Obamacare is to Insurance Enrollment as Draft is to Military Enlistments | Eastern North Carolina Now

    Publisher's note: The author of this post is Dr. Roy Cordato, who is Vice President for Research for the Carolina Journal, John Hood Publisher.

Consumer demand rather than government demand should drive decisions about what insurance policies cover

    Obamacare has failed. Almost all of its original promises have been broken.

    In 2009, President Obama promised his signature Affordable Care Act would lower health insurance costs, allow people to keep their insurance plans, and, most important to most people, keep their doctors. It, in fact, did none of this. Premiums have skyrocketed, and people were tossed out of the plans they had or the plans went out of businesses. Many discovered their doctors, in some cases family doctors they had had for decades, weren't included as part of the networks in their new, mandated, Obamacare plan. These are the main reasons support for some kind of radical change in the plan has been so overwhelming and why negative feelings about the plan are considered to be one of the most important contributing factors to Donald Trump's victory.

    But there is one promise the president made that was kept, namely that there would be a decrease in the number of people without health insurance. A larger percentage of the population are covered by some kind of plan, either a private or public, i.e., Medicaid, than was the case prior to the ACA's implementation. About 43 million people were uninsured or otherwise without some form of third party coverage in 2008. That's down to about 30 million.

    The question is how Obamacare led to this reduction and whether it's really something the president and his supporters should be proud of. As an aside, the kinds of plans Obamacare mandate should not be called "insurance." More properly, it is prepaid health care, because much of what these plans cover are not associated with levels of risk but are actually uses of health-care services that are planned or fully known in advance, such as pregnancies, contraceptives, annual physicals and pre-existing conditions. In fact, plans that are strictly insurance, i.e., catastrophic plans that cover uncertain future events with a less than 100 percent risk attached to them, are outlawed under Obamacare and is one of the main reasons insurance and health care itself has become so expensive.

    In examining the question of how Obamacare has succeeded in increasing the number of people who are covered, we have an opportunity to contrast how business/consumer relationships are established in a market setting with how they are established in a governmental or political setting,

    In a free market, if a business desires that more of its product be purchased by potential users, these users have to be peacefully persuaded. This usually means those doing the selling have to offer lower prices, better quality, or provide some other reasons the product will make the users' lives better. For example, over the past 30 years, as we have seen the prices of computers fall and the quality improve, the number of people who own computers have expanded and those numbers continue to grow as prices continue to fall and quality continues to improve. In other words, access to computer services of all kinds has expanded, and continues to expand, year after year. Of course, if the opposite had happened to the price and quality of computers, no increase in the ownership and usage of computers would have occurred. Generally, the vast majority of people would not have been persuaded that computers were a useful item to have in their lives, and access to the services provided by consumers would have declined.

    In the area of health insurance, this relationship has been turned on its head. We have seen premiums skyrocket and quality, in the form of deductibles and physician choice, go down, while at the same time the number of people using this inferior and more expensive product has increased. This was accomplished by using what sociologist Franz Oppenheimer referred to as "political," as opposed to "economic," means. That is not by peaceful persuasion but by threats or actual use of force. It was accomplished by the use of tax penalties and fines if Obamacare approved plans weren't bought.

    Health insurance has been taken completely out of the realm of markets and put into the realm of politics. Consequently, the number of people covered has increased, not because they were persuaded by lower prices and a better product, but because of threats of coercion. In other words, by removing the necessity to peacefully persuade to gain customers, there is no reason for prices to fall or quality to improve and every reason to expect consumers will be harmed. All that recent increases in the numbers of people covered by health insurance demonstrate is that you can get people to do things that they wouldn't otherwise do by threatening them with legal fines and penalties. Intimidation and fear does work, but it should not form the basis of what motivates people to purchase any product, particularly a product as important as a health-care plan.

    What is particularly interesting is that this point is explicitly recognized by Obamacare supporters. Many argue that because 30 million people remain uninsured, the fines and penalties need to be increased. This was recently argued by Obamacare architect Ezekiel Emanuel. In other words, the government is simply not using enough force. In a nation of free people, this is no way to run a program. The boast that Obamacare has increased health insurance enrollment is trivial. Indeed, it is no different than boasting that the draft, which forces young people to join the military under threat of imprisonment, increases enlistment in the Army, Navy, Air Force, and Marines. Yes, the government can always get people to behave in certain ways if the legal penalties are high enough.

    What does this say for efforts to "repeal and replace" Obamacare? The most important thing Congress can do is to eliminate all of Obamacare's mandates. This not only means the mandates on individuals and employers to purchase health insurance but also all of the mandates on insurance companies telling them what the policies they offer must cover, which are, in fact, mandates on policy holders. There are dozens of services and health conditions that Obamacare paternalistically force consumers to have in their health insurance plans, whether they want them or ever expect to use them. It is not government "demands," but consumer demand, that should drive decisions about what insurance plans cover. If this happens, competition and free choice, including the freedom not to choose, will ultimately drive insurance costs down and improve the quality of what will ultimately be real health insurance products.