Guest Commentary

The free market can deliver a better health care solution

Politicians such as Sen. Claire McCaskill are the reason health care is such a mess, writes economist Aaron Hedlund.
Politicians such as Sen. Claire McCaskill are the reason health care is such a mess, writes economist Aaron Hedlund. AP

For more than seven years, Republicans have barnstormed the country promising to repeal Obamacare and to replace it with a low-cost, high-quality, patient-centered system. Yet with each passing day, the Republican promise to repeal and replace seems as believable as President Barack Obama’s promise that Americans could keep their health care plans. While the diagnosis for Obamacare is poor, the free-market remedy is more possible than Washington, D.C., politicians would have us believe.

The case against Obamacare is an easy one to make. All across the nation, health insurance premiums are rising dramatically higher than they would have without Obamacare. Here in Missouri, insurers are leaving the state faster than people are fleeing Illinois. The result is tens of thousands of Missourians left at the mercy of a single insurance company monopoly or with no insurance options whatsoever.

This slow-motion death spiral was all too predictable, but Democrats, including Sen. Claire McCaskill, barreled ahead anyway — perhaps hoping to use Obamacare’s inevitable failure as the steppingstone to a government-controlled single-payer system. McCaskill — like many of her colleagues now — has admitted to Obamacare’s troubles yet continues to resort to her erstwhile role as chief Senate obstructionist and Elizabeth Warren cheerleader.

During McCaskill’s 2012 tour around Missouri, before the state exchanges had opened, she blamed rising premiums on who she called “freeloaders,” such as those who buy new motorcycles instead of insurance.

I’m sorry, Senator, but the only freeloaders are the politicians who are busy prepping talking points in front of the mirror instead of solving problems.

The driving force behind Obamacare was the effort to cover individuals with pre-existing conditions. Unfortunately, instead of doing it transparently through a targeted safety net, Obamacare constructed a web of convoluted mandates, regulations and subsidies that acts as a hidden tax on the young and healthy. However, many of them have decided to go without insurance and pay the IRS fine rather than struggle under the astronomical premiums created by Obamacare and enabled by McCaskill. As the insurance pool becomes sicker, premiums rise, losses mount and insurance companies flee.

The solution is to kick the lobbyists out of the room and remove the government mandates that dictate what insurance products people must buy. Robust competition in the marketplace — something that was held back by government even before Obamacare — should take the place of bureaucrats setting prices. For the vast majority of people, premiums would plummet and insurance options would bloom.

For those with a history of cancer and for those facing tragic health challenges, a free-market safety-net insurance option that protects against medical bankruptcy can easily take the place of Obamacare’s complicated subsidy scheme and at a fraction of the current system’s cost. It is unacceptable for people with pre-existing conditions to fend for themselves.

Missourians must insist on delivery system reforms to bring down the cost of actual care, not just insurance. Outdated Medicare billing practices, shortages in medical residency slots and out-of-control occupational licensing laws that act more as barriers to entry than patient protections all drive up costs while creating doctor shortages.

A combination of robust competition, a targeted safety net, and health care delivery reforms have the potential to cover more people at a lower cost than Obamacare. It’s about time that Congress and the Senate stopped the shouting match and started to take action. Our physical and financial health depend on it.

Aaron Hedlund is an assistant professor of economics at the University of Missouri and a visiting scholar at the Federal Reserve Bank of St. Louis.