The Road to Socialized Medicine Is Paved with Pre-existing Conditions
Washington’s control of medicine has grown slowly, evolving piecemeal over decades. Even before Obamacare, half of all heath care spending was controlled by the government.
The general pattern of the expansion works like this: advocates point to some group in real or alleged dire need and declare that Washington has a duty to act; Washington eventually does. It started with the poor (Medicaid) and the elderly (Medicare). Then came the uninsured in need of emergency care (Emergency Medical Treatment and Active Labor Act). Then came middle-class parents (S-CHIP).
And Obamacare? It was sold to us, in large part, as the indispensible means of addressing the plight of those with preexisting conditions.
In his recent State of the Union, Obama named as the not-to-be-compromised central achievement of his health care bill that it put an end “to the days when insurance companies could deny someone coverage because of a preexisting condition.” Obamacare does indeed make it illegal for insurance companies to refuse to cover people with preexisting medical conditions or to charge them higher prices.
Far from justifying an expansion of the state’s role in medicine, however, the issue of preexisting conditions illustrates how badly we need to disentangle government from American medicine.
It’s a complex story, but let’s start here: too often people automatically ascribe our health insurance problems (before Obamacare) to the inadequacies of the free market.
But what we have today is not a health insurance market — not really. We have instead the crippled remnants of nearly a century of government intervention in the health insurance industry. These interventions are vast and complex, but for the most part they fall into three categories.
First, there’s our tax code. In a sane world, if you had insurance and got sick, you would simply stay with your current insurer. But today, most of us get our health insurance through our employers, so if we lose our jobs — which is not exactly unheard of today — we are likely to lose our insurance. And once we are ill, a new insurer will obviously want to take our preexisting conditions into account when offering to insure us.
Now, we don’t buy food, diapers, or car insurance through our employers, so why in the world do we buy health insurance this way? It’s not because it’s more efficient for every car dealership and paper towel manufacturer to learn the ins and outs of administering a health insurance plan. It’s because we can buy health insurance through our employer with pre-tax dollars. No such luck if you want to buy your own health insurance package. And it’s not really even insurance anymore, since we use it to pay for almost everything, from a routine blood test to a routine physical — which makes about as much sense as using car insurance to pay for an oil change.
Next, there’s each state’s laundry list of health insurance mandates. We aren’t talking about Obamacare’s individual mandate, which forces us to buy insurance whether we want to or not. These state mandates dictate what coverage must be offered in the insurance packages you and I are permitted to buy. Even if you’re young, don’t want kids, and don’t drink, these mandates can force you to pay top dollar for a package that covers everything from in vitro fertilization to liver transplants to alcohol rehab. One result of these mandates? Many of us are priced out of the market; those already facing higher costs because of preexisting conditions are particularly hard hit.
Finally, there is a category best described as “insurance blindfolds,” a category that includes the preexisting condition rule. Insurance blindfolds tell health insurance companies that they dare not take into account certain risk factors when setting insurance rates. The effect of such laws is not to erase the existence of these verboten risks, but to force low-risk patients to shoulder substantially higher premiums.
These are just some of the highlights. So, since there already exist enormous government interventions in health insurance, we can’t simply assume that our problems are caused by the free market and that government is the cure. The market is far from free and the cause of our health insurance problems could be government policy itself.
But to think about this question fully and seriously, we need an idea of what a genuinely free market in health insurance might look like. We’ll take up that issue in our next column.
