Tuesday, 26 November 2013

Obamacare – Great Idea, Poorly Executed

by Sam Collings-Wells



(source: CNN)

I just don’t agree with anything that has to be forced.’  This was one Californian’s logic when they were asked by Jimmy Kimmel to justify why they preferred ‘The Affordable Care Act’ over ‘Obamacare’. Obamacare is, of course, exactly the same policy as the Affordable Care Act. Another interviewee asserted confidently that the Affordable Care Act would provide cheaper healthcare than Obamacare simply on the basis that its name contained the word ‘affordable’. Aside from the hilarity created by unearthing some of the uninformed citizenry of America, the various interviews shared a further common theme: a preference for rhetoric over fact.
Rhetoric has overwhelmingly dominated the debate over Obamacare, which forces Americans to purchase health insurance or face a fine. On the right, Republicans have smeared the policy with connotations of socialism and excessive government. Meanwhile, on the left, Democrats have asserted that this expansion in government is necessary for a healthier America by providing cheaper healthcare to those who need it most. But this is not the classic case of big government versus limited government that so often dominates squabbles between the right and left. As opposed to simple hand-outs such as Medicaid, where the federal government subsidises those who immediately need healthcare, Obamacare compels healthy citizens to enrol in healthcare plans. Some see this as healthcare socialism. Others just are annoyed by the extra cost.
Many Americans point to how America was founded on ideas of liberty and freedom. As a result of the imperial rule of the British, the American people have always had an aversion to big central government. Obamacare is clearly a huge extension of central government power, and infringes the rights of individual states, not to mention the individuals living within them. Forcing citizens to spend money on healthcare is seen by many as fundamentally un-American. Being a 21st century Brit, I’m inclined to believe that universal healthcare is second nature to developed countries. The benefits of the wider provision of healthcare are enormous: a more productive workforce, a better standard of living and, in the long run, lower healthcare costs. Yet it is important to comprehend how often principles may, for better or worse, take precedence over logical pragmatism, in order to preserve the ethos and values that a country such as American was built on.
Supporters of Obamacare will undoubtedly, at this point in the article, be rolling their eyes. Those on the left often like to see themselves as somehow intellectually superior by callously discarding ideas of tradition and the principles upon which lasting institutions were founded in order to make way for their own brilliant theories. So, in anticipation that the argument that Obamacare extends the power of the central government which their political system attempts to limit falls on deaf ears, I will now explain why Obamacare won’t actually work.


The reason Obamacare theoretically lowers healthcare costs is quite simple. By compelling all citizens, even the healthy ones, to purchase health insurance, the private companies that provide the insurance receive a greater amount of revenue than before. Both young, fit and healthy citizens as well as old, sick or those with persistent health problems sign up to the same company. As a result, the health providers use the increased revenue from the healthy people that have signed up to offset the costs they incur as a result of the unhealthy. This means they have the ability to lower costs, leading to cheaper healthcare for all. As a result of the healthcare exchanges, various companies have to compete to sell insurance plans. This competitive element of the healthcare market should incentivise healthy firms to lower their costs and provide good quality healthcare.
Of course, this theory works on a number of assumptions. Firstly, it assumes that uninsured healthy citizens will enrol. If they do not, healthcare companies will have to raise prices to cover their high costs as a result of insuring the sick without any revenue from healthy. This leads to a perpetual spiral of rising healthcare costs; healthy people become less inclined to bear the higher prices and, by not enrolling, increase the prices further. As a result, soaring healthcare prices, the subsidies that are quite rightly provided by the federal government to those on low incomes who cannot afford healthcare, will increase exponentially, making the system incredibly expensive and unsustainable. Therefore, for Obamacare to work, the Federal government clearly had to do everything in their power to ensure  they enrol by making enrolment as appealing and simple as possible.
But of course the complete opposite happened. Despite having three years to prepare the healthcare exchange website, it was a disaster. Glitches, malfunctions and operating incompetencies littered the website. As a result, many Americans who actually made the effort to log on found themselves unable to do anything. One can hardly blame your average healthy 24 year old from Texas who, after logging on to healthcare.gov and being greeted with message saying ‘website down’, simply went on Facebook instead and forgot about the whole thing. Only 500,000 people have enrolled so far, which is just 1% of those who have bothered to go on the website yet. The House Oversight Committee reported that on the first day of the rollout, despite 42 million visiting the website, shockingly only six Americans were able to register.
That is not all. The roll-out on October 1st has been littered with problems. Barack Obama during the debates over Obamacare repeatedly assured those Americans who were already insured that they would be able to remain on their current plans once the Affordable Care Act has been introduced. This was a lie and many Americans have found cancellation notices arriving at their doorstep. This is hitting lower-middle income citizens the hardest, who find themselves having to enrol in more expensive plans, but who earn too much to qualify for government subsidies. Obama’s response to rebel legislation from the Republicans was to ensure Americans that he would find a way for them to be able to keep their plans. This is a mistake; younger, more healthy individuals will remain on their basic health-plans for another year, reducing the influx of the ‘invisibles’ into the health exchange and leading to rising premiums for the sick.

America is in dire need of healthcare reform. Yet in a country with such a political culture it should fall upon the States and not the central government to implement this. Energetic state-wide reforms to healthcare, most notably exemplified by Massachusetts Governor Mitt Romney, should be encouraged by the Federal government, yet not forced. In this way, each state may come to see the benefits created by a healthier population, whilst those that avoid reform may begin to see the resulting problems, such as a less productive workforce. If Obama is really convinced of the merits of universal healthcare, he should let the states provide it on their own.

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