Video: What comes after ObamaCare repeal?
posted at 11:36 am on July 13, 2010 by Ed Morrissey
The Center for Freedom and Prosperity offers another in its Econ 101 series, but to be fair, this one’s a little more advanced — more like a 300-level course. Eline van den Broek delivers the lesson for today on ObamaCare and its repeal, and how that is really only step 1 of the necessary action needed to restore market forces back to the American health-care system. That would return the system to a status quo ante that still involves too much government intervention and disconnect from pricing mechanisms:
I wrote about the issue of third-party payers extensively last year, and it will be even more of an issue if Republicans succeed in dismantling ObamaCare. Van den Broek is entirely correct in pointing out that we didn’t have a free-market system for health care as much as we had one for health insurance, and even that wasn’t so free, thanks to endless government mandates at the state and federal level. The entire basis for the health care of most Americans is spending other people’s money through the overuse of comprehensive policies that only make sense in the warped environment of tax policy that doesn’t count health insurance coverage as income.
A quick look at the economics show that most people wouldn’t choose comprehensive coverage if given a rational choice and a level field. In 2007, the average individual comprehensive policy in Minnesota cost $3600 per year, or $300 per month. That would cover two, and perhaps three, clinic visits every month. Most healthy individuals only use a clinic once or twice a year, which means they throw away $3000 per year on coverage they never use. But why would people who get comprehensive coverage for $50 a month through their employer and pay no taxes choose catastrophic insurance instead when the employer doesn’t compensate them for making a wiser choice — and even if they did pay the difference in higher wages, the government would tax it as income?
As painful as it will be, repeal has to be followed by reforming the tax system to get rid of the distortion our current tax policies create in health insurance. We have to make the system more rational in order to get people into realistic and less expensive catastrophic coverage, and let them pay out of pocket for routine care, which will then become much more price competitive and more plentiful as providers shed the overhead costs of dealing with insurers. Repeal is just the first step to real reform, and if we don’t take the next step, we will put ourselves at risk that the next attempt at ObamaCare will not be reversed.