Given
the new Congress and president, and amidst signals that the now ostensibly
voluntary individual health insurance purchase mandate will be weakened further1,
and following a widely publicized debate on the future of Obamacare between
senators and 2nd-place presidential primary candidates Bernie
Sanders and Ted Cruz2, it seems that the time has come for Americans
to think about what kind of replacement for Obamacare they'll be willing to
accept under the remainder of the Trump Administration, in case the last
president’s key legislation is repealed.
On
January 25th, 2017, Senator Rand Paul of Kentucky introduced the
Obamacare Replacement Act (Senate Bill 222), legislation which would provide an
immediate replacement for the 2009 Patient Protection and Affordable Care Act (called
either P.P.A.C.A., the A.C.A., the Affordable Care Act, or Obamacare, for short).3
Paul favors repealing the entirety of Obamacare, and replacing it immediately.4
This is a clear, bold position which cannot be misunderstood, and which holds
an auspicious potential for allaying the oft-voiced concerns of Obamacare supporters
who believe that the opposition wants to repeal it and replace it with nothing.
The
Washington Post estimates that some 18 million
people could be kicked off their health insurance plans5, as millions
were when Obamacare kicked-in in 2014. Senator Paul does not want to see the
same thing happen again; he believes that establishing market-oriented health
will help ensure uninterrupted coverage for policy holders who have
pre-existing conditions. The senator is concerned that to continue to require
health insurance companies to sell policies to people with pre-existing
conditions could cause "adverse selection" of insurance policies,
something that he fears could bankrupt the health insurance industry.
In
an op-ed essay, which was published on Rare.us on January 2nd of this year (the
day before the 115th Congress was sworn in), Senator Paul proposed
replacing Obamacare with “freedom”. This includes "freedom for all
individuals to join together in voluntary associations to gain the leverage of
being part of a large insurance pool"6, in addition to three
other specific points (which are outside this article’s range of discussion).
On
the same day that Paul proposed the Obamacare Replacement Act, his senate.gov
web page published a press release. The press release stated that Paul’s
proposal would expand “Association Health Plans (AHPs) to allow small
businesses owners and individuals to band together across state lines through
their membership in a trade or professional association to purchase health
coverage for their families and employees at a lower cost."7 Association
Health Plans provide health insurance coverage to groups of businesses that
share common interests, through an “industry organization”.8
Senator
Paul’s proposal would allow people who work in similar professions to pool
their money and resources together, in order to inexpensively purchase health insurance
policies. Similarly-employed professionals joining into voluntary associations
could make it easier for industries to demand custom policies from insurance
companies; policies which are specially tailored to cover the unique and
distinct safety and health risks which are associated with particular
industries and particular types of workplaces.
The
broader purpose (outside of the issue
of professions) of allowing people to “join together in voluntary associations”6
is, as Paul’s press release stated, “to gain the leverage of being part of a
large insurance pool.”6 The point is to help customers (policy holders) to match,
equalize, and balance-out insurance companies’ great selling power. When
customers’ buying power increases, insurance companies’ price-setting power
declines in comparison, which means that premiums decrease, enabling working
people to more easily procure inexpensive coverage.
It
could be argued that the very same leveraging of economic power can be
accomplished through government
programs, and by increasing government
involvement in health. This is to say that requiring
as many people as possible to purchase health insurance, achieves the same kind
of leverage that is necessary to balance-out insurance companies’ selling power
and price-setting power.
This
argument holds some water, because to
establish (for example) a Medicare-for-all -type system, puts everybody in the
same purchasing pool. Everybody in the same pool means maximum purchasing power
for policy holders, which means lower premiums.
However,
putting all Americans in the same pool does not
accomplish Paul’s goal of having these pools emerge as “voluntary associations”
(“voluntary” being the operative
word). Paul opposes Obamacare’s individual mandate, because he believes that
mandates are antithetical to freedom.
If
the government can compel you – under the threat of fines and imprisonment – to
purchase health insurance, then it can compel you to purchase it at a price
that is satisfactory to both the government and the insurance companies. This
is especially true when the government extorts taxpayers in order to fund at
least ten types of artificial corporate privilege which would arguably not
exist in a free market for health insurance and health care. Corporate
privileges for health insurance companies produce an oligopoly; that is, a state of few sellers.
Just
as with student loans, for government to promise to pay all health costs (with
taxpayers footing the bill) only encourages high expense. When government buys
all health insurance, it becomes a monopsony;
that is, a single buyer. As Libertarian Party presidential nominee Gary Johnson
explained during the 2016 campaign, if college students boycotted college for a
single year, the price of tuition would plummet.
Similarly,
if Americans were suddenly able to exercise their natural freedom to refrain
from purchasing health insurance policies, premiums
would plummet. It is only our freedom to refuse
to purchase health insurance, which gives us the negotiation power we need to
bring premiums as close to zero as possible.
Senator
Paul’s Obamacare Replacement Act intends to put to good use the natural market incentive which people have to join into large insurance
pools in as numerous quantities as possible. The existence of this natural
incentive renders the idea of an individual purchase mandate completely
unnecessary and superfluous.
