Republican reforms to Obamacare are staggering through the legislative process, accompanied by a cacophony of overwrought commentary. Many on the Left insist that Republican health-care proposals are going to kill a lot of people. But pre-Obamacare America was not a Dickensian dystopia where the poor died in droves for lack of basic health care, and that won’t happen in a post-Obamacare (or a modified Obamacare) America either.
The accusation that Republicans really want to shove the inhabitants of pediatric cancer wards onto the streets to die is obscuring the health-care debate we need to have. The issue here is not whether masses of people will die from readily treatable conditions because they can’t get health insurance (they won’t). The real issues are middle-class anxiety and welfare.
Middle-Class Americans Fear Not Death But Poverty
It is not concern for the plight of the poor that drives the health care debate in America. The American poor can get health care. Medicare, Medicaid, and various state plans (as well as private charity and hospital write-offs) provide fairly universal health care. It isn’t the best by today’s standards, but it’s better than what the poor have had for the rest of human history. Improvements could be made, but the political clout of the poor is small. It is the broad middle class whose anxieties dominate health-care policy debates.
For the middle class, the real concern isn’t that they will die because they cannot afford health care, but that they will become poor from paying for health care. They fear that without generous health insurance the cost of medical treatments will consume their resources until they are reduced to poverty and forced to rely on the health-care options available to the poor. Their losses of comfort and status will be concomitant with recourse to government benefits and private charity, with the humiliating dependence those programs entail (plus, if they become permanently disabled they’ll have no way to earn enough money to get back to a better lifestyle).
These realistic fears are not of dying from a complete lack of treatment, but of financial hardship, dependence, and a declining quality of care—precisely the problems Obamacare visited on many Americans. Defenders of Obamacare would counter this by pointing to the people the law has helped, and claiming that GOP changes to Obamacare might hurt them. Both sides would have a point, because health-care policy invariably involves tradeoffs, no matter how often politicians promise (and voters want to have) it all.
Health Insurance Is Not Health Care
However much we may wish for this, cheap health insurance with great coverage for everyone is just not happening. It is impossible, for reasons that are readily acknowledged with regard to other forms of insurance. We all know that better coverage costs more: no reasonable person gripes about the increased cost of comprehensive car insurance compared to the minimum of required liability insurance.
We also accept that those who are greater risks will be charged more—there are few complaints about the injustice of higher car insurance rates for teenage boys. And we differentiate between insurance (a financial product that manages risk) and that which is insured—we know that homeowners insurance is not a mortgage payment or a prepayment plan for ordinary home maintenance.
Likewise, we ought to recognize that health insurance is not health care. It is a financial product designed to mitigate the financial cost of a medical crisis requiring expensive health care. As such, it has limitations, which are the product not of hardhearted policies but of the mathematical realities of accounting and economics. It is expensive to insure against the probable, and it is impossible to insure against the inevitable. Requiring insurance companies to sell new policies at a loss doesn’t change this. It only results in them going broke, or raising prices on everyone else, or needing government subsidies to survive.
These hard rules of economics may be obscured for the many Americans whose employers provide benefits that are often generous in paying for routine health care and chronic conditions. People using employer-provided insurance extensively don’t think much about the actual cost of their health care, and those who use it sparingly rarely contemplate how expensive insurance benefits reduce their wages.
However, the underlying economic realities of insurance do not change, and can be seen clearly in the individual health insurance markets. Young people in good health are very cheap to insure, while old people in poor health are expensive to insure. Some people with costly pre-existing conditions are effectively impossible to insure. These realities are unpleasant, sometimes harshly unfair, and a potential threat to middle-class security, but they cannot be wished away.
They Don’t Want to Go Bankrupt Before Tapping Welfare
It is the broad middle class that is haunted by the specter of medically induced penury and bankruptcy (the very rich can afford whatever health care they need, and the poor are likely already reliant on charity and welfare). Thus, just as opposition to Obamacare was driven by those whose health-care costs it has increased, opposition to changing it will be driven by those who fear changes will increase their costs.
Conservatives must recognize that the fear of an uninsured medical crisis or chronic condition destroying a family’s financial security is legitimate. The safety net is there for those who fall low enough, but the policies of a successful political movement must reckon with the fear of falling at all. The prospect of Medicaid stepping in after bankruptcy is a slight comfort to middle-class Americans worried about health care expenses.
The questions are how, and how much, taxpayers should protect the middle-class status of people who depend on government subsidies to pay for their health care. Obamacare’s answer was to do a bit of everything. It expanded Medicaid eligibility, pushing its coverage into the lower middle class. It required private insurance to provide coverage for pre-existing conditions, and then subsidized the costs via risk corridors (huge government payouts to insurance companies). Finally, it mandated that everyone buy health insurance, which induced the healthy to buy coverage (thereby subsidizing the unhealthy), and tried to preclude freeloading from those who would game the system by only buying insurance on the way to the hospital.
While these measures did help some Americans, they harmed many others, who had their coverage cancelled and watched as premiums and deductibles rocketed up for the plans that were still available. The promises President Obama made were exposed as lies. But for all the pain Obamacare caused, it does have a constituency among those it subsidized (and, of course, among Democrats eager to protect Obama’s legacy).
At its core, Obamacare is welfare for the unhealthy in the American middle class, which loves government benefits but tends to look down on welfare (which it associates with the inner-city ghetto or the trailer park). This distaste for honest labeling is why much of Obamacare is constructed around regulations, mandates, and subsidies to insurance companies, rather than direct government handouts. This dissimulation may spare the feelings of middle-class Obamacare beneficiaries, but it harms others and precludes honest discussion of government health-care policy, which comes down to who, how and how much. Who gets the benefit, how is it given to them, and how much will be doled out before government cuts off the supply?
These questions should be debated in an open, straightforward fashion. Instead, Obamacare tried to embed a welfare program into the health insurance market, and Republicans are now trying to undo the harm it caused without acknowledging the real contours of the issue or angering Obamacare beneficiaries. Good luck with that.