Plugging The Hole In The Bottom Of Obamacare
SEP 7, 2015
Once upon a time, the doctoring business was like most other businesses. Products and services were bought and sold for cash. Prices and terms were set by the market. This meant rich people could buy a lot more doctoring than poor people, though before the invention of penicillin it’s not clear that extra doctoring did a whole lot of good.
As medicine became less art and more science and doctoring grew more complex, certain treatments got more expensive, sometimes ruinously so. This worried surgeons, who banded together to start some of the first health insurance companies. In those early days health insurance really was insurance—an underwritten pooled risk management contract designed to protect premium-paying customers from rare and catastrophic events, much like fire insurance.
Then along came something called wage and price controls during the Second World War. Corporations were forbidden from offering higher pay to attract or retain workers. So companies got the clever idea of offering employees fringe benefits like health insurance. This gave them a competitive advantage without falling afoul of wage and price controls.
Wage and price controls long ago went the way of War Bonds, but thanks to the inherent tax advantages of fringe benefits compared to wages, company-provided health plans became even more widespread. And so, health insurance slowly evolved into a combination of catastrophic insurance and prepaid comprehensive medical care. Even so, market forces guided what employers could offer, and a wide variety of plans could be found in the private market for the self-employed.
Then along came Medicare and Medicaid, providing both health insurance and prepaid medical services as an age-tested or means-tested entitlement—paid for with OPM (Other People’s Money), which politicians adore.
Despite mighty efforts by certain politicians to expand these entitlement programs, many people still lacked employer-provided health coverage, were too young to get Medicare, or not poor enough to get Medicaid. So the pressure to get some OPM for them grew and grew.
And so, we got Obamacare, which takes a bit from everything that came before.
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