Slate shocked, shocked that ObamaCare didn't fix cost curve

This is a few days old, but it’s still instructive on how those who have supported ObamaCare will defend it now that premiums have skyrocketed out of sight. Slate headlines the Helaine Olen piece as “ObamaCare’s Bill is Due,” but don’t expect that bill to include any admissions that the reform went the wrong direction or should be shelved entirely. In fact, Olen starts off with a bit of a straw man to ridicule the side that she now admits was proven correct:

On one side—you don’t need me to spell out which—the Affordable Care Act was demonized. It was going to bankrupt the health care system; destroy the United States’ reputation for excellent service; steal you away from your doctor; and, by some means never quite explained, lead us straight to communism. Today, subsidized health care premiums and an end to pre-existing condition exclusions; tomorrow, Stalin and FEMA detention camps located in semisecret parts of Texas. You know how it goes.

Er … no, not really. The lunatic fringe that discuss FEMA camps aren’t using ObamaCare for that argument, and even if they were, they’d be no more germane to ObamaCare criticism than Illuminati paranoids discussing monetary policy. It’s a cheap way to throw a sop to Slate’s audience, a wink and a nudge that says I’m one of you! before explaining the results of the ACA — among which actually included the loss of preferred providers despite Barack Obama’s promises.

In fact, Olen goes on to explain that the ACA is currently bankrupting the health-care system, which is why insurers are having to ask for massive increases in premiums:

The problem is simple. As Trudy Lieberman reported this month in Harper’s, the ACA made a decent stab at solving the problem of Americans lacking insurance. Unfortunately, the bargain struck to get the bill to a point where lobbyists for the hospital, insurance, and pharmaceutical industries to sign on, or at least not fight it, did not adequately address the issue of overall medical costs.

And that’s where the consumer comes in. Someone is “it,” the party paying the bill. And that “it” is increasingly you, whether you receive insurance on the exchanges or from an employer.

According to the Health Research Institute at PricewaterhouseCoopers, the health care spending growth rate was 6.5 percent in 2014. It’s expected to climb slightly to 6.8 percent this year, before dropping back to 6.5 percent in 2016. That’s certainly an improvement from the pre-ACA years, when increases often topped 10 percent, but our overall inflation rate is lower too. At the moment, it’s all but nonexistent, with the consumer price index registering annual gains in the low single digits.

Olen’s wrong here, too. The problem isn’t that ObamaCare failed to control costs because of compromises needed to get insurers on board, but that its design guarantees that costs will never come under control. It extends the main problem that plagued the health care system all along: the elimination of price signaling.

The structural problem in health care is the use of insurance for routine care. Comprehensive insurance has been stretched to cover the kinds of routine medical visits that could easily compete in a direct-to-consumer billing environment. In part, that has evolved from the insurers themselves in competition for corporate plans, but also because of state mandates on coverage. A reform that encourages insurers to focus on hospitalization and serious illness, plus restructuring family practice through HSAs and true price signaling, would solve multiple problems, chief among them a shortage of family practitioners. Thanks to the overhead of dealing with insurers and a lack of competitive impulse in a price-setting environment, more and more doctors are choosing other fields. Retail clinics where doctors don’t have to spend inordinate resources dealing with insurers would lower costs through competition and a larger market pool.

The problems of mandates, overutilization, and discouragement of providers entering the pool drove the premium increases before ObamaCare. It’s not exactly a shock that increasing all of these factors through the ACA has made the situation worse. Giving more control to consumers over their medical choices and returning insurance to its proper role — as a defense against unforeseen circumstances rather than mandated medical clubs — would resolve these issues. Olen mostly manages to avoid discussing this kind of reform except to call the accurate analysis of price signaling by Pricewaterhouse Cooper “Orwellian.”

Tellingly, Olen doesn’t offer any other solutions, either. However, the tone hints that she sees insurers and providers as the problem, which at least suggests that the solution is closer to socialized medicine (which she derided as paranoia about “communism” in her opening straw man) than anything oriented to a well-regulated free market where consumers make choices in routine care rather than government. The fact that Olen never quite gives the game away demonstrates how unpopular that option remains — perhaps especially since the government-mandate model failed so spectacularly on practically every level with ObamaCare.