I know there are people on this blog who know a lot more about the intricacies of health insurance than I do, so I will stick to the basic contours of health care economics. These are quite simple: if you want to cover everyone in a way that is affordable, there are basically two ways to do it.
The first way is single payer, in which the government acts as the insurer, collecting contributions through a dedicated payroll tax. This is common across the developed world, and Americans will recognize it from Medicare.
The second way is to rely on private insurance. But for that to work, you need three elements. First, strict regulation, especially to prevent insurance companies from discriminating based on pre-existing conditions. But that alone won’t work—it will tilt the risk pool towards sicker people, prompting healthier people to drop out, leading to higher and higher costs for those remaining. So you also need, second, an individual mandate to make sure that healthy people are also in the risk pool. And even after this, premiums will still be too high for some people to afford, so you need subsidies (this is especially the case in the U.S. system, whereby the refusal of government to negotiable with providers or drug companies, or to impose price caps, leads to per capita healthcare costs about twice of the OECD average). This three-legged stool is basically the Affordable Care Act, in a highly simplified and condensed form.
Here’s the essential point: all methods of attaining universal affordable healthcare involve a key element of social solidarity. In other words, the young and the healthy subsidize the old and the infirm. Under Obamacare, they do that by respecting the individual mandate—buying insurance that probably comes with higher costs than warranted by their own individual risk profile. And they also do it by paying higher taxes to pay for the subsidies (although for Obamacare, this applies mainly to the wealthy).
This is exactly what Republican hate about Obamacare. They don’t accept the principle of solidarity—the notion that we are all responsible for all, and that we should feel collectively injured as a society when some of us suffer from a lack of healthcare. In the thrall of a radical libertarian ideology, they repudiate any obligation not freely chosen or contracted, insist on individual responsibility for one’s health, and believe that free market solutions can solve all problems.
It wasn’t always so. The basic contours of Obamacare were once embraced by Republicans as the more market-friendly alternative to single payer. They formed the basis of Dole’s response to Clinton’s proposal in the 1990s, and they formed the basis of Romney’s health care reform in Massachusetts. Yet Republicans today insist that this approach is tantamount to socialism. This tells us how far the ideological rot has spread.
This ideology, of course, makes little practical sense—unregulated insurance companies will exclude huge chunks of the population. Healthcare represents a classic market failure. Major information asymmetries mean that it can’t function like a normal market for goods and services. But this is ultimately about ideology, not practical wisdom. And you can see the ideology at play when people casually deploy classic neoliberal language to healthcare—instead of people in need for care, they talk about consumers desiring choice. Welcome to the throwaway culture, healthcare edition.
Of course, if you are young and healthy, you will be able to buy insurance on the market. And you might even get a good deal. If you reject social solidarity, then health insurance becomes like car insurance—tailored toward individual risk. Hence the infatuation with health savings accounts.
What happens to the people who sink rather than swim in this market? We’ve been there before, remember, and it wasn’t so long ago. Don’t forget the bad old days when 50 million lacked insurance, 25 million more were underinsured, healthcare costs were the single biggest cause of bankruptcy, and people suffered and died as a matter of course. This is the alternative to the ACA, and it is why estimates suggest that up to 30 million people could lose insurance under Obamacare “replacement” plans.
The only real solution Republicans offer the discarded is high-risk pools, a dumping ground for those the market rejects. This does have a certain logic: if the young and healthy are relieved of any obligation to subsidize the old and infirm, and we still want to cover these people, then the government is forced to pick up the tab. There’s no reason in principle why these pools can’t work. But here’s the problem: they’re extremely expensive. By design, everyone in them has high medical expenses. How expensive exactly? Well, the Commonwealth Fund estimated that covering everyone with pre-existing conditions would cost $178 billion a year. That’s a fantasy number. The Price plan is offering a measly $1 billion a year for three years. Paul Ryan, that paragon of generosity, is willing to offer $25 billion over ten years ($2.5 billion a year). This is why high-risk pools tend to act as the flimsiest of band-aids—an absolute last resort, and far inferior to Obamacare.
In rejecting this solidarity, it’s not just about getting a better deal for the young and healthy. It’s also about a huge tax cut for the wealthy. People might forget this, but Obamacare was fully paid for. And one way the subsidies were paid for was by raising taxes on investment income for people earning over $200,000 a year. Getting rid of that gives the top 1 percent an average annual tax decrease of $25,000—the equivalent number for the top 0.1 percent is $165,000. Make no mistake, this is why Republicans are salivating about the repeal of Obamacare.
This is not to say that there were no problems with Obamacare. Only half as many people as expected signed up on the exchanges. Because the insurance companies were faced with a sicker risk pool than anticipated, premiums had to be adjusted upwards and insurers began pulling out of some smaller markets. But the evidence suggests this was a one-time adjustment, and that the subsidies can cushion this cost for those on lower incomes. The real culprit here is, once again, a shocking lack of solidarity, a repudiation of what should have been a basic duty of citizenship. Too many healthy people opted to pay the fine rather than buy insurance. The fine, of course, could have been higher. But incentives can only go so far. More important is intrinsic motivation, the inculcation of virtue oriented toward the common good. But this is hard given the all-encompassing reach of the neoliberal mindset.
It goes without saying that Catholic social teaching regards access to healthcare as a fundamental human right—so much so that Pope John Paul II argued that it should be cheap or even free of change for workers. And of course, Catholic social teaching insists that we have a duty to meet human needs that cannot be met through the market—and healthcare is surely exhibit A here. But this entails solidarity. There’s simply no getting around that.