The GOP bill to repeal and replace Obamacare does not actually repeal Obamacare, according to one conservative scholar. Nor does it solve the core problem with the American health-care system – government interference.
“Through government interference in health care, politicians have joined with industry lobbyists to destroy the health care market and the direct relationship between consumers and providers,” Daniel Horowitz, senior editor at Conservative Review, wrote in a recent commentary.
“After destroying health care with third-party and fourth-party insurance payments supplanting direct payments, they then destroyed health insurance, whereby most insurance is provided by the government or paid for by employers, thereby placing individuals at a tremendous disadvantage. Not only do we no longer pay for our own health care, the overwhelming majority of those third-party payments are paid for by a fourth party: employers, government, or both.”
Horowitz, author of “Stolen Sovereignty: How to Stop Unelected Judges From Transforming America,” pointed out that in 2015 the public and private sectors combined to spend a total of $3.2 trillion on health care, accounting for about 18 percent of the economy. The reason health care is so expensive, he said, is because of the way Americans pay for it.
“In a functioning market, prices reach an equilibrium between the desire of profit for providers and the desire of consumers for the service,” Horowitz explained. “When consumers are paying for a service with their own money, there is a limit to what they can and will pay. This forces providers to innovate and cut costs to conform to the organic market demand.
“No such organic market demand exists when consumers don’t pay for their own product and all the money comes from a third party, which is primarily subsidized by a fourth party. Not only does this fail to lower costs, it encourages providers to charge even more, because they know there is an open-ended spigot from government-sponsored debt fueled by political pressure to keep the gravy train flowing.”
Horowitz calls the government-sponsored tax exclusion for employer-provided health insurance “the original sin of health care.” He said the only reason most employers offer their employees health insurance is because the federal government used the tax code to make it beneficial to do so. But employer-provided insurance is not good for the health care system, in his view.
“This in itself has had the effect of inflating the insurance bubble and moving health care away from direct payments towards third-party payments,” he wrote. “This is why individuals who do not get insurance from the government or employers are screwed. Individual health insurance is so much more expensive because individuals are placed at a disadvantage in purchasing power for third-party payments. And health care itself is now inflated by the government and insurance bubbles (third- and fourth-party payers), making health care itself gratuitously expensive, even for non-life-threatening illnesses.
“Thus, individuals can’t afford basic health care, even if they want to cut out the middle man and pay out of pocket, because most health care expenditures are the result of over-utilization from other people who pay third parties to pay their bills. There is no ability or desire to peg the price to the service. There is no desire on the part of the providers to compete and innovate, and there is no desire on the part of the consumer to be cost-conscience in utilizing the service.”
Dr. Lee Hieb, an orthopedic surgeon and past president of the Association of American Physicians and Surgeons, said employer-based insurance has combined with Obamacare to create a system that doesn’t benefit anyone.
“The bottom line with employer-based insurance is when you don’t own your own health-care policy, you’re wedded to your job, and your business is forced under the Obamacare mandates to buy insurance in such a way it’s not cost-effective,” Hieb told WND. “They cannot tailor the policies, they have to insure people with all sorts of conditions. The insurance companies are stuck with all these people with all these conditions. It’s not a way to go.”
Back when America had real health insurance, according to Hieb, people owned their policies for their entire lives. They paid into it when they were young and healthy, and their rates didn’t go up very much over the course of their lifetime. Now, however, regulation has made it much more costly to buy an individual policy, or any type of care for that matter.
“It used to be, years and years ago, that the blue-collar worker could afford cash for most outpatient and small surgical stuff, even like an appendectomy, and nobody can do that now, and that’s because the regulations have caused the prices to go up,” said Hieb, who authored the book “Surviving the Medical Meltdown: Your Guide to Living Through the Disaster of Obamacare.”
Horowitz used a common grocery item to illustrate the absurdity of the way Americans pay for health care.
“Imagine if only 10.5 percent of all orange juice purchased in America was paid for in the form of direct payments by consumers to the store owners,” he urged. “Picture a scheme whereby the government subsidized the majority of orange juice with Tropicade and Tropicare and concocted a tax scheme to ensure that most employers offer a payment plan to pay a third-party provider in order to pay for the orange juice of their employees. Plus, a myriad of regulations ensures that there is no innovation or array of options even for the third-party payment plans, much less for direct payments.
“How much do you think it would cost for an individual to then purchase a bottle of orange juice? $100? $200? Who knows? When there is no effort, desire, or need to peg the price of a service to organic consumer demand, but rather to inefficient payment plans of third parties – and mainly through the narrow confines of government subsidies and regulations – the costs will spiral out of control. Providers of the product know that big insurance companies will have the money to continue paying their increased prices and that the insurance will be paid for by the bottomless pit of government debt or government-sponsored tax treatment of employer-based insurance.”
Horowitz presented a chart that showed in 1987 federal and local governments paid for 32 percent of all health care expenditures, and by 2015 that number had risen to 47 percent. What’s more, out-of-pocket payments composed nearly half of all health care spending in 1960, whereas today they make up only 10.5 percent.
The solution to reversing spiraling health care costs, in his view, is to drastically limit the role of the federal government in the health care and insurance fields.
“We must first reduce fourth-party-payer and have individuals pay for their own insurance,” Horowitz argued. “The only way to do this is to make the individual market work again by getting rid of all regulations and protections for existing insurers that box out competition.
“Only once we heal the individual market could the proposition of equal tax treatment entice more individuals to forgo their work plans, take their full salary, and purchase an individual plan tailor-made to their families. At that point, we should then encourage individuals to purchase cheap catastrophic plans and spend the remaining funds out of pocket directly to the providers. This will dramatically bring down prices on the health care side and cut out big pharma and the lobbyists.”
