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The Affordable Care Act has Republican Roots

The Affordable Care Act has Republican Roots

“Just because a couple people on the Supreme Court declare something to be ‘constitutional’ does not make it so”-Rand Paul, (R) Kentucky

Despite the obvious idiocy of the statement above, the Affordable Care Act has roots in recent Republican history as a cause for many a Republican’s wet dream…unless of course it has President Obama’s name inexorably and permanently attached to it.

To illustrate just how bizarre the political arena has become, Rand Paul, son of Ron Paul and a sitting Republican Senator from Kentucky, actually quoted for all history, the STUPIDEST one-liner ever, saying,” Just because a couple people on the Supreme Court declare something to be ‘constitutional’ does not make it so.”

Really Senator? Can you also see Russia from your porch?

If anyone foresaw the result that came out the Supreme Court on the Affordable Care Act, they deserve the lofty title of, I don’t know, Nostradamus 2.0. Even INTRADE, an online betting site with an excellent record for predicting events, pegged the odds of the Supreme Court overturning President Obama’s health care overhaul law at almost 80 percent.

When the word came down that the court upheld the law’s constitutionality on Thursday, many forecasters were astonished. Granted, the ruling came by the slimmest of margins and was defended, in places, by imperfect economic reasoning. But, for forty years politicians have struggled to find a way to find some kind of compromise on healthcare and this ruling has paved the way for an orderly rehabilitation of America’s dysfunctional health care system.

Easy Fixes Available For the Interests of Politicians-Not Their Constituencies

It was a complicated case, in part because the reform legislation itself was an amalgam with too many political factions with their fingers in the pie. The law’s drafters could have proposed a simpler and more efficient system, something more like the single-payer systems that have been adopted by most industrial countries.

But that would have meant discarding the nation’s current system of employer-provided health plans. That these plans are a appallingly bad model for providing health care was beside the point. Forcing voters to abandon a status quo that most of them say they like would have doomed proposals that are more ambitious from the outset.

Because The GOP represents the interests of big business, (and few are bigger than Health Insurance) and the Democrats represent the lower and middle-income classes of individuals in the country, we end up in this same tug of war on virtually every issue.

In the past, both sides have been willing to compromise. The rise of the Tea Party Activists or the Neo-Confederacy touts states’ rights, promotes monopolies, is anti-capitalistic, and favors rich “Plantation Owners” (today’s big business).

The Neo Confederacy and little Grover Norquist’s anti-democracy pledge ought to have been a huge red flag that ever since the Articles of Confederation were rejected for the Constitution, at George Washington’s insistence, the GOP has waged both military (Civil War) and now economic and propaganda wars on the American people.

The important point is that because health reform had to be built atop the current system, each feature of the legislation upheld by the court was an essential precondition for that system’s improvement.

Not a single economic analysis of the health care industry rests on the observation that individually purchased private insurance is a viable business model for providing medical services. Such insurance is broadly affordable only if most policy holders are healthy most of the time AND employed.

The fundamental problems with our current system has always been:

Health Care COSTS are the actual problem, not the insurance.
Health Care COSTS are increased at will because insurance premiums to pay those costs can and are raised at will under anti-trust exemptions for the remaining few health insurance companies.
Insurers can easily identify those with pre-existing conditions and exclude those potential customers unfairly.
Those who are likely to need expensive care cannot get it without the rest of us picking up the tab while health insurance companies record record profits.
Ages of offspring who are not working and thus carried on their parents’ policy has been increasing with the length of the current economic downturn.
The Claim by health insurance companies that policies issued to such people at affordable rates would drive them into bankruptcy is unproven and if proven we need to go to a single-payer system.
Insurers’ most profitable customers could be lured away by competitors offering lower rates made possible by selling only to healthy people.
Economists call this the adverse-selection problem. Because of it, unregulated private markets for individual insurance cannot accommodate the least healthy and those who most desperately need health insurance.

Many countries solve this problem by having the government provide health care payments from a single, more efficient, less administratively cumbersome system for all. In some, like Britain, the government employs the care providers. Others, like France, reimburse private practitioners in the exact same manner that Medicare is handled for older Americans.

How We Ended Up With This Patchwork Health Insurance System

The United States probably would have adopted one of those models had it not been for historical accidents that led to widespread adoption of employer-provided plans in the 1940s. To control costs of World War II mobilization, regulators capped growth of private-sector wages, making it hard for employers to hire desperately needed workers.

But because many fringe benefits weren’t capped, employers spied a loophole: they could offer additional benefits, like health insurance. Its cost was deductible as a business expense, and in 1943 the Internal Revenue Service ruled that its value was not taxable as employee income. By 1953, employer health plans covered 63 percent of workers, versus only 9 percent in 1940.

