet every year, we’d come out with a better result because we’d just waste money. Now, we are taking that wasted money and artificially inflating the cost of health care to the point that nobody can afford it without government continuing the death spiral of spending, monopolizing, and price inflation. Also, because we funnel the subsidies through a “private” monopoly rather than handing the funds directly to those who need them in pre-filled HSAs, we lose at least $100 billion every single year to fraudulent claims.
According to a recent Harvard-Harris poll, health care is the top concern of voters, followed by immigration. Republicans have bungled both issues when they could have provided voters with a bold narrative on both. This will show in November.
Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.