The Republican Healthcare Bill Is Very Free-Market, Libertarian

Eric Zuesse

The Republican House proposed healthcare legislation is a substantially more free-market approach to health care than exists in any industrialized nation. It would greatly reduce regulation of health care in America, and also considerably increase the choices that consumers would have in their health care. Another way of putting this is: it would considerably decrease the requirements that are placed upon health care insurers and providers. It would be as close to extreme free-market health care as can be achieved except for a system in which anyone can legally sell anything and call it “health insurance” or call it “medical care.” In other words, it would be more like anarchy in these fields.

A typical and extremely important passage in the bill’s text is:

(3) PLAN PARTICIPATION.—A State shall not restrict or otherwise limit the ability of a health insurance plan to participate in, and offer health insurance coverage through, the State Exchange, so long as the health insurance issuers involved are duly licensed under State insurance laws applicable to all health insurance issuers in the State and otherwise comply with the requirements of this title.

(4) PREMIUMS.— [That “ — “ means that there’s nothing there; that anything goes, as regards “PREMIUMS.”]

(A) AMOUNT.—A State shall not determine premium or cost sharing amounts for health insurance coverage offered through the State Exchange.

(B) COLLECTION METHOD.—A State shall ensure the existence of an effective and efficient method for the collection of premiums for health insurance coverage offered through the State Exchange.

In other words: Whatever any state has “duly licensed under State insurance laws applicable to all health insurance issuers and otherwise comply with the requirements of this title” will be allowed to be sold in that state. This appears in “TITLE II—STATE-BASED HEALTH CARE EXCHANGES” of the bill. In that title, appears one major requirement:

(4) LIMITATION ON PRE-EXISTING CONDITION EXCLUSIONS.—The State Exchange shall ensure that health insurance coverage offered through the Exchange meets the requirements of section 9801 of the Internal Revenue Code of 1986 in the same manner as if such coverage was a group health plan.

Section 9801 of the IRS Code is shown here. Its section-title is “26 U.S. Code § 9801 — Increased portability through limitation on preexisting condition exclusions.” That, in turn, is part of “SUBTITLE K — Group Health Plan Requirements (§§ 9801 to 9834).” It places minimal requirements, in order for an insurance company to qualify to be taxed as supplying a “Group Health Plan.” It’s a tax-requirement — not a healthcare requirement.

In other words: the Republican bill adds nothing there, on top of what the IRS has already required since 1986. That means it’s bare-minimum regulation, very stripped-down, to totally a taxation-matter for insurance companies.

The degree of freedom that the Republican bill would provide to suppliers is enormous — especially in states that already are anti-regulation. The only regulation in this matter, that goes beyond the U.S. tax code, would be whatever regulations the state itself imposes.

Consequently, there also would be vastly wider choices for consumers to make. However, in true free-market, or unregulated, fashion, suppliers would also be far freer than they now are, to hide, not disclose to consumers, details of insurance policies that would need to be considered by an individual consumer in order for that person to be able intelligently to compare competing policies except on the basis of cost (and a few other fundamentals). In that situation, the “fine print” differences between competing insurance policies can be gamed by suppliers so as to achieve a competitive edge while at the same time reducing its own cost of providing a given policy. There would then be a great boost in business for services to consumers, that would — for a fee — professionally assist consumers to compare “apples” versus “oranges” versus “grapes” versus “chicken” versus “beef” etc., to use a foods-analogy. But these comparisons, if they’re to be done correctly, will need to be deeply informed about the relevant laws, and case-laws or courtroom outcomes (and that’s lots more complex than is the basic literature on nutrition). Reading the fine print without knowing what it really means, is virtually like not reading it at all.

Consequently, for example, Jon Reid at Morning Consult headlined on March 14th, “GOP Bill Would Make Comparing Health Plan Prices More Difficult” and reported that, “The GOP bill, dubbed the American Health Care Act, would repeal the Affordable Care Act’s actuarial value requirements, which let consumers know what percentage of health costs an insurer should cover. Under the ACA, individual health care plans generally fit into four tiers, starting at 60 percent insurer coverage for bronze plans and going as high as 90 percent for platinum plans. Repealing the AV requirements while retaining Obamacare’s essential benefits would make it harder for consumers to make educated decisions about which health plan to pick.”

The GOP bill consequently would intensify the game that’s played between shoppers and sellers, between consumers and producers, between individuals and corporations, and so enable corporations that are selling insurance, to hide the details that they are planning to be the key drivers behind the profits they’ll be earning from any given policy they market.

