John H. Cochrane writes in the WSJ about what must be done when Obamacare unravels, as he knows it must.
He writes that returning to the status quo represents a false dichotomy. It isn’t a choice between that or Obamacare. The real answer is contained in one concept and only one concept. Trust in the free market. Deregulate health care. Sort of.
Only deregulation can unleash competition. And only disruptive competition, where new businesses drive out old ones, will bring efficiency, lower costs and innovation.
Of course none of that disruption will cause unemployment, a reduction in income for those who are suddenly out in the job market or any negative effects that really mean anything to anyone. No patient records would ever be lost in the transitions that this orgy of creative destruction would cause. I wonder if he really believes that or if he just considers it all necessary collateral damage that will work out in the end. Yet in spite of his faith in the market the next paragraph seems to contain some contradictions to the one he just wrote.
Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.
The emphasis is mine because I just can’t understand how he could possibly believe that those things could happen without being mandated by law. Does he actually believe that competition would result in insurance companies offering those features? Does he not for a minute consider the possibility that instead there will be a wink and a nudge agreement between them to not ever go there for the sake of profit? This of course assumes that there would be some sort of regulation that would force the arrangement to be of the wink and a nudge variety.
He also writes a gem of a sentence that shows me he apparently understands nothing of how people think. Among the evils of offering insurance through employers he makes this claim.
Knowing they will abandon individual insurance when they get a job, and without cross-state portability, there is little reason for young people to invest in lifelong, portable health insurance.
In the real world many young people don’t buy health insurance because they just don’t think they’ll need it and since many young people don’t make that much money they know plenty of things more important and much more real to them that they could spend that money on instead. Student loan debt takes a lot of money, for one thing.
What about those who can’t afford health care even with all the price reductions Mr. Cochrane knows free market competition will cause? His answer is short and simple.
What about the homeless guy who has a heart attack? Yes, there must be private and government-provided charity care for the very poor. What if people don’t get enough checkups? Send them vouchers. To solve these problems we do not need a federal takeover of health care and insurance for you, me, and every American.
You mean vouchers like SNAP (food stamps), Mr. Cochrane? The ones that your allies at the Hoover Institution and Cato Institute want slashed? Like Medicare and Medicaid, which they also want cut? Until it can be admitted with no hesitation that every system of capitalism will leave some people on the bottom whether it’s because they have no jobs or jobs that the system will not pay a living wage for this answer is a pipe dream. It is as unrealistic as the belief expressed in this editorial that the market is capable of dealing with what is literally a life and death issue as well as any less critical product or service.
No other country has a free health market, you may object. The rest of the world is closer to single payer, and spends less.
Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less just shows how dysfunctional our current system is, not how a free market would work.
So far as I can understand it, the claim being presented is that the free market applies to everything. It sounds too much like the idea that there is one simple answer for every problem. Maybe it’s not particularly complimentary but once again I find myself thinking of it as the First Church of the Infallible Free Market.