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Obamacare's Biggest Problem is Profit, Not Government

By       Message Richard Eskow       (Page 1 of 2 pages)     Permalink

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It's true: the Affordable Care Act is having problems. But Republicans who say those problems are caused by "big government" have it exactly backward. Obamacare's current difficulties are grounded in our country's political fetishization of the private sector -- a fad that began in the Republican Party, but has unfortunately spread to much of the Democratic establishment.

Government isn't the problem here. It's the solution.

When the ACA is attacked, most Democrats point to the good it has done. They should. Some of its work, particularly in extending coverage to children and economically vulnerable populations, is highly laudable

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But the flaws are real. One person in five on the exchanges will have no choice of insurers next year. Premiums for "mid range" plans -- which offer fairly paltry coverage -- will increase by an average of 25 percent, according to the Administration. States like Arizona are faring even worse, with an average projected increase of 116 percen t. Many people have found insurance on the exchanges to be unaffordable and are taking a tax penalty instead.

And while lower-income people will see their premium costs offset by subsidies, those subsidies represent a shifting of wealth from the general public to for-profit insurance corporation. That, too, is a legitimate policy concern.

What went wrong, and what can be done to fix it?

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The policy heart of the ACA is the individual mandate to purchase health insurance, which was crafted at a right-wing think tank. A number of its other key provisions had GOP roots too, including the "marketplaces."

Sen. John Chafee's Republican alternative to Hillary Clinton's 1993 health proposal resembled the future ACA in a number of key ways. Republican Governor Mitt Romney eventually implemented a similar program in Massachusetts.

The ACA differed from these Republican plans in several key ways, including its expansion of Medicaid and the small additional tax it imposed on high earners. But it has Republican DNA. If President Obama hoped that would bring in some GOP support, he miscalculated. As the president himself said, "Republicans reversed course and rejected their own ideas once they appeared in the text of a bill I supported."

The ACA's deepest problems stem from assumptions built into its design -- assumptions that its backers described at the time as "technical" and "wonkish," but which were in fact deeply ideological at their core. These assumptions were rooted in a misplaced faith in private-sector market forces -- a faith not shared by some who, like me, had actually worked in private-sector health insurance.

The developed world is filled with healthcare success stories, but they are government success stories.

How did market myths distort the ACA? First, even the most conservative economist would agree that market forces can't function without competition. And yet in 2009, before the Affordable Care Act was signed into law, several studies found that 94 percent of all health insurance markets in the United States were "highly concentrated."

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The ACA tried to address this lack of competition by establishing nonprofit coops to compete with private carriers. But 15 of the 23 coops established under the law have already failed (as I predicted they would in 2011).

The ACA also relied on free-market ideology to "bend the cost curve," assuming that insurers would compete to cut costs in order to gain market share. But health insurers have relied on less productive tactics like mergers and market dominance to boost their profits instead.

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Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future

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