Two weeks ago, the Supreme Court heard arguments on the constitutionality of the administration’s health law, aka ObamaCare. Opponents are giddy with the possibility that the law might be struck down.
But what then? Millions of uninsured, both those who choose not to purchase coverage and those who can’t due to pre-existing conditions, will still be with us. The rising costs and inefficient delivery of health care will still be with us.
The country can have a vibrant market for individual health insurance. Insurance proper is what pays for unplanned large expenses, not for regular, predictable expenses. Insurance policies should be “guaranteed renewable”: The policy should include a right to purchase insurance in the future, no matter if you get sick. And insurance should follow you from job to job, and if you move across state lines.
Why don’t we have such markets? Because the government has regulated them out of existence.
Most pathologies in the current system are creatures of previous laws and regulations. Solicitor General Donald Verrilli explained as much in his opening statement to the Supreme Court: “The individual market does not provide affordable health insurance,” he noted, “because the multibillion dollar subsidies that are available” for the “employer market are not available in the individual market.”
Start with the tax deduction employers can take for their contributions to group health-insurance policies—but which they cannot take for making contributions to employees for individual, portable insurance policies. This is why you have insurance only so long as you stay with one employer, and why you face pre-existing conditions exclusions if you change jobs.