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.