As I read the spirited debate over whether Obamacare will drive health insurers out of business (here and here), I wonder if we need to bring the discussion back to fundamentals: The key problem with U.S health insurance is that there is too much of it – whether provided by private insurers or government.

Avik Roy and Rick Ungar disagree on the likely outcome of Obamacare: Private-insurance monopolies or government monopoly (a.k.a. “single payer”).  I think both are correct.  Private monopolies will arise (within each state or regions within larger states) to exploit the huge subsidies (tax credits) available through the so-called Health Benefits Exchanges.

But this will only persist for a few years.  Today, the politicians supporting an increasingly shaky Obamacare must ensure that the health-insurance industry remains divided – some hoping to profit from Obamacare’s forthcoming monopolies and others fearing exclusion.  This prevents them from coming together in a unified effort to repeal the law.  The Democrats’ success at keeping the health-insurance trade association on-side and on-message is pretty impressive, given the fact that even the U.S. Chamber of Commerce now publicly advocates repeal.

The likelihood of Obamacare surviving both the U.S. Supreme Court and next year’s voters is pretty slim, so its supporters cannot afford to let any more hostages escape.  (The pharmaceutical industry, for example, is also refusing to join the repeal movement.) So, while Democratic leaders cannot stop single-payer extremists like Mr. Ungar from telling the truth, they must continue to pretend that the end-game is simply a “fairer” private system, rather than a government take-over.

If Obamacare does succeed, growing public anger at the abuses of these monopolies will cause their political protectors to switch sides and collapse them in favor of “Medicaid-for-all”.

Even if individuals were able to enter a Health Benefits Exchange and acquire a policy of our choice, this would do us little good, because the federal government will be determining the package of benefits.  While we may be able to shop for coverage, we would not be able to shop for care – a turn of phrase I’ve borrowed from Doug Ghertner, the president of Change Healthcare, in this blog entry.

Although Mr. Ghertner is a lot more optimistic about Obamacare’s Health Exchanges than I believe is warranted, he recognizes that they would not change the fundamentally malformed relationship between a patient, an insurer, and a provider.

Because prices would still be determined secretly by insurers and providers, patients would still be ignorant of the cost of a procedure, and unable to make decisions about price versus quality,   Mr. Ghertner’s business, Change Healthcare, is part of a growing effort to break this down, and give patients good quality information about health-care prices so that they can make timely decisions about the services they use.  (Castlight, featured by‘s Zina Moukheiber here, is likely the nearest competitor.)

As I’ve written before (here and here), I am continually amazed at the willingness of entrepreneurs to challenge the status quo in health care, especially when “single-payer” advocates like Mr. Ungar are fearlessly cheerleading the looming imposition of total government control over our access to health care.

John R. Graham is Director of Health Care Studies at the Pacific Research Institute, & Senior Fellow at the National Center for Policy Analysis. This post originally appeared on Forbes.

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7 Responses for “Shopping for Health Coverage Versus Shopping for Health Care”

  1. BobbyG says:

    “The likelihood of Obamacare surviving both the U.S. Supreme Court and next year’s voters is pretty slim”

    I would take issue with that.

    ” the looming imposition of total government control over our access to health care”

    The readily available facts contradict you. But, hey, never let evidence get in the way of ideology.

    Google “Health Care Innovation Challenge” for just one counterexample.

    And spare me the lame comeback that “if it comes from the government, it HAS to be invalid a priori.”

  2. Folks on Medicare seem to love the “total government control” over their “access to health care”, much more than the rest of us experiencing total private insurers control over our access to health care.
    What am I missing here?

  3. DeterminedMD says:

    Excuse me, but if the intended plan of PPACA would have detrimental impacts on health insurers and big pharma, why did they sign on as supporters?

    Gee, you think they did not have someone read the legislation in full and find the loopholes? If it walks, sounds, and acts like a duck, why are you telling me I am standing in front of a swan? Learn the basics, and pay attention to those telling you the truth does not exist in accepting this legislation!!!

    George Carlin once again: it is not the politicians who suck, but, the public.
    You keep reelecting the bastards to fleece you more and more!

    Campaign slogan 2012: Incumbency is incompetency, see the two I’s with your own two eyes and stop touching the damn stove. Idiots!!!

  4. Vikram says:

    So in words of author there is no healthcare crisis, except the remedy being crafted to address the supposed crisis.

    On the right, there is no healthcare crisis and that’s the fundamental chasm. When it becomes crisis for right, then the problem can be solved much more easily.

    A question I have been asking myself when does the break point will really come. We have been shouting and screaming that system is unsustainable since early 90s and it is still going on. Here are few things I thought of when we would reach break point.

    1. Average annual premium + OOP reaches $23000, which is 30% of mean salary.
    2. Uninsured % reaches 30%.

  5. Peter1 says:

    “The key problem with U.S health insurance is that there is too much of it – whether provided by private insurers or government.”

    Too much for who, Medicare recipients saying “Don’t cut my benefits”? Cadillac plan holders saying they don’t want government telling them how much health care they can consume? Dishonest Republicans who use senior fear mongering on cuts to oppose “Obamacare”, while plotting their own cuts behind the scenes?

    “If Obamacare does succeed, growing public anger at the abuses of these monopolies will cause their political protectors to switch sides and collapse them in favor of “Medicaid-for-all”.”

    Growing public anger at what abuses, CUTTING USE?

    Tell us what you want Mr. Graham, cut use or continue to avoid public anger by giving them all they want?

  6. Pay says:

    A single payer alheth care system would replace all the alheth insurers. They would all have to go find work elsewhere. This would result in billions of dollars in savings.the 3500+ alheth insurers each have their own billing requirements that tie doctors and hospitals up in red tape and has spawned a 5 billion dollar medical billing industry. That would all be replaced by a single billing standard saving the system nearly 5 billion dollars per year.Since there will be one source for insurance, all doctors, hospitals, and specialists will be in the network , resulting in greatly expanded choice for people who otherwise are restricted by HMOs and PPOs.Everyone will be insured, so there will be no incentive for waiting until the medical condition is in crisis. This will result in far less use of ERs (the most expensive form of care). Thus, ERs will be freed up so they can concentrate on those who really need emergency care. This will result in faster ER responses and billions of dollars in cost savings.Once insurance companies no longer interfere with yours and your doctors decisions, the quality of care should increase dramatically.As far as I’ve seen, nobody has mentioned reducing doctor pay. And I hope they never do. But even if they did, it would not result in fewer doctors. Where would they go? It’s not as if they can go anywhere else in the world to get the kind of pay they get here. Even at reduced rates, they still would be the best paid in the world.

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