Understanding Obamacare
By Luke MitchellNo one today is more moderate than the Democrats. Indeed, the triangulating work that began two decades ago under Bill Clinton is reaching its apogee under the politically astute guidance of Barack Obama. “There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada’s,” Obama noted (correctly) last September. “On the right, there are those who argue that we should end employer-based systems and leave individuals to buy health insurance on their own.” The president, as is his habit, proposed that the appropriate solution lay somewhere in between. “There are arguments to be made for both these approaches. But either one would represent a radical shift that would disrupt the health care most people currently have. Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn’t, rather than try to build an entirely new system from scratch.”
With such soothing words, the Democrats have easily surpassed the Republicans in fund-raising from the health-care industry and are even pulling ahead in the overall insurance sector, where Republicans once had a two-to-one fund-raising advantage. The deal Obama presented last year, the deal he was elected on, and the deal that likely will pass in the end is a deal the insurance companies like, because it will save their industry from the scrap heap even as it satisfies the “popular clamor for a government supervision.”
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The private insurance industry, as currently constituted, would collapse if the government allowed real competition. The companies offer no real value and so instead must create a regulatory system that virtually mandates their existence and will soon actually do so.
A study by the McKinsey Global Institute found that health insurance cost the United States $145 billion in 2006, which was $91 billion more than what would be expected in a comparably wealthy country. This very large disparity may be explained by another study, by the American Medical Association, which shows that the vast majority of U.S. health-insurance markets are dominated by one or two health insurers. In California, the most competitive state, the top two insurance companies shared 58 percent of the market. In Hawaii, the top two companies shared the entire market. In some individual towns there was even less competition—Wellmark, for instance, owns 96 percent of the market in Decatur, Alabama. “Meanwhile, there has been year-to-year growth in the largest health insurers’ profitability,” the AMA reports, even as “consumers have been facing higher premiums, deductibles, copayments and coinsurance, effectively reducing the scope of their coverage.” And yet no innovating entrepreneurs have emerged to compete with these profitable enterprises. The AMA suggests this is because various “regulatory requirements” provide “significant barriers to entry.” Chief among those barriers, it should be noted, is an actual congressional exemption from antitrust laws, in the form of the McCarran–Ferguson Act of 1945.
http://www.harpers.org/archive/2009/12/0082740
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