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Health Care Politics

Failure is an option: Alternatives to Obamacare

HealthReformFrom the Wall Street Journal:

The U.S. health-care market is dysfunctional. Obscure prices and $500 Band-Aids are legendary. The reason is simple: Health care and health insurance are strongly protected from competition. There are explicit barriers to entry,…

The Affordable Care Act bets instead that more regulation, price controls, effectiveness panels, and “accountable care” organizations will force efficiency, innovation, quality and service from the top down. Has this ever worked? Did we get smartphones by government pressure on the 1960s AT&T phone monopoly? Did effectiveness panels force United Airlines and American Airlines to cut costs, and push TWA and Pan Am out of business? Did the post office invent FedEx, UPS and email?…

While economically straightforward, liberalization is always politically hard. Innovation and cost reduction require new businesses to displace familiar, well-connected incumbents. Protected businesses spawn “good jobs” for protected workers, dues for their unions, easy lives for their managers, political support for their regulators and politicians, and cushy jobs for health-policy wonks. Protection from competition allows private insurance to cross-subsidize Medicare, Medicaid, and emergency rooms.

via John H. Cochrane: What to Do When ObamaCare Unravels – WSJ.com.

A definite read the whole thing article. In a nutshell he makes three points:

  1. Obamacare as it is designed will fail.
  2. Deregulation, market competition and disruptive technology will bring down costs and improve quality.
  3. The status quo will fight deregulation in order to protect themselves from competition.

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