Former editor and now columnist for the New York Times Bill Keller echoes Paul Krugman’s Orwellian assertion that we need government to create a market for health insurance, absurdly claiming in an article titled “Obamacare: The Rest of the Story” that the law has “spurred innovation and efficiency”. Keller begins by repeating this canard:
Unless you’ve been bamboozled by the frantic fictions of the right wing, you know that the Affordable Care Act, familiarly known as Obamacare, has begun to accomplish its first goal: enrolling millions of uninsured Americans, many of whom have been living one medical emergency away from the poorhouse. You realize those computer failures that have hampered sign-ups in the early days — to the smug delight of the critics — confirm that there is enormous popular demand.
The only person bamboozling anyone here is Bill Keller. Here again he is channeling Krugman, who in a blog post titled “Good Glitches” asserted that all the problems people were having with the HealthCare.gov website was “good, not bad, news for the program” because it showed what high demand there was for Obamacare health plans. There were “Lots of people logging on and signing up on the very first day”, he claimed. Two days later in his column, he still insisted that “Obamacare is off to a good start”.
That, of course, was a load of nonsense. Evidence for this supposed “popular demand” remains elusive, as the problems with the website have proven to be caused by the site itself being poorly designed. Krugman acknowledged two days ago on his blog that “they messed up the programming big time”. And after claiming that the problems were caused by the huge traffic load of people signing up, the actual numbers of people who have done so also remains elusive. This, too, Krugman humorously acknowledged, writing that “This morning I talked to someone who successfully signed up for Obamacare — with great difficulty, but she did succeed in the end.” His story changed from claiming that “Lots of people” were “signing up” on day one to “people are starting to trickle through”, as evidenced by the single example he was able to find. “I know,” he added, “one example — but the plural of anecdote is data.” Despite these acknowledgements, he ridiculously stuck to his story, titling his post “Obamacare Success”.
Starting to “trickle” indeed. As Krugman and Keller’s own newspaper pointed out several days ago, “just a trickle of the 14.6 million people who have visited the federal exchange so far have managed to enroll in insurance plans, according to executives of major insurance companies who receive enrollment files from the government.” A CNN reporter who has been trying since the exchange was launched on October 1 to get signed up for a plan as of two days ago still hadn’t managed to do so.
Information about just what a disaster the $400 million federal insurance exchange website is keeps rolling in. And they are not “glitches”. On the contrary, in some cases, the problems with the site were intentionally designed that way. For example, they created a bottleneck by forcing people to go through the laborious process of actually creating an account before they could shop around for a plan. Why would they do this? Simple. They wanted people to register first so that if they were eligible for subsidies this could be taken into account so they wouldn’t get sticker shock from the actual prices for the plans.
As Avik Roy points out, “Obamacare wasn’t designed to help healthy people with average incomes get health insurance. It was designed to force those people to pay more for coverage, in order to subsidize insurance for people with incomes near the poverty line, and those with chronic or costly medical conditions.” Does that come as a surprise to you? It shouldn’t. Krugman himself has pointed this fact out, responding to the criticism that Obamacare will actually result in higher premiums for young, healthy people by saying, “Well, duh!” As I wrote in my July 2012 paper about how the individual mandate is unconstitutional, “It is important to emphasize the Court’s explicit recognition of the fact that the purpose of the mandate is to subsidize the costs of insurance premiums for unhealthy individuals by forcing healthy individuals who are on the whole financially better off without it to purchase an insurance policy.”
Roy also points out that “most people will either not qualify for a subsidy, or qualify for a small one that, net-net, doesn’t make up for the law’s cost hikes.” He correctly reasons that “If the ‘Affordable Care Act’ truly did make health insurance more affordable, there would be no need to hide these prices from the public.” Elsewhere, Roy points out that “Middle-class Americans face the double-whammy of higher insurance premiums, and higher taxes to pay for other people’s subsidies.” Also, “For months, we’ve heard about how Obamacare’s trillions in health care subsidies were going to save America from rate shock. It’s not true. If you shop for coverage on your own, you’re likely to see your rates go up, even after accounting for the impact of pre-existing conditions, even after accounting for the impact of subsidies…. Rates are going higher. And if you’re healthy, or you’re young, the Obama administration expects you to do your duty and pay up.”
Essentially, Obamacare is fundamentally not about addressing the reasons why health care is so unaffordable, but simply attempts to shift costs around in a shell-game sleight-of-hand designed simply to hide the true costs from the consumers, such as how young, healthy people who generally have less income are forced to buy insurance to subsidize costs of unhealthy people, like older people who generally are financially better off, who are then taxed more in order to subsidize the costs of having to buy insurance for young people who don’t make much money. (By the way, here is an interactive map you can use to get an idea of what a health insurance plan under Obamcare might cost you in your state; my state’s data isn’t on the map yet.)
So, the bottom line is that, no, the failures of the website do not “confirm that there is enormous popular demand”, as Keller claims. It just shows that the website has a lot of technical design problems, some of them built in intentionally. As for traffic, many people visiting the site is not evidence of demand for the plans available to them there. I’ve visited the site a couple times, for instance, but wasn’t there to shop. I know, I’m just one example — but, remember, the plural of anecdote is data! That the “Most Popular” question at HealthCare.gov the day before the launch of the exchange was “How do I get an exemption from the fee for not having health coverage?” offers still more “data”.
But we’re just getting warmed up. Keller continues:
What you may not know is that the Affordable Care Act is also beginning, with little fanfare, to accomplish its second great goal: to promote reforms to our overpriced, underperforming health care system.
Actually, addressing the reasons for why health care is so unaffordable is not a goal of Obamacare. The so-called “Affordable Care Act” does nothing to address the underlying causes for high health care costs. As already noted, it just tries to further eliminate any kind of meaningful market prices and shift costs around. What Obamacare actually does is exacerbate the problems by trying to further legislate away any semblance of a free market for health care with legislation ostensibly designed to “solve” problems created by previously enacted legislation.
The individual mandate itself is an example of this, being a “solution” deemed necessary to “solve” a problem created by Obamacare itself. Obamacare forces insurance companies to insure anyone, even if they have a preexisting condition. This obviously creates an incentive for individuals to not buy insurance unless and until they require health care — precisely the opposite outcome the law was intended to produce. Hence the “solution” of unconstitutionally forcing everyone to buy an insurance policy.
The Obama administration and the law’s supporters like to boast how Obamaacare will mean tens of millions more insured Americans. Yes, mandating that they buy it under threat of penalty is one way to try to accomplish that. But it hardly seems an approach to brag about.
Keller then makes the bizarre statement:
Irony of ironies, the people who ought to be most vigorously applauding this success story are Republicans, because it is being done not by government decree but almost entirely with market incentives.
Not being done by government decree? Entirely with market incentives? WTF?
Using mainly the marketplace clout of Medicare and some seed money, the new law has spurred innovation and efficiency.
Ah, yes, the “incentives” and the “innovation and efficiency” spurred by Obamacare! For instance, how government decrees under the law that insurers must overcharge the healthy so that they can undercharge the sick, which creates a profit incentive that wouldn’t otherwise exist for insurers to create plans that attract the healthy but deter those who actually need a lot of health care. And how this artificial incentive has led insurance providers to innovatively meet the requirements decreed by government either by offering plans with lower annual deductibles but higher premiums or offering lower premiums by restricting consumer choice to smaller networks of health care providers willing to accept lower fees. Plans of the latter type would, of course, be more attractive to those rarely or never requiring health care while tending to deter those who require a lot of care.
Oh, yeah, remember when Obama said, “no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period.” Yes, well, that was a lie.
A bit further on, Keller elaborates on the kind of “innovation” he is referring to:
Since the Affordable Care Act was signed three years ago, more than 370 innovative medical practices, called accountable care organizations, have sprung up across the country, with 150 more in the works. At these centers, Medicare or private insurers reward doctors financially when their patients require fewer hospital stays, emergency room visits and surgeries — exactly the opposite of what doctors have traditionally been paid to do.
So here are some initial questions that should immediately pop into your head: If Accountable Care Organizations (ACOs) offer such a great business model, then why does it require the use of government force to get people to join? And think about what it means for doctors to rewarded for having patients requiring less treatment. What kind of incentive does that create? Obviously, doctors now, like insurers, will have an incentive to attract generally healthy patients while shunning those who would need a lot of care. This is indeed “exactly the opposite of what doctors have traditionally been paid to do”. But how is that a good thing?
John C. Goodman (author of Priceless: Curing the Healthcare Crisis, which I highly recommend) makes similar observations. Pointing out that “ACOs have been described as ‘HMOs on steroids'”, he comments that they “may reward doctors for underproviding care, as traditional HMOs were accused of doing.”
Pointing out that, “Eventually, the Obama administration would like to see everyone in an ACO”, Goodman similarly asks, “But if no one had any previous interest in forming ACOs, let alone joining them, what is going to cause them all to change our minds?” The answer? Why, it’s once again those “market incentives” Keller mentioned! Except, of course, that they aren’t free market incentives, but created by, yes, “government decree”.
Goodman answers: “Money. Insurers won’t be able to get premium increases unless they adopt ACO plans. Doctors and hospitals will be paid less if they don’t join. Eventually, doctors will find they are ineligible to treat Medicare patients or patients insured in the newly created health insurance exchanges if they are not practicing in ACOs. As for the patients, there won’t be any plans to join other than ACO plans.”
