Health care was needlessly expensive and inefficient before the ACA
Right after Obamacare was enacted in 2010, I wrote a column suggesting four principles that should guide and motivate supporters of free markets and limited government.
As part of that article, I pointed out that Obamacare wasn’t a dramatic change. Instead, it was just another layer of government imposed on a health system that already was burdened by a huge amount of intervention.
The way to think of Obamacare is that we are shifting from a healthcare system 68 percent controlled/directed by government to one that…is 79 percent controlled/directed by government. Those numbers are just vague estimates, to be sure, but they underscore why Obamacare is just a continuation of a terrible trend, not a profound paradigm shift.
Later that year, the Center for Freedom and Prosperity released a video that elaborated, pointing out that Obamacare simply made a system dominated by government into a system even more controlled by government.
With predictable bad results.
That video included two charts based on my back-of-the envelope calculation, and I shared them in a 2013 column that further discussed the incremental damage of Obamacare.
Our healthcare system as a mess before Obamacare. Normal market forces were crippled by government programs such as Medicare and Medicaid and also undermined by government intervention in the tax code that resulted in pervasive over-insurance that exacerbated the third-party payer problem. These various forms of intervention led to all sorts of problems, such as rising prices and indecipherable complexity…Obamacare was enacted in 2010, and it was perceived to be a paradigm-shifting change in the healthcare system, even though it was just another layer of bad policy on top of lots of other bad policy. …Not surprisingly, all of the same problems still exist, but now they’re exacerbated by the mistakes in Obamacare.
In other words, we’re not going to fix the healthcare system by merely repealing Obamacare.
Yes, that’s a necessary step, but much more needs to happen.
Pre-Paid Health Care
Which is why I’m very happy that Prager University has a new video pointing out that health insurance doesn’t work nearly as well as car insurance and homeowners insurance. Why? Because it’s become an inefficient form of pre-paid health care rather than protection against large and unexpected expenses.
Though I wish the video went even further by explaining how the healthcare exclusion in the tax code encourages over-insurance.
And here’s a video from the Foundation for Economic Education that also explains how government intervention is distorting the health market.
Here’s the most important factoid from the video, which comes from the accompanying FEE article.
According to the Consumer Price Index and Medical-care price index from 1935 to 2009, the health care spending crisis didn’t start until the mid 1960s, around the same time when Medicare and Medicaid were signed into law, and at the same time that we began requiring doctors to go through all sorts of expensive licensing procedures beyond medical school. Since then, health care spending has doubled, even adjusted for inflation.
But let’s keep everything in perspective. Our system is needlessly expensive and inefficient because of government, but it still manages to deliver some decent outcomes.