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Obamacare's Key Flaw


In Stephen Davidson, Obamacare has found a convinced, but not necessary convincing, defender. Over on the American Interest main site, VM staff writer on health care Peter Blair offers a detailed look at Davidson’s new book on the Affordable Care Act entitled A New Era in US Health Care.

The book is a helpful guide to Obamacare’s provisions, but in discussing the rationales behind them, Davidson reveals a central assumption behind the bill: that the health care crisis needs to be fixed by doctors and insurers rather than consumers. Rather than changing the aspects of the system that keep consumers ignorant of prices, the ACA primarily tries to lower costs by altering the behavior of other actors in the system:

In the end, some of this debate might come down to a perennial tension in American politics: whether to trust the people or the technocrats. Those who trust the technocrats more, like Davidson, want us to tinker with incentives on the provider side, helping doctors provide more care more efficiently. For them, the ACA represents a good attempt to reform insurer and provider incentives. The populists trust the people to exert consumer pressure on providers, if only the system allowed them to.  Since the ACA further entrenches the existing insurance regime, they oppose it.

Throughout the review Blair teases out some weaknesses in an exclusively technocratic approach, and offers some ways in which consumers might contribute to lowering costs and improving quality. Read the whole thing to get a sense of how the day-to-day debates over Obamacare trace to bigger picture questions confronting health care reform.

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  • Andrew Allison

    My favorite blogger excepted, this book(based on the review) reveals the enormous divide between the Ivory Tower and real life. WRM is spot-on in noting that the healthcare mess needs to be fixed by consumers. The health insurance industry will, understandably, fight reform, tooth-and-nail. Doctors can help by declining insured patients (as VM has noted, this roughly halves the cost of routine care). The biggest single impact would be to eliminate insurance for routine care by means of high-deductible insurance. The only incentive for the consumer to decide what’s necessary is having to pay for it.

  • Corlyss

    “the health care crisis”
    The very characterization assumes facts not in evidence. Some people have trouble with the health system, but most Americans didn’t. The idea of a health care crisis is a gigantic scam.

  • cubanbob

    What will kill Obama-Democrat care is the poison pill CJ Roberts used to justify its constitutionality. Taxes. The court ruled it a tax but didn’t specify what kind of a tax it is. Once the tax is paid and hence the dec actions start to get the courts to rule what kind of a tax it is is when the fun and games begin. If its not an income tax then it’s not an apportioned tax and hence impermissible. Then the only way around that is to make it a FICA tax. Good luck to the Democrats in trying to sell that to taxpayers. If it is an income tax it’s even worse for the democrats since everyone who gets that income-everyone with an employer paid plan-just had a tax hike and there won’t be any waivers. Besides the penalties for non-purchase make no sense. In what other tax does the taxpayer get to opt out of paying the underlying tax by paying the penalty?

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