Obamacare: beautiful in theory

flickr.com via Creative Commons

Obama, Obama, Obama… Five years ago he promised the United States that he would finally implement healthcare for everyone, something that up to that point had only been a distant vision.

Obamacare was an innovation for America. Before Obamacare, health insurance companies and the United States government did not support a public-health system, since they believed such a system would collapse. This view ignored countries like Canada and France, whose public health systems have proven successful.

Previously, American health insurance companies would grant coverage to healthy people but not to sick people. The health insurance companies, being motivated by profit, were looking out for their own benefit instead of working for the public’s benefit, so they saw that when healthy people with no medical illnesses bought health care, more cash would flow in and not out. They would not have to spend a dime caring for people who were completely healthy. However, healthy people would be hesitant to give away money for free and buy health insurance; conversely, sick people would either be charged massive amounts of money per month or not receive health insurance at all. In such circumstances, sick people who did not receive health insurance would go directly to emergency rooms, since U.S. law forces hospitals to treat patients regardless of insurance coverage and only ask for payment after treatment. Eventually, many hospitals went into debt, because people without health insurance could not afford to pay their hospital bills.

In 2008, Barack Obama campaigned on the idea that everyone, including the sick, should be able to buy health insurance at a reasonable price. This principle was one of the main reasons he was elected president. When Mr. Obama entered office in 2009, he proposed that everyone had to buy health insurance, not just the sick but also the healthy, and if people did not do so, they would be fined. Health insurance companies also had the obligation to provide the public with full health insurance, including coverage for a comprehensive range of conditions from maternity care to mental healthcare to eyeglasses, regardless of the medical status of those seeking insurance coverage. This benefitted everyone: the health insurance companies would be flush with cash that they could keep from healthy people that did not need health care, and this meant that they could offer health insurance to sick people at a lower price. This sounds like a win-win situation. So what’s the catch?

Before Obamacare, individuals had the option either to buy a full package of health insurance to cover all expenses or to buy a cheaper, more limited package that targeted more general healthcare but didn’t cover extras like psychologists and birth control. What Obamacare does is obligate the insurance companies to offer the public only a full package of health insurance benefits. This means that health insurance costs will go up, especially for the young and healthy who may not need birth control (for example, if they’re gay), psychologists (if they’re sane), or maternity care (if they’re men).

Another problem that Obamacare is facing is the website for citizens to sign up for health insurance. On this site, insurance companies will list their prices so customers can shop for the best deal. The problem with this is that, instead of the website being created by a private firm, which would have the incentive to do it well since private firms profit from good work, government bureaucrats built the websites themselves. As a result, the website has been a debacle. The complexity of listing all possible insurance plans and registering millions of Americans was too much for the incompetent bureaucrats to handle, creating a huge embarrassment for Obama.

Just when it seems there can be no more problems, another one arises. How do insurance companies compete with each other if they have to offer the same package? Well, they lower prices by cutting down on the number of doctors who are part of their network of providers. So, many people are finding that, even if the website miraculously works for them, there are very few doctors for them to see and oftentimes the doctor that they have been seeing for years isn’t part of the network provided by the insurance company whose plan they are able to afford. However, recently, President Obama said he will allow insurance companies to extend existing policies, an announcement that many were relieved to hear.

Overall, Obamacare is amazing on paper. Yet, as shown in practice, it’s become a mess, and President Obama has to find a new way to either make Obamacare work or eat humble pie and admit defeat. Obamacare is a classic case of the law of unintended consequences: even when you have good intentions, things are bound to collapse in unforeseen ways.

Sources: obamacarefacts.com, huffingtonpost.com