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Right in the center

Health-care Reform

Posted by kostub on August 23, 2010

It has been a few months since the health-care reform bill has passed. Some people have labeled it as a great success while others an abject failure. One thing is for certain though – the overall popularity of this reform is still quite  low. So would this law make things better or worse?

While the exact nature in which the provisions of the law will affect the health-care market is something that remains to be seen – people have made strong predictions of the outcomes – the liberals have the rosy ones and the conservatives the scary ones, and some people have even thought of ways to game the system. My guess is that the real outcome will probably be somewhere in the middle, largely leaving the current macro trends such as rising insurance premiums and health-care costs unchanged and that health-care would again be a significant issue in the 2020 presidential elections.

One thing that this law doesn’t do – which in my opinion should have been the primary thrust of any health-care reform – is to make any attempt at controlling the costs. I’ve previously argued that the main way to combat the rising costs would be to move away from a third-party pay system. Imposing arbitrary mandates or shifting the costs to tax payers doesn’t work. Take a look at the data coming out of Massachusetts. MA is the only state which has a similar health-care law – and it hasn’t improved the access to health-care. Moreover the premiums in MA continue to rise while the insurance industry is making significant losses. The administration in MA believes that imposing arbitrary mandates on the rate of growth of premiums is somehow going to limit their increase – and it seems keen to apply various kinds of band-aids to their law which never attack the core issue – lack of competition driven by consumers. The rest of the nation is bound to see similar problems in the coming years as the various provisions of the reform come into force.

I still do not understand why Obama pushed so hard for this reform in spite of strong opposition to it. It is not the liberal paradise of universal coverage that he had promised his voters, but rather some compromised monstrosity written to appease all kinds of special interests. In fact it is a law explicitly written to so that they can have something on paper which can be modified in the future to make it better! Moreover, Obama managed to push the law through using an obscure political process after the Dems lost the MA senate seat and not giving it the due process and consideration it deserved. The perception (especially when it was passed) is that passing an unpopular law will result in the Dems losing the house and the law will get repealed next year. I somehow doubt that is going to happen.  Even if the Republicans win the house (which itself is unlikely), repealing this law would be significantly harder than enacting it.

Unfortunately, this will not be the end of the health-care debate. Instead, what has happened is that addressing of the core issue of rising costs has just been pushed out by a decade. What we ended up with is a stop-gap law which really doesn’t change much, but rather enables Obama to say that he kept his political promise of providing universal health-care during his reelection campaign.


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