The
individual mandate, and unconstitutional taxpayer-funded corporate favors, have
assisted in the birth and growth of a price-setting cartel of health insurance
companies. Allowing an oligopsony
(state of few buyers) to arise naturally through the market, would be
sufficient to balance-out the price-setting power of the insurance oligopoly
(state of few sellers). But government takes it one unnecessary step further;
it takes our money, and uses it to buy all
health insurance. Thus, it not only makes itself into a health insurance monopsony (that is, the sole purchaser
of insurance, the “single payer”); it also remains the same defense monopoly it
always was, being the only agency legally authorized to sell military and
police protection to the people.
Although
some may argue that any market-oriented
or voluntary proposal to fix health policy is “privatization” that risks the
very same kind of monopoly that free-marketers should rightfully oppose, Paul’s
plan is not “privatization”. Privatization refers to a system in which government
gives favors to cronies, picks winners and losers in the marketplace, and
sells-off parts of itself to the highest bidder. But Paul’s proposal resembles “radical
privatization” than privatization.
“Radical
privatization” is a term which radical libertarians use to refer to a situation
in which government gets out of the way, by exiting an industry entirely,
rather than transferring management or ownership of government agencies to
members of the for-profit private business sector.
Radical
privatization frees-up taxpayer funds, allowing taxpayers to choose from among goods
and services that compete in the market; when these types of goods and services
were previously monopolized by government and not readily available for
individual purchase in markets.
To
allow voluntary associations, while repealing the mandate, means a truly optional “public option”. In fact, multiple voluntary associations really
means multiple public options. If
Paul’s proposal passes, we could see these “public options” (if the term would
still rightfully apply) compete on the market alongside ordinary plans. This is
because a truly voluntary and optional public plan would transform government
health insurance cooperatives into market actors.
The
result would be a wider and more diverse array of types of policies; a wider
array of the set of conditions and ailments which health insurance policies
cover. Additionally, people would be free to choose between plans tailored to
their profession, versus plans
tailored to their individual or family needs. Perhaps most importantly, nobody
could be rightfully compelled to pay for coverage of ailments which they reason
will probably never affect them.
Moreover,
to eliminate the tax credit for employer-provided health insurance (which Paul
did not mention specifically in his proposal, although he does support it),
would make that choice easier, because people who lose their insurance when
they lose their job would be free to choose non-professional policies whose
premiums are not distorted by the price-altering influence of government tax
credits.
But
professional voluntary associations, and cooperatives competing on the open
market, are only the first step.
While
cooperatives and E.L.M.F.s (egalitarian labor-managed firms) empower workers,
consumer-cooperatives (sometimes called worker-consumer cooperatives, or mutual
firms), ensure that consumers and workers have equal power. Just as with
insurance cartels, the goal here is to ensure that consumers have as much power
to demand low prices as workers do to demand adequate compensation for their labor.
In
a consumer-oriented health insurance purchasing cooperative, policy holders and
policy providers would have equal negotiation power, moderated and adjudicated
by neutral agents. The prime candidates to moderate these disputes would be individuals
who both buy and sell insurance; such as a health insurance company employee
who has purchased health insurance for himself.
If
policy holders (the consumers of health insurance) do not feel that such an
enterprise would be sufficiently balanced and fair, then they would still be
free to join (or form) consumer-oriented enterprises and consumer interest
groups which intend to make sure that health insurance policy providers do not
demand so much compensation that it puts ordinary policy holders in dire
financial straits.
Furthermore,
cooperatives, consumer-cooperatives, and consumer-oriented enterprises, are not
the only types of agencies which could buy and sell insurance, and negotiate on
premiums. Many types of agencies could accomplish this; there is no limit to
the number of combinations and permutations of existing business models into
new types of firms.
For
example, cooperatives (and / or consumer-cooperatives) could band together into
federations known as Cooperative Wholesale Societies (or C.W.S.s) – or purchasing
societies – in order to arrange and manage bulk purchases. As we all know,
buying in bulk, and buying at the wholesale price, saves us money.
Rand
Paul’s Obamacare Replacement Act would help provide a smooth transition away from
a health policy built on a command-and-control model, to one that potentiates a
nationwide interstate market for health care and insurance. Paul’s is a
voluntary, market-oriented proposal that carries the potential of addressing
consumers’ unique needs, without seeming to necessitate increased government
spending, nor the expansion of federal involvement in health (an industry which
the authority of managing is not specifically enumerated in the Constitution).
Perhaps
voluntary public options and professional voluntary associations, competing on
the open market on a nationwide basis, will result in a multi-state health
insurance purchasing pool that acts as a C.W.S., subsuming all health insurance
purchasing cooperatives into-under it, upon consent of each cooperative,
choosing individually whether to join the federation. Maybe the telos of all this is some sort of “federative
society of wholesale health insurance purchasing consumer-cooperatives”,
whatever that might look like.
I
guess there’s only one way to find out.
Sources
Written on
February 10th, 2017
Edited and
Expanded on February 16th, and 18th through 21st, 2017