RALEIGH – There are ample reasons to oppose the health care legislation that narrowly passed the U.S. House and now awaits action in the U.S. Senate. Contrary to the early political promises, ObamaCare will hike taxes on everyone, raise the real cost of medical services, expand the federal budget deficit, and force millions of Americans out of health care financing and provider networks with which they are already familiar and satisfied.
But if these arguments don’t persuade you, perhaps this one will: the bill is little more than special-interest legislation born of a corrupt bargain between disingenuous politicians and big business.
The Left doesn’t seem to have updated its talking points in many years. Supporters of the legislation continue to blast drug companies, hospitals, doctor associations, employer groups, and other interested parties for obstructing health care reform despite the fact that these actors are spending tens of millions of dollar supporting ObamaCare through advertising and lobbying activities.
The health insurance industry started out as a full-fledged member of the same Washington cabal, too. It was only later that the legislation took several turns for the worse, from the insurers’ standpoint. They also became a handy foil when the administration found than it needed a villain to make their narrative persuasive. The insurers are getting hammered now much like former mobsters get hammered – in part because they’re in the way but also because the powers-that-be consider them traitors to the cause.
Why did the industries that helped block ClintonCare in the early 1990s become proponents of ObamaCare? Both fear and avarice played their roles.
After the 2008 election, Democrats were in firm control of the federal government. They seemed to have acquired a filibuster-proof majority in the Senate. Democratic leaders put the word out that a sweeping health care bill would pass in 2009 no matter what. The only question was whether interested parties would have seats at the legislative table or be served on it. They preferred being diners to being dinner.
As for avarice, remember that the current, ramshackle, wasteful health care system serves the interests of many people. That’s why it looks the way it does. Expensive, low-deductible health insurance makes little sense as a financing vehicle for most doctor visits, drug purchases, or hospital trips. Insurance is a financial tool to help consumers manage their risk of experiencing unpredictable, high-dollar events such as a house fire, an auto accident, or the death of the family breadwinner. Its misuse as a means of paying for routine medical expenses is one of the main drivers of health care inflation.
When consumers get the impression that a $150 visit to the doctor costs just $25, or that a $300 a month medication only costs $50, or that a trip to the emergency room only costs a couple hundred dollars rather than triple or quadruple that amount, they tend to buy more than they would if faced with the real price. In a rational world, one in which government tax breaks and regulations didn’t make prepaid health plans the default mechanism for financing health care, health insurance would be reserved for truly catastrophic events and be both less expensive and more universally purchased.
Many current providers recognize that if consumers shopped with their own money for routine medical expenses, they’d be more sensitive to price and less likely to purchase services of questionable value. These providers do not like where that would lead. So they’d prefer to keep the current third-party payment model – only, if possible, they’d like the government to spread out the costs more and guarantee that, in the event of cost containment, their particular services will get preferential treatment.
So the Obama administration offered them a deal. In exchange for supporting the bill, each provider group would get valuable assurances. Drug companies got a pledge that their reimbursements would be cut by no more than $80 billion. Hospitals got a similar pledge at the amount of $155 billion. The American Medical Association got a pledge that scheduled Medicare cuts would be rescinded. All then offered support for ObamaCare, expecting that forcing the uninsured into the system and further socializing health costs would increase overall demand enough to offset their concessions.
Health insurers were on board for a while. Recognizing that any version of ObamaCare would prohibit them from pricing insurance based on risk, they figured that their best bet to avoid the inevitable moral hazard – people waiting until they got sick before bothering to buy insurance – was to go along with ObamaCare as long as it included a strong mandate forcing everyone into the system and excluded a competing government insurer.
By the summer, however, it became clear that Democratic moderates would weaken the individual mandate while Democratic liberals would insist on a government insurer. The insurance lobby began to balk – at which point they became the administration’s public enemy number one.
If you like your policymaking done “the Chicago Way,” then perhaps all this doesn’t bother you. But if you think Congress shouldn’t be in the business of cutting corrupt backroom deals to favor special interests over those of the general public, then join the club – and hold out for real health care reform, not the grotesque legislation now slithering its way from one side of Capitol Hill to the other.
Hood is president of the John Locke Foundation