America’s Affordable Health Choices Act of 2009 in Layman’s Terms

Before getting into a discussion of the health care “crisis” in America, let’s be clear on what the problem is:

The Census Bureau says 47 million Americans do not have health insurance, or 16% of the population.    Of those, 37 million are American citizens, or about 12%.  Of those, less than half make $50,000 per year or less.  And according to the Congressional Budget Office, 45% of uninsured individuals get insurance within four months.  So when referring to Americans who cannot afford health insurance, one is referring to about 6% of Americans, nearly half of those who soon find health insurance again on their own.  So that’s about 3-4% of Americans who are uninsured and making less than $50,000 per year, and what percentage of those have a major medical emergency that year?  (Remember that routine preventative medicine is very cheap.)  Young, healthy individuals often go, very deliberately, without insurance.  And let’s not assume that health insurance equates to health care: all people in America, citizens or not, are guaranteed emergency health care in every hospital in the country already regardless of their ability to pay.

Yet over 40% of Americans want health care reform, and those in power want to capitalize on that desire for better or worse.  I’ve stayed away from reading the specifics of the proposed legislation because I simply didn’t care what the proposition said; the mere concept of government intervention in health care is sufficient to reject the idea.  Even if I favored such intervention, this legislation is unconstitutional at the federal level under the 10th amendment.  But since I had not personally analyzed nor read an analysis of the bill, I’ve kept away from the health care debate.  Until now.

Duke University’s John David Lewis is parsing through H.R. 3200 in order to cut through all the political rhetoric and find out what the bill actually says.  From the introduction:

This bill is 1017 pages long. It is knee-deep in legalese and references to other federal regulations and laws. I have only touched pieces of the bill here. For instance, I have not considered the establishment of (1) “Health Choices Commissio0ner” (Section 141); (2) a “Health Insurance Exchange,” (Section 201), basically a government run insurance scheme to coordinate all insurance activity; (3) a Public Health Insurance Option (Section 221); and similar provisions.

This is the evaluation of someone who is neither a physician nor a legal professional. I am citizen, concerned about this bill’s effects on my freedom as an American. I would rather have used my time in other ways—but this is too important to ignore.

I admire this guy- it’s wonderful that citizens are taking such an active (and fact-based) role in government.  It has, unfortunately, taken a private citizen to do what government will not do: give straight talk on what this bill will immediately do and the very predictable results of those actions.  I don’t need to hear about the intents of politicians because their intents have little to nothing to do with their results.

This health care bill is every bit as scary as I feared it’d be, but this particular line from the analysis angered me the most:

2. By setting a minimum 70%  actuarial value of benefits, the bill makes health plans in which individuals pay for routine services, but carry insurance only for catastrophic events, (such as Health Savings Accounts) illegal.

Having health insurance as for emergencies only is, in my view, the best way to lower health care costs to whatever the most fair market value really is.  This bill outlaws the simplest, most reasonable solution to lowering health care costs- to decrease the roll of health insurance companies in America.  The American reliance on comprehensive health insurance is a government-started policy dating back to wage freezes during World War II.  Companies couldn’t compete with wages, so they offered full health coverage to attract employees.  Uncle Sam made these benefits tax free, but only when bought by the employer.  Thus started the spread of comprehensive health insurance, which didn’t really exist before that point.  Along with that seemed to come this health care “problem”, as folks call it.

So what if we reversed this tax benefit?  Health insurance would migrate from your employer back to you.  You’d buy it like you buy car insurance: you’d choose a policy very specifically tailored to you.  Perhaps most Americans would buy minimal insurance, there only for emergencies, much as they do for car insurance.  Is this not a good thing?  The more people who pay for non-major, non-emergency procedures and tests out of pocket, the more the people will be aware of what they’re buying.  The market needs smart consumers, with transactions between a patient and doctor, and without an intervening third party whether it be government or private insurance.  By reducing the number of tests and procedures requested by patients for the sole reason that it is included in their current insurance policy, hospital resources free up.  This properly addresses the basic economic principle of supply and demand by decreasing demand and increasing supply.

Look at the prices for surgeries at a veterinary hospital.  They’re drastically lower than that of human care.  Don’t think it’s a fair comparison?  Somehospitals in America operate on a cash-only basis at drastically lower prices.  Why not encourage the spread of such practice?  This bill makes the most logical solution to lower, market-based health care costs illegal.

By design, the “Affordable Health Choices Act of 2009” will instead increase demand (after all, it’s claiming to give more coverage to more people) while not addressing supply.  This raises prices, but other parts of the bill tell us how this natural reaction will be circumvented: by rationing and/or price-fixing.  From the bill, determination of readmission will be done on pure statistics; feedback based on doctor/patient relationships will not be entered into the equation.  This is rationing- prohibit enough people from getting procedures and demand on hospitals will fall.

Even less desirable is the other suggestion in the bill- a government entity determining fair costs for medical procedure, not the market.  Private insurers try to do this, but they are kept in check by an open market and competition.  Government price-fixing always- always– results in shortages as low prices persuade professionals to leave that market.  This decreases supply while demand stays the same, and since prices cannot rise due to government, shortages ensue.  Hospital equipment will age as hospitals try to cut costs by keeping old, obsolete equipment, just as it has in other countries with socialized health care.

What other results can Americans expect?  To add insult to injury, the decisions of government are not subject to judicial review, and federal officials may pull any personal information they need from your tax return (and question employers) to make their decisions.  Privacy out, unelected medical czar in.  Where in the Constitution is any of this authorized?

Much like medicaire, medicaide, social security, etc- the system will very likely become a great consumer of tax revenue from the general fund.  This means those with private-insurance will be paying for health care twice- once for their private insurance and once (through their taxes) for the government option.  This is very like the public school system, where some individuals find the public school system so unbearably awful that they sacrifice to pay for private schools instead.  However, this is very expensive for consumers and puts private institutions at a severe disadvantage against the subsidized public option.  Expect private insurers to shrink and many to disappear.

Obama himself has said he favors the elimination of private insurers, where the government becomes the only buyer of health care.  However, he believes that migrating to such a system will take time- doing it now would be too much of a shock to the system.  This health care bill is merely the seed to start the government ownership of the entire health care industry.

Cost is determined by supply and demand.  Government cannot control this.  Getting the best health care will always (and should) require great expense to somebody, and this is necessary and desriable to keep the industry moving forward so that technologies may trickle down and become cheaper for everyone long-term.  You, yourself, currently have the freedom to sacrifice and pay for expensive health care or to save money and buy cheap health care.  You have the freedom to buy a cheap or expensive car, a small or large house, and cable television and/or cellular phone service.

Freedoms should not be given up so willingly, for doing so tends to produce many unintended consequences.