The remarks of Dr. Benjamin Carson at the National Prayer Breakfast last week have created quite a stir. Some commentators on the left (and a few on the right) have described his speech as inappropriate while many on the right are applauding him. Regardless, the content of his speech might require a look back at the debate over the Affordable Care Act.
As for what Carson said: At one point in the speech, he said that we shouldn’t punish the fellow who makes $10 billion per year because he just put a billion bucks in the pot, referring emblematically about taxation. Shortly thereafter, he described his ideal health care system, in which we essentially issue every child an electronic health record and a health savings account.
The problem some people have with this part of the Carson’s 25-minute-plus speech is that President Barack Obama was sitting just to his right. After all, is it appropriate to say two of the president’s key policy ideas are imprudent at a prayer breakfast? And isn’t the debate settled?
Regardless of the propriety of his remarks, Carson’s formulation harkens back to the debate leading up to the passage of the Patient Protection and Affordable Care Act. Much of the debate revolved around ancillary matters, with Republicans describing why this provision and that provision were bad ideas. What was missing was an alternative vision—perhaps the same was also largely missing in the 2012 Election.
Lost in the conversation in 2009 was the fact that the American health care system was, indeed, flawed. It was the Democrats who put forth a plan while the GOP seemed to merely poke holes. Eventually, Democrats passed the law, which has since been unpopular as a whole.
Perhaps the GOP would have done better in 2009 (or before, for that matter) if they had 1) pointed out the flaws of the existing system and 2) put forth new ideas. Conservative think tanks like the Heritage Foundation have done so for years, but without major political coordination with Republicans. Even the individual mandate originated on the right some 15 years before the ACA was passed, although the idea was eventually dismissed, even before Mitt Romney’s Massachusetts took it up.
Carson’s prescription contains many ideas that would have constituted real reform.
Modern American health care is hampered by two key flaws that drive costs up. The first is that it’s a third party payer system where the patient has no idea what treatments cost. Since someone else is footing most of the bill, this decreases the out-of-pocket cost to the patient (sounds good at first), but increases demand for care. Over time, this leads to excess demand and a lack of bargaining. The latter of these would have downward pressure on prices since patients could shop for services, forcing providers to compete for business. In a third party system, that is absent.
The second flaw is government mandates. Each state mandates minimum coverage, much of which is inflexible often makes no sense. For instance, if a state mandates policies that cover diabetes-related treatment, then everyone has to buy it; and because insurers must put aside funds to pay for such treatment, premiums must increase. This also prevents a skinny individual who eats well and has no history of diabetes in the family from opting out of that particular policy rider, thereby driving his or her premium up. The feds also have price controls—a sort of mandate—for Medicare and Medicaid. Doctors can only charge Medicare patients so much for a particular procedure, and if this causes the doctor a loss, he simply passes on that cost to privately-insured patients, which drives their premiums up.
The Affordable Care Act doubles down on these two flaws.
Carson’s formula would give everyone an account which would be used for routine care with insurance being reserved for truly catastrophic or expensive care. Individual responsibility would breed economy and force providers to compete for business by bidding for care. Having a lifelong account would also allow patients to save up for later life care. And with electronic records, doctors would have access to more information and provide better care.
Had the GOP moved earlier—say, when they had full power in Washington—they might have been able to move the health care system away from third party payers and mandates. Then, the biggest remaining problem would have been providing care for the truly indigent and for those with pre-existing conditions. Instead of extricating the state from the system, the state is slowly becoming the system. It’s not that this is bad per se, or that a full market system is good, per se—it’s simply that there are trade-offs with any option, and the drawbacks of the current trajectory are clear.
That someone would openly disagree with the president at a prayer breakfast is outrageous to some, but at least Benjamin Carson had the courage to put forth an alternative vision. With that, let’s see what the president has to say tonight in the State of the Union Address.