Obamacare is Bad Public Policy, Only Free Market Health Care Solutions Will Work


It’s to be expected that the major political discussion this week centered on arguments before the U.S. Supreme Court on the constitutionality of the Patient Protection and Affordable Care Act (PPACA), known widely as Obamacare. 

Although the constitutional question is important (and will decide whether the legislation takes full effect), it’s not the only debate to be had by those interested in the state of health care. The bigger question is what the PPACA says about political decision-making in our country and who, exactly, the legislation is designed to help. 

Here, I will offer five reasons why the legislation being considered by the Supreme Court is bad public policy that makes problems with health care availability, cost, and accessibility worse, while also making private individuals’ health decisions a matter of majority rule.

1. The PPACA is crony capitalist legislation at its worst. At its core, the health insurance mandate is a blank check to health insurance companies, many of them very large corporations. Faced with the cost of having to insure people with pre-existing conditions and other regulations, health insurance companies became champions of the mandate because it ensures they will have more customers. What’s even better for them is they don’t have to offer services or coverage people would actually choose to buy – it’s soon to be required by federal law.

2. The legislation further intertwines health insurance with health care. In many of my discussions on this issue, the terms “health care” and “health insurance” are used interchangeably. There’s little wonder why. The legislation requires most people to buy health insurance but it does very little to incentivize the creation of a greater quantity (or quality) of health care. Certainly, the “doc fix” provides higher reimbursement rates for doctors who serve patients covered by Medicare, but that only compounds another problem.

3. It continues to obscure prices for health care. The legislation’s focus on requiring people to have health insurance permits health care providers and pharmaceutical companies to continue to charge essentially whatever they want. More precisely, it increases the power of providers and medicine-makers to negotiate with health insurance companies on the prices for goods and services. The health care consumer never sees these prices and cannot judge whether to consume them. Obviously, a patient will not deliberate over the cost of different types of emergency surgery, but permitting less urgent situations to be informed by free prices would affect the prices in the ER as well. Considering the distorting effects of government intervention on prices up to this point, it’s logical to assume they would drop across the board were prices allowed to function.

4. It brings 300 million Americans into your medical examination room. This is the problem highlighted by religious groups particularly. They argue they should not be required to pay for someone else’s health care services they find objectionable to their faith. Indeed, when what is covered by health insurance policies is decided by the majority of politicians, we are saying we accept the decisions of our fellow citizens when it comes to our personal health care. Far from keeping other people’s hands off our bodies, this legislation puts all hands on deck.

5. It is not health policy reform as much as a major expansion of policy that has already failed. The legislation was billed as a fundamental reform. In actuality, it doesn’t change much. Health insurance is still required if you want to get health care at a reasonable price. Doctors who serve Medicare and Medicaid patients still have to endure the hassle of processing reimbursement requests and being paid cents on the dollar. The price of medicine continues to increase. We could have asked why these things are happening, but we chose to perpetuate them through this legislation.

Classical liberal economist F.A. Hayek explained how we tend to look at political problems in a vacuum, ignoring how our previous actions created the status quo. Hayek wrote this in an essay entitled “Individualism: True and False:” “…[W]ithout principles we drift. The pragmatic attitude … far from increasing our command over developments, has in fact led us to a state of affairs which nobody wanted; and the only result of our disregard of principles seems to be that we are governed by a logic of events which we are vainly attempting to ignore."

Our guiding principle should be personal liberty, not state control. The only way to facilitate the least imperfect provision of health care is to roll back previous government interventions. We must first uncouple health insurance from employment. We must repeal all price controls and streamline the FDA’s approval process for new drugs. We must means-test Medicare and more strictly limit who is covered by Medicaid. We must also abolish the federal Department of Health and Human Services. The only people whose health care they know how to address are those in Washington, D.C. 

I would ask those skeptical of a market-based health care system to broaden their minds to the possibility that expanding the government-centric approach will only compound current problems. This goes not only for the health insurance mandate and Medicare, but also for the vaunted single-payer option many now argue to be the only next step.

Those who advocate a free market for health care are also interested in the welfare of our fellow citizens, rich and poor, healthy and sick. Perhaps current skeptics could find value in a free market health care policy, too.