Obamacare and Healthcare

Today the Supreme Court ruled in a 5-4 decision that the government can force people to buy health insurance. What the Supreme Court did in essence is place a tax on people for not doing something. The legislation entitled Patient Protection and Affordable Care Act plans to try to provide more people with health insurance. I like the key word “affordable”. If you ask someone what is the cost of an affordable house, college, or health insurance could they give you a number? The AMA endorsed the plan in this press release. According to a Gallup Poll done in December 2011 around 17.7% of Americans didn’t have health insurance. This turns out to be close to 50 million people. However, this paints a false picture. Around 25% of these people who are counted as uninsured can get Medicaid and the State Children’s Health Insurance (S-SHIP) but never enrolled. Another 20% of the people who are counted as uninsured are not legal immigrants. Also greater than 33% of people have incomes over $66,000 yet many choose not to purchase healthcare since they are young. Also a very small percentage of people (2.6%) of people go without health insurance for three years or longer.

Another big question is about pre-existing conditions. I would say on this there are some people who through no fault of their own have conditions that they had no fault in causing. However, the idea of insurance is to plan for unforeseen events. One problem is that health insurance is often tied to employment. You can’t take your health insurance policy with you from company to company since the company is paying for it. A better system would be companies just to increase the pay by the amount of what the insurance is worth and let consumers purchase their own health insurance. Also since people can’t purchase health insurance across state lines it artificially increases in the price of insurance. This requires insurance companies to comply with different regulations and restrictions which impose costs on them which are passed on to the consumer. If you don’t believe that there is much regulation in insurance can you even name three new insurance companies in the past five years?

The government does a poor job of managing the money taxpayers give it. Medicare fraud is estimated at $48 billion for 2010. Total spending on Medicare was around $528 billion which means 9% of spending on Medicare is payments to bogus people. If any private organization had a business like this they wouldn’t even exist. If people were paying with their own money instead of a third party paying this wouldn’t occur. Speaking of Medicare according to this article the last two months of a patient’s life cost Medicare $55 billion and it estimated that 20%-30% of the expenses have no impact yet the government keeps spending money.  

The idea of free markets is to create competition which drives down prices and increases options which would allow more people to have health insurance. Two other things that increase cost as I have pointed out here and here the lack of not enough private hospitals and FDA also increase the cost of healthcare. If we had more hospitals it would increase competition and bring down costs. The FDA limits the type of drugs that can go on to the market which artificially increases the price since drugs that the FDA doesn’t approve will never end up in the hands of patients even though some people in the clinical trials benefit. Allow patients to use drugs after the drugs were tested for safety in Phase I and you would see more innovation and prices for drugs drop like a rock. Healthcare isn’t complex we just need more free market solutions.