Sunday, April 8, 2012

Health Care & Insurance is Not a Free Market

As someone who purchases family health insurance not through my employer but as an individual consumer, I have carefully watched the Supreme Court hearings on the Affordable Care Act - pejoratively reviled by insurance holding members of the GOP as "Obamacare." As arguments about the "market" and the commerce clause applicability have been made to the insurance issue, many consumers have frustratedly tried to remind critics, this is not a free market issue. It's not an open market.

And, I have been baffled by the inability of the Obama administration to make this argument both in the public and in the actual court hearing. Now, finally, op-ed writer Donna Dubinsky has effectively and succinctly clarified these concerns:

As best as I can tell, the recent arguments at the Supreme Court did not touch on a critical part of the discussion about government’s role in health care: the broken market for private insurance. It was as if the court forgot that the private insurance market does not function as a normal market. If you are not employed and you want to purchase insurance in the private market, you cannot unilaterally decide to do so. An insurer has to accept you as a customer. And quite often, they don’t. Insurers prefer group plans, with lots of people enrolled to spread the risk. Can you blame them? The individual consumer is a lot of work, is a higher risk, and produces relatively little revenue.

The justices repeatedly asked: If the government can require you to purchase insurance, what else could it require you to do? What are the limiting conditions to this breadth of control?

The government muffed its response. To me, the answer is obvious. There are two simple limiting conditions, both of which must be present: (1) it must be a service or product that everybody must have at some point in their lives and (2) the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.

Let’s test the examples presented to the high court: Can the government force you to eat broccoli? This proposition fails on both counts. Nobody must eat broccoli during their lives, and the market for broccoli is normal. If you want broccoli, go buy it. Nothing stops you.

Clearly, these are the issues which drove the move for universal coverage in the first place. And I have significant criticisms of the ACA - especially the mandates it requires for coverage to be provided for free. While I agree colonoscopies and well-visits should be covered - nothing should be for free. The consumer must contribute to the payment for all health services.

But, the private market is in serious trouble. It's not a free market, and no GOP alternatives to the ACA address that disparity.

No comments: