As societies become more complex, the government (the instrument of our social compact) is called on to do more to arrange commerce – the exchange of goods and services. Market regulation is a necessary component of development, to ensure some transparency for all participants in an otherwise free market.
We regulate commerce to mitigate risk. The FDA weighs the safety and effectiveness of a pharmaceutical against the risk of not taking it. The Department of Transportation regulates every vehicle – cars, trucks, airplanes, trains – to protect the public from the market power of sellers and operators. The EPA regulates the quality of air and water, balancing the risk to people against private activity.
Insurance – a mechanism for the mitigation of risk – is available in nearly every sector of society, all policies in essence reducing personal liability. And every insurer is regulated, to ensure that the issuer can actually pay a claim.
Yet for decades America has been fighting over the provision of insurance for our most vital and personal concerns – having our health problems addressed without going bankrupt – and somehow this market gets caught up in ideology over “free markets.” There are no free markets (except the black market). Health insurance and medical care exist in a regulated free market. Only the VA has government-managed health care.
In the debate over the Affordable Care Act, at stake is whether all citizens can participate in the health insurance market at a price they can afford. The question invokes John Rawls’s “veil of ignorance”: What sort of system would you create if you had no idea where you would fit in it – whether you had money or not, whether you had health or not? Rational people choose a system that allows everyone to participate (rather than adding risk to being born poor and unhealthy). We recognize our self-interest and our moral (or perhaps ultimately selfish) interest in not having to watch people die on the street.
Suppose you are in charge of a hospital’s admissions. A little boy shows up in the ER bleeding from a severed arm. He has no insurance and no money. He’s not even an American citizen. He will die if you don’t admit him. What do you do? As a society we’ve decided: admit him.
Then the question is, who pays for it? The answer, consistent with our social compact and the financing principles of Medicare and Medicaid, is that the healthy and the economically better-off pay more. The ACA, like intermediate programs enacted over the past 30 years (coverage for poor children, the prescription drug benefit), is an attempt to include more people in a risk-sharing market.
For decades the Republican Party has opposed any system that would allocate health care by any means other than one’s personal ability to pay. The GOP opposed Medicare (the most effective poverty-reduction program ever), though 40 years later, in 2003, it sponsored the prescription-drug benefit. For seven years, it has fought to destroy Obamacare by every means available.
Today the party’s effort apparently came to a humiliating end by a single vote on the Senate floor, at 1:30 a.m. After failed attempts to repeal taxes on the wealthiest 5 percent of households by slashing Medicaid, Majority Leader Mitch McConnell’s final proposal was a bill to pull the legs out of the system, by ending the requirement that employers offer insurance and employees have it. That would have led to the collapse of the individual market, which before Obamacare functioned arbitrarily to suit the need of insurance companies seeking to mitigate their own risks.
With passage, millions of Americans might have risen up against the party, which in all its time in opposition never considered either a replacement or addressed comprehensively the critical question: Who pays for the care for the little boy who arrives at the ER?
It will turn out to be a blessing, provided the party inquires into what ails and acts to fix our dysfunctional health care system, which costs twice as much with less benefit than that of any other industrialized country. Candidate Trump promised better insurance at lower cost. Whether his party will take up that promise remains to be seen.