A Free Market in Health Care?!?

A commenter on our latest Policy Points on Health Care Reform describes health care as “the free market, unregulated situation at the time the Act was passed.”

I’m not sure if the commenter is that naïve, or if it is a regular PolicyBlog reader, making a joke that they know will throw me into a tizzy, with steam coming from my ears.

No one could possibly suggest that when government programs (Medicare, Medicaid, SCHIP, and others) represent more than 50% of health care spending—as was the case before Obamacare—that we have a “free market”. Nor could you possibly consider it unregulated, as states mandated what insurance plans must cover—Pennsylvania now has 57 such mandates—regulated pricing, and even imposed guarantee issue and community rating, which all drive up the cost of coverage. Some states even imposed individual and employer mandates to buy insurance. Some states had fewer regulations (and thus less costly coverage), but individuals were prevented from buying insurance across state lines.

What the new law really does is impose many of these mandates at the federal level, rather than the state level, and increase the amount of subsidies for big insurance and Pharmaceutical companies.

Indeed, they really took the biggest failures from state insurance regulation and mandates and adopted them into federal law.

I’ve written so much on the lack of free markets in health care that I can only conclude the commenter is either brand new to this site, or just setting me up for another blog post. Examples:

Of course, she goes on to suggest Obamacare will help small businesses, which is absurd. Already, we are seeing insurance premiums rise. And already, we are seeing a reduction in coverage available, as insurance companies are consolidating and dropping options, and employers are looking to drop their coverage, as detailed in the Policy Points and my collection of health care articles.

The tax credit offered to small business, as also noted in the piece, helps very few small businesses, and phases out as businesses hire workers and increase wages (indeed, beginning with the average wage of $25,000 for a full time worker, which is well below the state average). Thus, the law creates incentives to not hire workers and to keep wages low.

There is a reason why small businesses, led by the NFIB, have joined in the lawsuit against Obamacare.

We have noted the numerous problems in our health care system, but the problems are largely due to government intervention, not the mythical free market. And we’ve been touting real solutions for years: