One of the most unsavory remnants of the Obama era is known as the “private mandate,” a requirement that every citizen purchase health
care insurance from a private corporation, or face a severe penalty. This requirement led to a new bureaucracy that tracked every American to make sure we had insurance. It was suffocating and onerous – the health insurance industry (“Americas Health Insurance Providers,” or AHIP for short) bullying us into buying their crappy products, using Obama as a sock puppet.
The Affordable Care Act, ACA, or “Obamacare” (as if) was challenged in court on this basis, and was spared by a 2012 ruling that said that the penalty is a tax, and Congress has the power to tax. I do not know if this was an unintended consequence, or if the people around Trump are really that clever, but in late 2017 as part of a broad tax bill, Congress eliminated the penalty. The Fifth Circuit recently held that 2017 act constitutional, and here is the catch: The “attributes that saved the [ACA] statute because it could be read as a tax no longer exist.” The writing on the wall says Obamacare is dead! Long live Obamacare!
Josh over at Cutting Through the Fog once wrote about a concept called “racketeering,” and it applies here. I am aware that if we are not required to purchase health insurance from private companies, those companies will circle their wagons back into the “preexisting condition” regime. For decades AHIP used that lever to punish us, refusing to issue insurance policies for a whole host of illnesses from diabetes (still in effect) to heart ailments – anything that might affect their bottom line. When AHIP basically wrote and passed ACA in 2010, it was racketeering come full circle.
Here’s another way to look at it: Suppose you run a small storefront pizza parlor in Manhattan. One day a vaguely threatening heavy-set man with hands in the pockets of a heavy overcoat comes in the store and says “Listen. I gots a deal fer ya. I will pertect choo. Say some kid comes by and breaks yer windows, I take care of dat kid. You don’t gotta worry no more. All you gotta do is pay me $200 a week.”
The message is clear – if the parlor owner doesn’t pay the $200 a week, his windows will be broken, again and again until he submits.
That’s racketeering – creating a problem in order to be paid to solve the problem. AHIP approached Congress in 2010 intent on solving the preexisting conditions problem … a problem that AHIP created.
All that ever need be done regarding preexisting conditions was this: Suppose at an AHIP meeting, a heavy-set man with his hands in the pockets of a heavy overcoat comes in the room, walks up the aisle, and takes over the podium. “Listen, yoose guys. I gots a deal fer yas. When my people dey come to you and they dey want health insurance, you gotta sell it to them. If ya don’t, you deal wich me. Got it?”
That is something AHIP would understand, thug to thug. There would be warmth and mutual respect in that room.
Oh, I know … the problem behind preexisting conditions is called “adverse selection.” That means that in the absence of a mandate, those who need health care the most are the ones most likely to purchase it. Those who don’t need it, especially the young, are likely to go bare. Consequently, insurance companies go belly up, not a bad thing.
Adverse selection is the justification behind preexisting conditions, but I have never read it that way. I have always thought of adverse selection as the reason why we should not have health insurance companies. They cannot exist without either the ability to turn customers away in droves, or with government coercion behind them, which is all Obamacare was. If the government is going to force us to buy health insurance and force AHIP to sell it to us, then it is only logical that the government should offer a public option, or the ability to avoid dealing with a private cartel in order to obtain health care. That’s basic freedom of choice. We do live in a somewhat free country, so that no one should be able for force us to buy their product. That smacks of fascism.
As you might suspect reading this, I think the US ought to do to health insurance companies what Canada did to theirs back in the 1966 – boot their sorry asses out. They are not involved in health care. In economic terms, they are involved in two interacting activities:
- Rent-seeking: “In …economics, rent-seeking means seeking to increase one’s share of existing wealth without creating new wealth.” The health care system can exist without AHIP, but AHIP cannot exist without a health care system. AHIP does nothing to make health care better, only leaches money from the system. In order to force the health care system to line their pockets, AHIP also engages in …
- Economic enclosure: Think of it in terms of an allegory. You live in a small village where farmers share land for grazing in nearby fields. The system is self-regulating in that overuse of pasture results in no one being able to use it. Along comes an “investor” who erects a high chain link fence around the pasture, and charges entry. He doesn’t own or maintain the pasture, only the fence. Nonetheless, if villagers don’t pay him, their cattle will starve. That is in effect what AHIP has done to our health care system. AHIP has never so much as provided a bandaid, but has built a fence around the health care system in order to charge us for entry.
The United States had a choice at the end of World War II on what kind of health care system it was going to build. Where other countries reasonably and sanely chose systems like government-run health care (Great Britain), or single payer (Scandinavian countries and later Canada and Taiwan), or regulated insurance (Switzerland), all of which work reasonably well and cover 100% of their people at far less cost than our system, the United States chose a Rube Goldberg system of employer-provided health care. It was as if employers did not have better things to do. The effect of this was to empower the insurance industry, as it relieved employers of the administrative burden. It also had the effect of chaining employees to their desks, as employer-provided health insurance was not portable. Loss of job meant loss of health insurance. (In countries with single payer, etc., coverage is automatic and by definition goes with the person, not a company.)
Health insurance companies grew more powerful over time, and were perhaps at the apex when they backed Obama and passed ACA though him in 2010. By that time they had grown wealthy and powerful in their rent-seeking behavior and were able to enclose almost the entire health care system. There were only a few health care outlets that did not force us to deal with insurers, such as Medicare, Medicaid and the VA, which have been widely and unjustly mischaracterized and ridiculed in our controlled news media.
There appears now, with elimination of the private mandate, to be a backlash. The so-called Public Option suddenly breathes new life. But it is hard to tell where we go. Bernie Sanders and Elizabeth Warren (and the so-called “Green New Deal”) are pushing something called Medicare For All. That is effectively single payer, and would serve to disempower AHIP, and eliminate one of the primary causes of health care cost inflation – private insurance companies. Opponents claim it would cost “trillions.” I don’t see that. I don’t see how removal of AHIP from the most expensive health care system in the world would do anything but make the system more efficient and cheaper. Medicare for all would save us money, not the opposite.
Of course, the problems are a little more complex. As a rule in our country, when you see people like Sanders or Warren rising to prominence in favor or opposition to some policy, it is a sure bet that they are controlled opposition. I trust neither of them. Our only hope is grassroots organization and power, and introduction of reforms in laboratories called “states.” If we are indeed to have real health care reform, it will be a slow trial and error process done at the local level. No more Obamacare.
PS: To head Big Swede off at the pass, the standard right-wing answer to our health care problems is to allow people to cross state lines to buy insurance. While that in principle sounds wholesome, in effect people would flock to those states that offered the cheapest policies with the least coverage, in effect causing massive under-insurance. I would support the concept if there were a law in force guaranteeing minimum standards for health care coverage, and perhaps the remnants of Obamacare might serve that purpose.