In other words, the ACOs can’t compete in the free market, so the government is intervening to help them gain monopolistic advantages through the use or threat of force. Obamacare is designed “to drive doctors into organizations where their behavior can be controlled” by bureaucratic central planners. “For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control.”
“Moreover,” Goodman also points out, “the business model of the ACO requires that patients see only the doctors that the ACO employs. If you are getting care from an ACO, therefore, your insurance may not pay for you to see doctors outside the ACO.”
“Also, part of the ACO vision is that all doctors and nurses will practice medicine in the same way. This means that when you visit an ACO clinic, you will not necessarily see the same doctor you saw on your last visit.”
Elsewhere, Goodman writes, “you are not the real customer of the auto ACO. The third-party payer is. The ACO is not trying to meet your needs. It’s trying to meet the third-party payer’s needs.” And, once again, “When you are healthy, how your ACO functions may not matter very much. But when you’re sick, the fact that the ACO is the agent of Blue Cross instead of your agent may matter a great deal.”
Elsewhere, Goodman comments, “The Obama administration has little trust for real markets and believes that consumers are incapable of directing their own health care in a competitive market. It believes that government experts must manage consumers to protect them from unscrupulous providers. The result is a top-heavy regulatory system in which administrators in government and the ACOs could soak up health care dollars without improving patient outcomes or reducing overall health care costs.”
Scott Gottlieb, a former FDA deputy commissioner and health policy expert, similarly observes that the means by which ACOs cut costs is “restricting patient choice” by maintaining “closed networks” of doctors, with patients having to pay more to visit a doctor outside of that network; that the law sets out to help ACOs consolidate and dominate local markets for health care; that “doctors could be compelled to participate”; that they are in many ways they are modeled on HMOs, which “ultimately proved unpopular with patients, who believed that it gave doctors financial incentives to ration care”; and that, “Far from improving the delivery of care, many fear that ACOs will simply create local monopolies around hospitals, which will use their concentrated power to drive up costs.”
Gottlieb additionally points out that “doctors bound to ACOs may find that rates are set by the federal agency overseeing ACOs”; that is, that the government will even further attempt to eliminate any semblance of a free market by engaging in even more price fixing, as in Medicare and Medicaid.
Furthermore, “historically, most of the significant innovation in health care delivery has developed in for-profit companies, often started by entrepreneurs”, who “are now exiting the health care services space because the Obama plan tilts the marketplace so heavily against their endeavors.” The law “targets targets these for-profit health endeavors, in some cases with new taxes on their profits. This is not being done to improve the delivery of care but to generate additional revenue to help pay for the expansion of other government-run health programs.”
Profit motive, contrary to leftist mantra, is a good thing, a healthy incentive in markets. In a free market, after all, the way businesses profit is providing goods or services either of higher quality or lower price, or both, to satisfy consumer demand. Furthermore, high profits are a signal to investors and entrepreneurs to direct scarce capital into areas where the profits are to be had, thus drawing in competition, spurring innovation, and ultimately lowering costs. Moreover, exchanges in the free market occur voluntarily, for mutual benefit. Whereas government must use or threaten force to coerce people into behaving against their will in ways they deem contrary to their own interests. Which system sounds better to you?
So, in sum, what can people expect from ACOs?
- Effective government-legislated local monopolies
- Underprovision of care for the sick
- Restriction of choice to a smaller network of doctors
- Patients’ needs coming second to third-party payers’
- More centrally planned medicine; total lack of personalized care; “one-size-fits-all”-type treatments decided upon by bureaucrats
- Further elimination of market prices and the crucial signals they send to entrepreneurs and investors about where to direct scarce capital to efficiently produce goods or services to meet consumer demand
- Less innovation
- Continued increasing costs
In closing his article, Bill Keller remarks,
What Obamacare has wrought is the kind of market-driven reformation that Republicans pretend to believe in.
As should be self-evident to anyone just instinctively, this is pure Orwellian doublespeak. To say that the “reformation” occurring under Obamacare is “market-driven” is obvious logical nonsense. If it was being “market-driven”, it by definition wouldn’t require government coercion, and, conversely, the fact that it requires government coercion by definition means it isn’t “market-driven”. What Republicans pretend to believe in is the free market, but “What Obamacare has wrought” is by definition emphatically not the free market. It is what Republicans actually believe in, the coercive use of government power to obtain desired ends. The only difference between them and Democrats is which ends government should use force to achieve. Both parties are crony capitalist to the core.
The same goes for Bill Keller, who evidently hasn’t even a concept of what the free market actually is and who likewise prefers government coercion, as in the case of Obamacare, a shining example of crony capitalism at its finest.
See also my article, “Five Obamacare ‘Myths’? Debunking Bill Keller’s NYT Debunking“. Also, for more on the real solutions, check out Hunter Lewis’s new books Free Prices Now! and Crony Capitalism in America, as well as Goodman’s Priceless.