ACA: Not What the Doctor Ordered

Health care has been on my mind lately, not the least reason being that our family got to experience a febrile seizure for the first time yesterday (if you’re a parent or otherwise look after children, I’d suggest reading the link to avoid a similar “that was the scariest thing that ever happened to us” moment). Aside from that, America told the incumbent “Obama, you’re doing a heck of a job!” whose lasting “legacy” will be either the Affordable Care Act (thanks, Justice Roberts!) or bazillions in debt (the two not being unrelated); EWTN and other organizations and companies are suing the government over the HHS mandate; and I read “The Best Essay on Health Care” as linked by Russ Roberts at CafeHayek.

pic by José Goulão

Roberts links to “After the ACA: Freeing the market for health care,” a presentation by U. of Chicago Finance Professor John H. Cochrane. It straddles a nice line between the arguments that health care simply must be provided or strictly overseen by public servants (i.e., bureaucrats and regulators) and that it has to devolve to a Wild West free market anarchy. It also can be a reminder to Catholics that our arguments against Obamacare should not be just over the HHS mandate; the entire Act is overkill to remedy a problem that government and regulation itself greatly exacerbated. For people (and bishops!) who continually argue for “universal health care” (which is practically interpreted to mean increasing government control over health care) and continually turn a skeptical eye to market solutions, Cochrane’s remarks demonstrate a common-sense path toward reigning in costs and improving outcomes:

The big improvements in health care come from better technology. But big improvements in its delivery and average quality are also attainable. They come from much better human organization, as has happened recently in many other industries that have witnessed revolutionary supply competition. Yet achieving those improvements will displace lots of entrenched interests…
Health care markets need a big supply‐side revolution, in which the likes of Southwest Airlines, Walmart and Apple enter, improving business practices, increasing quality and transparency, and spurring innovation. And disrupting the many entrenched interests and cross‐subsidies of the current system…
Health care is singularly ill‐suited to payment‐plan provision, either by government directly or by heavily regulated insurance by a few large well‐protected businesses. A functional cash market must exist in which patients can realistically feel the marginal dollar cost of their treatment, or (equivalently) enjoy the full financial benefits of any economies of treatment they are willing to accept, and are not patsies for huge cross‐subsidization and rent‐seeking by an obscure system negotiated behind the scenes between big insurance companies, hospitals, and government…
Both supply and demand must be freed. Without supply competition, asking consumers to pay more will do little to spur efficiency. Without demand competition, new suppliers will not be able to succeed.

There are too many good quotes to include in a blog post, so as Russ said, “Read the whole thing. Then read it again. You will be wiser.” If you are unfamiliar with how regulatory agencies can be captured by businesses, how regulations intending to increase efficiency or competition rarely do so, how third-party payment distorts consumers’ incentives, and how all this adds up to a medical system bogged down by red tape with politicians claiming the solution is more red tape, then you should read Cochrane’s remarks.

More importantly, if you care about your own or your family’s medical care, then you should read Cochrane’s remarks. Then read it again.


Categories:Featured Health Care Politics

  • Rob

    Two questions:

    1. Before the Affordable Care Act, we had a “free market” health care system for decades. At what point was the “free market” going to kick in and provide universal health care? If the free market is so apt to providing universal coverage, why did the free market not do that before?

    2. As the Congressional Budget Office projects the Affordable Care Act will reduce the deficit, why do you say that the Affordable Care Act is tied to raising the deficit? Sources/evidence?

    • Rob

      Since Tim is clearly not going to reply, I’m replying to my own comment.

      Pertaining to Point 2, I get so sick and tired of hearing about how the ACA is a drain on the budget. Stop acting like there wasn’t a budget drain from the lack of health care availability already, or get some facts to support your case.

      • Joe M

        Rob. Quit acting like there aren’t facts to support the case against ACA.

    • Tim Shaughnessy

      1. The Cochrane paper itself will answer your question whether we had a “‘free market’ health care system for decades.”

      2. Because bureaucracies cost money. Read the section of Cochrane’s paper entitled “The reregulation path” starting on page 8. Better yet, read the whole thing. Then read it again.

      As to presuming that I’m “clearly not going to reply,” I’m sorry if I do not constantly monitor the comboxes of my post. Responding to comments lies somewhere after a) time with God, b) time with my family, c) my job. In the 7 hours between your posts, I was busy doing all of the above at various times.

  • Paul

    Wal-mart won’t solve this healthcare problem for us by buying cheap crap from China.

  • Abigail A.

    Wow! Ayn Rand must be so happy right now. How typical of CatholicVote that they support the bishops only so long as it agrees with their ultra right-wing agenda. After a life time serving the poor I can tell you that free markets hurt as much as they help. I’m no fan of what the Obama administration has done to religious freedom but universal health care was one of the few good things to come out of the whole health diabolical. Business aren’t interested in helping people. They are only interested in helping themselves.

    • T.J.

      Indeed, there is a risk that a radical capitalistic ideology could spread
      which refuses even to consider these problems, in the a priori
      belief that any attempt to solve them is doomed to failure and which
      blindly entrusts their solution to the free development of market

      -Pope John Paul II

      Catholic vote is Glenn Beck style Catholicism

    • Jan

      Do you really, really think your “free” health care is going to be worth a sh**? Because if you do, you are seriously deluded. If O-Care gets its hooks into America, that will be the ONE place where it will be “vitally important” for the government to save money – just you wait and see. How they gonna do that? Well that’s pretty simple. Don’t take care of sick people! Hello death panels. Hello, you are “too old, too young, too sick, too healthy” for treatment.

    • Tim Shaughnessy

      Did you read the Cochrane paper?



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