This year, on March 23, was the first anniversary of the Affordable Care Act. Experts of different stripes from conservative think tanks, conservative politicians, media pundits and editorial writers of conservative media outlets are on the bandwagon of criticizing the law. The column on ACA by Wisconsin Republican Sen. Ron Johnson in the Wall Street Journal on March 23 caught my attention. He heaped praise on the medical care his daughter got. He had insurance through his employer. His praise was sprinkled by highly critical remarks on ACA.
According to Senator Johnson, ACA will destroy the quality of care and innovations in medical care, and implement bureaucrats' take over: I wonder where he got that information about ACA. He had nothing to say about the imperfections (concentration of economic power) in the insurance markets, lack of health insurance to almost 47 million people now and increasing rapidly over time, denial of insurance based on pre-existing conditions and other hardships people face in getting and continuing their health insurance coverage
Similarly, Sen. Orrin Hatch in columns, including one in the Standard-Examiner, on March 27, tried to make the case for repeal of the law. The ACA, according to him, will increase insurance premiums, increase unemployment, taxes and deficit. It was not clear where he got his data to make such unsubstantiated claims contrary to other analytical evidence. He praised Utah's health care system. However, if Utah has such a good system, why such a high growth in enrollment during 2009-2010 and in the expenditure, and why is Utah Health Exchange plagued with low enrollment and high premiums? Moreover, the claim that ACA is a government takeover overlooks the fact that UHE, as in some other states, is a government-organized market place, just like ACA requires.
The column by Doug Olson, a small business owner, in the March 24 Standard-Examiner, points out the problems he faced in getting insurance from varied insurance companies in covering his wife's surgery-related medical bills. His experience is indicative of the problems ordinary people face in getting insurance, especially those with preexisting conditions. Sometimes insurance companies refuse coverage on the pretense that the doctor-approved treatment is experimental. A former health insurance executive, Wendell Porter, describes such an incident in his book, "Deadly Spin," which resulted in the death of a child.
Utah politicians do not have to worry about their lifetime taxpayer-paid coverage after only 10 years of service in the Legislature. I am sure federal government employees and politicians will not willingly reduce or do away with their generous taxpayer-provided coverage. Why do the politicians think that other people have to fend for themselves and be deprived of the opportunity to obtain lower priced group coverage if their employers do not provide insurance?
I understand that medical care in the U.S. is among the best in the world for those who have access to it at an affordable price. But those who are priced out of the market for any reason do not even have the opportunity to access the second-best medical care. As Professor David Cutler at Kennedy School of Government at Harvard states in "The Economists Voice," "Substantial empirical evidence shows that the major issues influencing insurance take-up are price and accessibility." The subsidies to low- and middle-income persons under the ACA will go a long way for many Americans to afford insurance and hence adequate medical care.
The access to medical care and its cost not only depends upon insurance markets but also on the pharmaceutical drugs markets and medical care markets in various regions of the country. For example, if medical care industry increases prices, it tends to increase insurance premiums. The cost of drugs, profit motive, monopolistic practices and diversified insurance pools also affect premiums.
The study by Leemore S. Dafny in American Economic Review's September 2010 issue finds that controlling for other effects, health insurers charge higher premiums to more profitable firms, and within an insurance company premiums escalate in the most concentrated (indicative of market power) markets. This study challenges the notion prevalent among many faithful but misinformed supporters of free competitive markets that health insurance markets are highly competitive. The Wall Street Journal, March 26-27, reports that the Justice Department has opened its antitrust probe into the Blue Cross-Blue Shield insurance plans' anti-competitive behavior in several states.
It is hoped that cool heads will prevail in the health care debate. The debate should be guided by factual information and solid objective analysis of the consequences of ACA, rather than ideology. If the ACA has certain deficiencies, then the responsible action will be to remove those deficiencies and substitute them with policies, which assure adequate health care for all Americans.
Mathur is former chair and now professor emeritus of economics, Department of Economics, Cleveland State University, Cleveland, Ohio. His articles also appear at vijaykmathur.blogspot.com. He writes original blogs for the Standard-Examiner http://blogs.standard.net/economics-etc/