A serious defect was missed and resulted in eligibility for favorable tax treatment hinged on the plans being available to all employees. Although hiring workers with pre-existing conditions meant paying higher premiums, tight labor markets made many employers willing to bear that cost, because insurance was an effective recruiting tool.

Employer plans are thus a significant improvement over individual private insurance, but they are still profoundly defective. If you lose your job, you can lose your coverage. This problem has been cast into sharp relief by the persistent high unemployment in the wake of the financial crisis that occurred under George W. Bush.

In no other industrial country do we see communities organizing bake sales to help defray the cost of an uninsured neighbor’s cancer treatments.

The decline in the number of workers covered by employer plans began long before the recent crisis. According to census data, 65 percent of workers had employer-backed plans in 2000, but only 55 percent were covered by 2010. This decline has been driven in part by rapid increases in health care costs.

Economists agree that no matter how those costs are apportioned on paper, any money spent on employer-sponsored plans ultimately comes at the expense of wages. Real wages have risen little in recent decades, and the prospect that they will keep stagnating portends further erosion in coverage. So even if we ignore the inherent failings of the employer model, it simply won’t be able to deliver broad health coverage.

Where Did the Affordable Care Act Have Its Initial Creation?

In today’s Bizarro World of politics, where up is down and left is right, The ACA is modeled after proposals advanced by the most Conservative of Conservative think-tanks, the Heritage Foundation, the American Enterprise Institute and other conservative research organizations in the 1990s. The main provisions of the president’s health care law were intended to eliminate the most salient problems associated with the current system and promulgates PERSONAL RESPONSIBILITY…the most often cited basis of all things Conservative…and is being used SUCCESSFULLY in Massachusetts, where the presumptive Republican nominee, Willard Mitt Romney proclaimed it as his “GREATEST ACHIEVEMENT”!!! Major Hospital Stocks SKYROCKETED after the ruling by the Supreme Court.

One provision establishes insurance exchanges, where participating companies must offer coverage to all customers, irrespective of pre-existing conditions.
Another imposes a financial penalty on those who fail to obtain coverage ( the dreaded individual mandate). And
A third prescribes subsidies to make insurance more affordable for low-income families. (The Massachusetts plan engineered by Mitt Romney as governor in 2006 took an almost identical approach.)
WITHOUT each of its three main provisions, the law won’t work. The individual mandate, of course, is the most debated. Critics denounce it as a violation of our liberty. Paradoxically, the slim majority on the court that affirmed the mandate’s constitutionality seemed to embrace that view, likening the mandate to requiring citizens to eat broccoli for their own good. The court defended the constitutionality of the mandate by calling it a tax rather than a penalty.

But that interpretation strikes many economists as a misreading of the mandate’s purpose. It isn’t that people should buy health insurance because it would be good for them. Rather, failure to do so would cause significant harm to others. Society will always step in to provide care to the uninsured who fall ill, though in much more costly and often delayed and ineffective forms. To claim the right not to buy health insurance is thus to assert a right to impose enormous costs on others. Many legal scholars insist that the Constitution guarantees no such right.

No one can be sure how the law will play out. But its critics would be unwise to assume that it would have been easy to draft superior legislation had the law been overturned. Any new attempt would have taken the employer-based system as a starting point.

What’s important now is how the health care sector will evolve under the new framework. And here, there are grounds for optimism. While the effects of the court’s Medicaid restrictions aren’t entirely clear, the law will certainly:

Extend coverage to tens of millions who now lack it.
Require new insurance exchanges that will provide a broader array of care options.
Increase competition that tends to hold costs in check, while enhancing service quality.
Many scholars have argued that private, nonprofit institutions like the Mayo Clinic are the most effective model of providing care, and not only because they can better coordinate across many specialties. They are also less likely than traditional fee-for-service practices to prescribe unnecessary tests and procedures because doctors are paid salaries, not based on how much they can bill their patients or their insurance companies. This same system is used by the Cleveland Clinic, another U.S. health care provider rated in the upper echelon of hospital systems.

Given those advantages, such institutions, or ones that mimic them, might have spread even without health care reform. After all, employers have an interest in providing cost-effective care for their workers. But regardless which model proves most effective, it is certain to develop and extend faster in a truly competitive environment established by the insurance exchanges.

The new law will hardly be the final word on these issues. Though it takes tentative first steps on cost control, government budgets will face devastated unless we do much more to reduce the persistent rise in the COST of medical services rather than focusing on the insurance for those services. Additionally, if we as a nation are serious about protecting and preserving Medicare, many tough decisions remain to be made about end-of-life interventions, and whether Medicare should become an optional form of coverage for those who aren’t elderly.

The event worth commemorating is that last week’s ruling will at last enable our distinctly dysfunctional health care system to evolve into something better.

Come on Republicans.

Just this once, let us unite in our hope for a better tomorrow for ALL Americans and not just the ones sipping mint juleps on their front porches while us “po folk” do all the dirty work.

Source: HgTransEcon


 

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