“If you like your health plan, you will be able to keep your health plan, period.” That assurance, repeated over and over again by Barack Obama, members of his administration and Democratic members of Congress, has been revealed this week for all to see as a lie. A knowing lie: soon after the passage of Obamacare in March 2010, the Obama administration was busy issuing regulations that were intended to and did abolish many existing insurance policies, as my Washington Examiner colleage Tim Carney explains.
Now Obama apologists are coming out with another line explaining that this big lie wasn’t, er, exactly, well somehow, actually, not a lie. White House Press Secretary Jay Carney explains now, “What the president said all along is that there are going to be changes brought about by the Affordable Care Act that create minimum standards of coverage.” In other words, there was an asterisk at the end of those categorical statements that referred to an invisible footnote, that noted that you can keep your health care plan only if the Obama administration likes it.
What kind of plans does the Obama administration like? Well, it doesn't like policies that provide just catastrophic coverage. As the Wall Street Journal's Holman Jenkins pointed out this week, Obama at a 2010 health care summit disparaged such policies: "I'm buying that to protect me from some catastrophic situation; otherwise, I'm just paying out of pocket. I don't go to the doctor. I don't get preventive care. There are a whole bunch of things I just do without. But if I get hit by a truck, maybe I don't go bankrupt." Blogger Josh Barro makes a similar argument this week in successive tweets: “Some decisions are best left up to individuals, others are best restricted by policy." And "vast swathes of policy are based on the correct assumption that people don't know what's best for them.”
The assumption here is that if people's health insurance doesn't cover some form of health care, people won't get that form of health care. They'll scrimp and save on preventive care, won't attend to aches and pains that are signs of health problems, will thrust costs on the rest of us by seeking treatment in emergency rooms (as Megan McArdle points out, unreimbursed ER treatments represent only a negligible percentage of total health care spending). Health insurance, the unspoken assumption goes, will lead to more health care and better health outcomes.
That sounds reasonable to many people, not just Obamacare apologists. And yet it may be wrong. That at least is the implication of the Oregon Health Study on which I wrote a Washington Examiner column last June. The state of Oregon, faced with limited Medicaid funds, held a lottery in which the winners got Medicaid coverage and the losers did not. This provided the opportunity to conduct a randomized study of the effects of Medicaid coverage. Such random studies are exceedingly rare, since populations who choose to purchase or apply for coverage may differ in significant respects from those who don't do so. What the Oregon Health Study found, to summarize the results (check out the references in my column for more information), is that there wasn't much difference in health outcomes between those who won the lottery and got Medicaid coverage and those who lost and didn't get coverage. Admittedly, this was a limited study, covering only two years (Oregon found more money and eliminated the lottery), and so it's possible that long-term health outcomes might be significantly different for the two groups. But contrary to the assumptions of elitists from Barack Obama to Josh Barro, those who lost the lottery and did not qualify for Medicaid nonetheless sought and received attention for medical needs. They got health care without health insurance. And remember that this is a group of people who qualify for Medicaid, that is, of people with lower incomes and presumably less regular habits than the general population.
Most forms of insurance provide protection against unlikely and unwelcome expensive events. You pay a premium against the possibility that your house will burn down or your car will get totaled. The Obama/Barro model of insurance is quite different: it includes prepayments for all manner of routine and predictable health care treatments. In addition, the Obamacare model also includes subsidies: young people, who typically have negative net worths, will pay for services for people in the 55 to 64 age group, the age group in which individuals typically achieve their highest net worth. Why it is progressive for low-net-worth individuals to subsidize high-net-worth individuals is unclear.
Obamacare is an attempt to herd the entire working age population into a one-size-fits-all health insurance system with all manner of such subsidies, some scarcely justifiable (why should 26-year-olds with affluent parents qualify to get on their health insurance policies while other 26-year-olds without such parents have to pay premiums that subsidize people their parents’ age?). It is based on the assumption that a large number of Americans—perhaps a majority—will not get health care unless they have an “insurance” policy that provides prepayment for it. The Oregon Health Study provides at least some evidence that this assumption is mistaken, and that ordinary people—even those far from the most adept at navigating society’s shoals—can manage most of the time to make rational decisions about obtaining health care as they do about obtaining food, clothing and shelter.