Friday, March 14, 2014

Mend Obamacare. How?

For years the Democrats have complained the Republicans want to end Obamacare but have no plan to replace it. Personally, I don't think you need to have a replacement plan. We ended Prohibition, and just ended it. What replacement plan was needed? The irony now is some would like to mend Obamacare, not end it, but have very little in the way of solutions. 

In my opinion, there are many problems with Obamacare, but at its core, the biggest problem was identified by Bob Laszewski:
The biggest flaw is that the product the Obama administration is trying to sell to consumers is not the product people want to buy.
And the reason is, in my opinion, is because Obamacare is a top-down government-driven product instead of a bottom-up, market-driven product. It's driven by the idea if we assemble a bunch of smart people in a room they can create a system overnight to satisfy consumer demand. We see over and over again the failure of this idea. Think Russia, Cuba. Think Amtrak, the Post Office. Think SynFuels.

And we see over and over again how markets develop products consumers want and make both the consumer and producer better off. We have iPhone's because Steve Jobs thought he could do something better than Blackberries. And he was right. We have Androids because Samsung and Google thought there was demand for a non-Apple smartphone solution. And they were right. Obama wants us to buy Blackberries. We want iPhones and Droids.

I haven't heard or read one proposed solution or mend to Obamacare. Before the supporters do that, it would be useful for them to identify what they think the problems are they are trying to fix. I think the problems are this:
1) Consumers are not offered the choices they want at prices they are willing to buy in the Obamacare health care system. Losing your plan, losing your doctor are FEATURES of Obamacare, not bugs. Consumers look at higher deductibles, higher out-of-pocket expenses and narrower networks and rationally choose to not participate or complain they are being force to buy a product they don't want.
2) Obamacare does not understand the insurance market so has redesigned it as an income re-distribution scheme.
2) The consumption of health care is disintermediated from the purchase of health care.
3) Health insurance is tied to employment, and since it is tax-advantaged results in stagnating cash wages and over-consumption of health insurance and medical care.

I don't know what Obamacare's supporters think the problems are except: web site, Republicans and the Koch Brothers. Unfortunately for them, that diagnosis doesn't result in very effective or compelling solution.

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