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Home Publications Blogs Beat the Press Educating Robert Samuelson: "Affordable" Insurance is in Reference to the Person Buying It

Educating Robert Samuelson: "Affordable" Insurance is in Reference to the Person Buying It

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Thursday, 24 October 2013 05:22

Robert Samuelson thinks that he has news for Obamacare supporters. He tells readers:

"Obamacare supposedly makes insurance more affordable. Not really. Health costs are simply shifted. To subsidize insurance for some means raising taxes for others, cutting other programs or accepting larger deficits. Only reducing costs or increasing efficiency can make health care more affordable."

Apparently Samuelson didn't realize that "affordable" is in reference to the person buying the insurance. The idea of Obamacare is to make insurance more affordable for the people who need it most. That would be people with pre-existing conditions who could not otherwise buy insurance in the individual market or would have to pay an exorbitant price for it if they did.

By requiring that insurers charge everyone in an age group the same rate regardless of their health, the law will make insurance far more affordable for people with serious health conditions. This obviously does raise the cost for people who are healthy, and for taxpayers insofar as there are subsidies. Most Obamacare supporters knew this.

Samuelson is right that the law does relatively little to control costs. Unfortunately public debate on health care is dominated by protectionists who do their best to shield doctors, drug companies, and other providers from international and domestic competition. This is the reason that people in the United States pay more than twice as much per person as people in other wealthy countries for our health care. Unfortunately neither Samuelson nor anyone else at the Post seems very interested in opening up these markets.

Comments (9)Add Comment
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written by Ryan, October 24, 2013 7:27
Wow, telling people to their faces that they're takers wouldn't be the strategy I'd pursue.
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written by kharris, October 24, 2013 7:47
"...doctors, drug companies, and other providers..."

Let's be specific here. "Other providers" are overwhelmingly insurance companies. Getting universal access to Medicare or some other non-commercial insurance provider would very likely have led to a stampede away from private providers. Insurance companies are largely in the business of rent seeking.
Bending the cost curve?
written by Dennis, October 24, 2013 8:22
Haven't you been reporting evidence that ACA is already bending the cost curve? That would make it more "affordable" on average, not just for those who were priced out before.
"Affordabilty" is Loser Liberal Code for Zero-Sum Ignorance
written by Last Mover, October 24, 2013 8:25
By requiring that insurers charge everyone in an age group the same rate regardless of their health, the law will make insurance far more affordable for people with serious health conditions.


Guess what. When markets are truly free and competitive this can happen anyway on a much broader scale due to reduced cost rather than "more affordability". Part of the problem here is confusing insurance with health care provision, two completely separate subjects economically speaking.

For example, it is well known in the medical industrial complex that certain proprietary computer software can diagnosis disease and illness more accurately than an in-person physician in over 90% of cases by providing a detailed list of symptoms and lifestyle.

Imagine the reduction in health care costs if such software were available in a free competitive market at cost of production after paying for its true cost of research and development.

Simply huge. Age, pre-existing conditions and all the rest would not matter. It would not be a question of "affordability" of an otherwise grossly overpriced product to those who cannot afford it. It would be "affordable" to everyone at the same rate because of an incremental cost of reproduction near zero - no "subsidy" required.

It won't happen. Zero-sum sock puppets for the medical industrial complex like Robert Samuelson make sure it won't happen. By framing the issue as a zero-sum trade-off of who gets what from a fixed economic pie of health care costs, those costs cannot be reduced by correction of market failures including market power and moral hazard endemic to American health care.

Imagine the outcry should such diagostic software ever escape the protectionst walls of the medical establishment and fall into the hands of the unwashed masses.

The horror of patients diagnosing (read misdiagnosing) themselves and then shopping doctors for treatment who would never accept them. The horror of patients missing out on the 10% not correctly diagnosed by computer. The horror of patients who dare use hi-tech to bypass trained physicians to get it approximately right rather than exactly wrong as many physicians and hospitals do with hundreds of thousands of mistakes, many fatal.

In fact, such diagnostic software could turn up alongside blood pressure monitors and diabetes test kits on the shelves of socialist havens of affordable prices like Walmart.

Be a loser liberal like Robert Samuelson, won't you America? It's zero-sum trade-offs or nothing in the name of "affordability".

Anything that looks like a postive sum gain smacks of intrusive government sponsored socialism and must be smothered in the cradle by protectionists like Samuelson who know what's healthy for you.
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written by watermelonpunch, October 24, 2013 10:38

I vote Samuelson gets this week's Red Foreman Memorial Dumb Ass Award.

Most "Obamacare supporters" I know, would've preferred single payer insurance, and merely accepted that Republicans would only accept "Romneycare", and now they don't even accept that, let alone a health care policy that would actually make health care cost less for everybody!

Circular contradictions to make noise.
Reply to Lastmover
written by John Q, October 24, 2013 1:01
Lastmover may well be right that the cost of getting a diagnosis could come down a bit, but getting a diagnosis is not that expensive now anyway.

Affordable health care means making treatment affordable. Lastmover doesn't explain how market forces will make effective treatment less expensive.
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...
written by watermelonpunch, October 24, 2013 5:03
written by John Q, October 24, 2013 1:01
Lastmover may well be right that the cost of getting a diagnosis could come down a bit, but getting a diagnosis is not that expensive now anyway.


What world are you living in John Q?

How about this... You run the experiment yourself.

You try posing as a 40-something woman entering menopause, with a gynecological surgical history, a history of ovarian tumors, and ovarian cysts...
Without health insurance.
Now contact your local gynecologists and see where you can get an appointment.
Find out how much it would cost to see that gynecologist, and how much it would cost to get the necessary tests to determine, treatment for menopause, treatment for ovarian cysts, and testing for ovarian cancer. (Hint: It's a LOT.)
That's IF you can find a gynecologist that actually accepts uninsured patients, and if they do, if the wait time is not one year plus for an appointment. (Hint: Most won't. In fact, nearly all won't.)

And then research how LITTLE it actually costs to treat non cancerous ovarian cysts & menopause ailments. (Hint: It's actually rather affordable!)

Just saying.
There are other common conditions that are highly treatable at more or less affordable prices, but doctors can't just go treating them inexpensively without running a bunch of really expensive tests & scans to back up their diagnosis.

I'm not saying they ought to not bother testing people. And I'm not saying this situation is epidemic, because I don't know that. But the problem does exist.

Is there evidence for the idea that treatment is usually the only unaffordable aspect of medical care for most people?
That diagnostics like MRIs are "the cheap part" of most general medical attention seems rather unlikely.
Costs are the issue
written by John Yard, October 25, 2013 12:35
"Samuelson is right that the law does relatively little to control costs."

That's exactly the issue. A system that perpetuates runaway costs , evening it to the entire population, is unviable. The current system can't be extended to the entire population due to its propensity for high cost.
But this is what Ocare does by fiat.

A local hospital is being charged $120K for a medical device that costs the vendor ~$6k. If Obamacare scales up this system even further, it will be unviable.


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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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