There’s a lot not to like about America’s fragmented, inefficient health-insurance system. If you had to identify its fundamental flaw, however, it would probably be this: People need medical care whether they have a job or not, yet the U.S. system is built on a linkage between health insurance and employment.
Fifty-six percent of the nonelderly U.S. population obtained insurance via employer-paid plans in 2014, according to the Kaiser Family Foundation. The federal government picked up more than a quarter-trillion dollars of the cost, indirectly, through a tax break.
Even directly government-funded programs, such as Medicare for the retired elderly, or veteran’s care, embody the premise that coverage is “earned.” Exceptions — coverage for the disabled or poor children — go only to those not expected to work.
President Barack Obama’s health-care law addressed, but did not solve, this problem. So you might expect a plan to reform that reform, such as the House Republicans’ proposal to “repeal and replace” Obamacare, to fix it for good.
The GOP’s proposals make matters worse. Obamacare imposed a percentage tax on high-cost employer-paid plans, to go into effect next year; the GOP bill postpones it further into the future, until 2025. Obamacare created a subsidized and regulated individual market for the self-employed and others left out of the employer-paid system. Republicans would salvage it, sort of, by shrinking it.
Obamacare offered Medicaid to millions of poor and near-poor adults. The Republicans would phase much of this out and — in the latest version of their bill, rewritten to appease GOP ultra-conservatives — encourage states to link remaining Medicaid benefits to work. Specifically, states could deny coverage under Medicaid for able-bodied, childless adults who do not work, study, train or seek work, and those states that did so would get extra federal financing.
“The work requirements are important. They’re something that is restorative to people’s self-worth . . . sense of themselves, about working when they’re able to,” President Trump’s health and human services secretary, Tom Price, said Sunday on ABC’s ‘This Week.’”
To be sure, this sentiment has its place. When awarding cash, such as welfare or unemployment benefits, government must avoid creating disincentives to work, for the sake both of the recipients and of the taxpayers who support them.
However, to repeat: One’s susceptibility to illness does not vary with work effort. There is precious little to be gained, either financially or politically, and certainly not morally, by linking Medicaid and work.
The vast majority of Medicaid beneficiaries — 77 percent in 2015, according to Kaiser — are in households with a worker already. As for the rest, no less a conservative than Robert Rector of the Heritage Foundation has pointed out that the likeliest result of denying Medicaid would be that individuals wind up at a hospital emergency room, seeking expensive treatment for conditions that might have been dealt with at less cost earlier — with insurance. Rector’s scenario assumes they do make it to the hospital, of course. Those who don’t — well, Republicans can explain that at the next election.
The GOP needs to knock off the ideological games and face facts: Health insurance works best with a broad risk pool, and “everyone” is the broadest possible risk pool.
This country’s failure to organize itself accordingly — a failure that persists in spite of the changes Obamacare made, not because of them — is at the root of our health-care woes.
Trump and Price are not among history’s greatest free-market intellectuals. Friedrich von Hayek was, though, and he acknowledged that health insurance presented a special economic case.
“Where, as in the case of sickness,” Hayek wrote in his 1944 magnum opus, “The Road to Serfdom,” “neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance — where, in short, we deal with genuinely insurable risks — the case for the state’s helping to organize a comprehensive system of social insurance is very strong.”
As Hayek was quick to note, this in no way implies a Bernie Sanders-style single-payer system. Rather, “it is possible under the name of social insurance to introduce measures which tend to make competition more or less ineffective.”
Smart reformers, conservative and liberal, have devised plans that rely more on market forces than does the hodgepodge we live under at present, or than single-payer would. What the best such concepts all have in common is that they weaken, or end, the link between employment and insurance.
“There is no incompatibility in principle between the state’s providing greater security . . . and the preservation of individual freedom,” Hayek wrote. And he was right — even if the contemporary GOP leadership seems intent on proving otherwise.
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