The Affordable Care Act and Economics 101

   Last week our business manager and I attended a diocesan workshop on parish compliance with the provisions of the Affordable Care Act (a.k.a. Obamacare).  The presentation was excellent, and honestly it's not that hard to understand what we will have to do to be in compliance with the ACA and avoid penalties.  There is a regulatory burden we'll have to deal with, and there are portions of the law that are utterly unworkable.  The thing that most disturbs me, though, is what the ACA is going to mean for the future of health care in the U.S., because there is simply no way this legislation will accomplish its primary aims: greater access and lower cost.

   The reason is basic economics - the law of supply and demand.  Obviously there is a demand for quality health care at a price people can afford.  Common sense tells you that the way to improve access and lower cost is to increase supply.  What we need are more doctors, more nurses, more medical professionals, more facilities and equipment.  Concentrate on increasing supply to meet demand, and more people will receive decent care at lower cost.  

   But the ACA does none of these things.  Its whole premise is to insure everyone, but insurance is not actual care.  How is the creation of more bureaucracy going to encourage people to pursue careers in the medical field?  How is a tax on medical devices going to increase the amount of equipment and techonological advancement?  The whole law is designed to increase demand on an already strained system of available health care, while doing nothing to address the supply-side problems.

   There were legitimate problems in health care and insurance that the ACA aimed to fix.  But the law is fundamentally flawed in its grasp of basic economics, and it is doomed to fail.  The Obama administration is attempting to make the insurance companies the scapegoat for people losing their coverage or seeing premiums skyrocket, but the individual mandate was itself an unholy alliance between government and insurers.  If we want to improve health care in our country, we need to grow supply faster than demand, but the ACA does exactly the opposite.  It's the law now, so God help us.

The Perils of Politics

   Some people follow politics closely, some not at all.  I confess to being the former.  I've developed a keen interest in what happens in the political and economic sphere, largely because I'm fascinated by the way in which ideas and philosophies are manifested in the flesh of policy and action.  I'm intrigued by the why and wherefore of laws and the reasoning of the people behind them.  I do firmly believe in American exceptionalism - not of the U-S-A!  U-S-A! variety, because we are far from perfect, but in the sense that we are unusual and special.  There's something about the American experiment that is marvelous, even with its misfires.

   The government shutdown makes most of us roll our eyes in disgust.  We expect our elected officials to put the good of the country before ideological purity; namely, to compromise when necessary to avoid a greater evil, and a government shutdown is not, by any measure, a good thing.  I'm not going to weigh the merits of each party's arguments, but I do have a few observations about what has happened and why.  As so often happens, the truth is hidden not in what politicians do say, but what they don't.

   Republicans complain about the intransigence of Democrats, including the President, who refuse to compromise on any aspect of the Affordable Care Act in order to pass a budget bill.  Republicans point out the inequity of letting corporations, trade unions, special interests and even Congressional and White House staff off the hook when every other individual in the country must comply with the insurance mandate.  But let's face it, part of the reason for the House offering up one compromise bill after another is that they want Senate Democrats to cast a vote on these controversial and unpopular provisions so that they can use their record against them in future elections.  Senate Democrats and President Obama are standing firm and refusing to compromise because deep down they know the ACA is a giant bureaucratic mess and they own it.  The only hope they have is that the ACA will, in time, prove to be successful and more popular than it is at present.  However, that hope fades if they can't squeeze every cent possible from the provisions of the law in order to fund it.  That's why the Senate and President have said no to every compromise offered by the House, because practically everything the House has suggested would, in some fashion, affect the revenue meant to be generated by the law.

   In the end, there has to be some sort of compromise, because that's the way politics work.  The Republicans have leverage in the upcoming debt ceiling battle.  It should be possible to give President Obama something he wants - perhaps a strife-less hike of the debt ceiling - in exchange for something like a one-year delay of the individual mandate or repeal of the medical device tax.  Not negotiating is a recipe for failure, and it's everyday Americans who will pay the price.  One-party rule tends to be a bad thing in our national politics.  Nobody gets to call all the shots.  Politics is the art of the deal, and no one gets everything they would want according to their ideal.  Our political representatives should know the difference between hard and fast principles that must not be broken, and the many practical things where it is possible to bend.  Let's hope the folks in D.C. grasp this difference sometime soon.