Thursday, March 23, 2017

Larry Elder: What To Do About Obamacare And The Uninsurable? Free Markets And Charity!

By Larry Elder, March 23, 2017

When it comes to repealing and replacing Obamacare, defenders of President Barack Obama's signature domestic law constantly ask, "What about those with pre-existing illnesses?"
After all, the most popular feature of Obamacare is that it prohibits insurance companies from denying coverage because an applicant has a pre-existing illness. And President Donald Trump and House Speaker Paul Ryan insist that those with pre-existing conditions will be covered. But by agreeing with Obama on the issue of pre-existing illnesses, by promising to replace Obamacare "with something better," Republicans are making a massive concession: That access to health care insurance should be guaranteed by the federal government, and that denying people coverage based on their health history is unfair and should be prevented by law.

That's a lot for the supposedly limited-government party to buy into. Free markets are the best way to improve quality, accessibility and affordability. But by campaigning to "repeal and replace" Obamacare, by refusing to make the case that free markets beat government-controlled health care, they've done just that. So the question now simply becomes who pays and how much.

When did health insurance become a right?

Did the Founding Fathers, under Article I, Section 8, grant the federal government the power and duty to ensure "universal health care coverage"? The answer is no, and there are many historical examples that prove it.

Economist Walter Williams writes of Presidents James Madison, Franklin Pierce and Grover Cleveland, and how they quoted the Constitution to turn away congressional attempts to spend money when the federal government is not authorized to do so.
James Madison, known as the "father of the Constitution," opposed a 1792 bill that would appropriate $15,000 for French refugees. Madison said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

Some argued that the Constitution allows for benevolent spending under the general-welfare clause. Not so, said Madison: "With respect to the words 'general welfare,' I have always regarded them as qualified by the detail of powers (enumerated in the Constitution) connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators."

Later presidents understood this. President Pierce, in 1854, vetoed a bill meant to help the mentally ill, saying, "I cannot find any authority in the Constitution for public charity." To approve such spending, he said, "would be contrary to the letter and the spirit of the Constitution and subversive to the whole theory upon which the Union of these States is founded."

In 1887, President Cleveland vetoed a bill to send money to drought-stricken counties in Texas, saying: "I feel obliged to withhold my approval of the plan to indulge in benevolent and charitable sentiment through the appropriation of public funds. ... I find no warrant for such an appropriation in the Constitution."
This brings us back to the issue of those with pre-existing illnesses. Before Obamacare, 35 states had "high-risk pools" so that their residents with pre-existing illnesses could get non-group health insurance. But what about states that don't have high-risk pools? And even in states that do, some people will not be able to afford it, even at a reduced and subsidized price. What to do?

The answer is charity.

Alexis de Tocqueville, the Frenchman who spent months studying America in the 19th century, wrote this about America's charitable spirit: "Americans group together to hold fetes, found seminaries, build inns, construct churches, distribute books, dispatch missionaries to the antipodes. They establish hospitals, prisons, schools by the same method. Finally, if they wish to highlight a truth or develop an opinion by the encouragement of a great example, they form an association."

As for why Americans donate so much to charity, Tocqueville considered it a matter of enlightened self-interest: "American moralists do not claim that one must sacrifice oneself for one's fellows because it is a fine thing to do but they are bold enough to say that such sacrifices are as necessary to the man who makes them as to those gaining from them. ... They do not, therefore, deny that every man can pursue his own self-interest but they turn themselves inside out to prove that it is in each man's interest to be virtuous. ... Enlightened self-love continually leads them to help one another and inclines them to devote freely a part of their time and wealth to the welfare of the state."

Life is not fair. But it is unfair to assume that an America without a government-provided safety net would turn its backs on the less fortunate. Charity is in America's DNA.

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  1. Before the ACA, my son--a high school dropout who worked an assortment of menial jobs--was diagnosed with congestive heart failure. He had no insurance benefits. He applied for Social Security disability three times and was denied. He applied for Medicaid and was denied, even though the MD wrote a letter saying his ejection fraction (a critical measurement of heart function) was "10-15%" (normal is 45-55%). He was treated at Emory University Hospital under their Charity Care program, and received care from some of the best specialists in the country. About 3 years later, he eventually passed away, at age 39. But I believe Emory gave him at least 2-1/2 of those years, and I am forever grateful. To my dying day, I will contribute monthly to Emory's heart failure center in his name, for the good that they do.

  2. "Charity in America's DNA"? So is Greed. That is why we need to compromise. Unfortunately, the Federal Govt must be involved when the States and/or "Charity" is not adequate and history has proven that these problems are never solved when left up to local people to do the right thing.

  3. I am an ER nurse. Because of Obamacare, many of us have had to leave the ER due to the overwhelming workload. People flooded the ERs for non emergent issues simply because they now had healthcare. It drove us to new areas or to retire. Now we have a shortage of nurses and doctors. Nurses with years of experience left to save their health and sanity. Obamacare has ruined our industry.
    President Trump will succeed. Deems will come back with hat in hand. This will collapse. The deal will be even better. I believe our President suspected this all along and is working The Art of The Deal.

  4. Larry, charity is of course terrific, but there are free market solutions to the pre-existing condition problem as well:

    Health-Status Insurance:

    Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses. If you get a long-term condition that moves you into a more expensive medical insurance premium category, health-status insurance pays you a lump sum large enough to cover your higher medical insurance premiums, with no change in out-of-pocket expenses. The combination of health-status insurance and competitive, freely priced medical insurance solves the central problem of our current health insurance market: the lack of real, long-term, portable health security.

    Association Health Plans:

    Association health plans allow individuals to purchase health insurance through non-traditional groups, such as churches and civic associations. In theory, any person who wanted to purchase group insurance, including those with pre-existing conditions, would have the opportunity to do so. Because these individuals would negotiate with insurance companies as a group (such as the AARP) vs. individually, they would enjoy considerable negotiating power thereby creating a powerful market incentive for the insurance company to take on all members of the group, including those with pre-existing conditions.

    Guaranteed-Renewable Insurance:

    Guaranteed-renewable insurance permits consumers to renew their coverage at the same premium, tax free, regardless of whether they have developed any new chronic health conditions since obtaining the insurance. Guaranteed-renewable health insurance policy can be conceptualized as having two parts to the premium: one part covers the upcoming single year’s expected expenses for those without chronic conditions, while the second part covers the cumulative multiyear difference between expected spending with chronic conditions and without them for those who develop their first chronic condition within the upcoming year. As a result, the “subsidies” to cover the higher costs of people who develop chronic conditions simply comes from the voluntarily purchased, long-term components of everyone’s premiums.

    Lose Your Job, Keep Your Policy:

    You don’t lose your car insurance or life insurance or house insurance if you lose your job; you shouldn’t lose your health insurance either. Allowing people to keep the policy they had with their employer would go a long way to addressing the problem of pre-existing conditions, since much of that problem stems from people losing their jobs and then not being able to get new coverage on the individual market. While a person with pre-existing conditions would now be responsible for the full cost of the policy, all payments made toward the policy would be tax exempt, and the premium would likely be lower than a policy negotiated individually since employers enjoy a “group rate.” Most importantly, the person with a pre-existing condition would retain their coverage within the free market.


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