July 5 2012

Obamacare Myths

Charlotte Hays

The Supreme Court’s decision upholding Obamacare means that the fate of the law is now in the hands of the voter.

Capital manager Cliff Asness, writing on The American, argues that the debate, so far, has been hampered by four myths about the health system. If the country is to repeal Obamacare and replace it with something better, we must first debunk these myths, Asness writes. It is impossible to have an honest discussion of the health system if we don't. 

This is an article that deserves to be read in full. But here are the highlights to help us get started thinking about, as a former president might say, tomorow:  

Myth # 1: “Healthcare costs have soared in the recent past.”

Well, this is one we all know, right? But Asness argues that we may be spending more than in the 1950s because we are paying for more advanced service or using more medical care. As Asness notes, your grandparents might have had one pair of reading glasses; today most users have multiple pairs. Sometimes health care is more expensive because it is better. Cancer treatment was probably a lot less expensive back in the day that a diagnosis was almost certainly a death sentence.

The money quote:

Even if correctly referred to as the “soaring cost of healthcare,” this is presented as an unambiguously bad thing, when that is certainly false. It’s bad when it’s a function of waste or monopoly power gained through cronyism—undoubtedly part of our system and, as usual, with government the main culprit—but not bad when it’s the result of improvement, undoubtedly a huge component over time. The price of healthcare over time is hard to accurately measure, but those screaming about the price soaring are probably wrong.

Myth # 2: “The pre-Obama system was ‘insurance.’”

If you read Inkwell, you probably already know where this is going: insurance is a system that allows insurers to take risks and, if they guess right, make profits. Think Lloyds of London. What we have is something else. Instead of insurance against catastrophes, we have a massively subsidized system (employers get breaks to provide “insurance”) that allows us to get most basic health care for a small copay.

Money quote:

Why does this matter? ObamaCare sets out to fix health insurance, and to provide it to more people. Laudable goals. But the system we had was not badly managed health insurance. It wasn’t insurance at all. ObamaCare does not throw out the crazy system we had in favor of real insurance, which would actually work, but rather enshrines and extends all the problems of an insane healthcare payment system masquerading as insurance and built as a tax dodge.

Myth # 3: “Stopping insurance companies from charging based on pre-existing conditions is the one good part of Obamacare.”

This polls well and even some Republicans have fallen for it. But what really happens is that some people end up paying more to support these people who for whatever reason didn’t obtain health insurance before getting sick. The real question we should be having is the degree to which we, as a society, want to take care of such people. Answers will vary.

Money quote:

[I]f we choose to subsidize a portion of the population we should do so openly, using taxation and government spending, which at least shines sunlight on the cost, not through tricky regulation that hides it.

Myth # 4: “Healthcare costs are very high in the United States compared to socialized countries.”

“Like the opening myth about soaring prices, this one is used to undermine faith in our system and open us to radical change for the worse (ObamaCare or worse),” writes Asness. The good news: the studies on which this claim is based tend to be biased and not very good in judging medical services. The most famous example is the U.N’s 2000 World Health Report, always cited. But its “findings” are based as much upon whether a country is enacting progressive policies as the quality of the actual health care.

 

 

 

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