This is the libertarian objective: to increase choice and to decrease the consumer’s information, so as to maximize profits. There can be consumer-advisors — for a fee, of course — but the more choices and less standardization there is, the more that consumers (except the very rich who won’t be so much bothered by hiring professional advisors in order to make a purchasing decision) will virtually be required to rely more on gut guesses and less on adequately informed calculations, when choosing what policy to buy.

And these are some of the reasons why the United States, which already has a more free-market healthcare system than any other OECD nation, has (by about a factor of two as compared to the average) by far the highest cost (in absolute terms and also as a percentage of GDP) health care, and also near the bottom health care in terms of life-expectancy. We already have the costliest and nearly the worst, but the Republican proposal would drive it even farther into that direction. 

The fundamental marketing-idea for Republican policies is the “free market,” which is the idea that it’s good, and so the total lack of it, or communism, is bad; so that, the more free-market a system is, the better it necessarily will be. However, this is like saying that if the lack of vitamins can kill a person, then the more vitamins a person takes, the healthier he’ll become. It’s not really true. (If vitamins are good, a person still can kill himself by taking too much.) But the U.S. public believes (or feels) that it’s true, and that’s why there are more Republicans than Democrats in Congress. But even Democrats in America are more libertarian than most Europeans are about health care. It’s a matter of faith, and one might even say that “the free market” is the biggest faith there is in America. It’s so big that even some Democrats believe wholeheartedly in it: it’s the American way. And so challenging it has a stench to American nostrils. Whereas in Europe and many countries elsewhere, socialism is taken for granted as a democratic reality there, the U.S. isn’t like that, and “socialism” here is automatically equated more with its dictatorial form, communism, like a holdover from the Cold War that just will not stop, because it’s a very profitable myth, for those who sell it. So those sellers keep selling it. But it’s false. It’s taken only on faith. There is no other basis for it, than that. Libertarianism is faith-based. Pure and simple. But so was communism. Even a faith can end. But if it’s just replaced by another faith (not by truth), then that’s like going from one frying-pan into another — no real change at all.

But the Republican health plan would be a change, toward increased faith.

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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  • diogenes

    Three essential points that need to be emphasized in this discussion — and none of them are ever even alluded to — is (1) that the USA is the ONLY developed nation in the world that does not provide universal health care coverage; (2) that health care in the USA costs 150% of what it does anywhere else, and that extra 50%+ represents ONLY investor profits and corporate administrative bureaucratic overhead; and (3) as a result, the public health rates in the USA, as measured by such basic statistics like infant mortality and life expectancy, are the WORST of all “developed” nations. On the face of it, this is a nationwide, societal FAILURE, and it is a failure deliberately produced, inflicted and maintained for the profit of the investor class — 0.1% of Americans, one person in a thousand. Which makes the people who maintain this system killers for hire and the investors for whose profit they maintain it killers for profit.

    • sionnach liath

      Utter nonsense. It is up to the individual to understand the contract they make. That has always been the law. A person’s health is not the government;s responsibility, and it is not my obligation to pay for the healthcare given to others because they won’t either understand or live up to their individual responsibilities. Any government obligation should be limited to providing a level playing field and free market. If you do not want to make the effort to understand the terms of your contracts, you deserve the shellacking you will get. Big Daddy gov’t creates societal failure. Societal success is generated from the ground up

      There are laws on the books right now which will protect the consumer if they are enforced. Prosecute the monopolies, open markets to competitive pricing, put violators in prison. Just enforcing present law will reduce prices by 80% – at least. Just the other day my wife asked her druggist the cost of a salve she wanted for an infection she had developed. A small tube – 2-3 grams – would cost her with insurance co-pay $ 285.00; without insurance, $ 875.00. That same tube in Europe is available over the counter for less than $10.00. Hello, FDA?

      Wake up America, the kind of idiotic liberalism expressed above has already struck the death knell for this country.

      • Eric Zuesse

        “A person’s health is not the government;s responsibility”

        What nonsense! A person with a hereditary disease, or disabled from a workplace accident, or crippled by a robber, or with a terrible addiction (perhaps one that forces him to commit burglaries or etc. so as to pay for it), or otherwise unproductive — an “unproductive eater” as the Nazis called such people — should just be abandoned, or maybe shot, because of his misfortune, it’s all and only his fault?

        You don’t think that preventative health care, such as regular check-ups, vaccinations to prevent spread of communicable diseases, and assistance to avoid a person’s becoming incapable of contributing to society, basic healthcare, is a right that everyone has, not a privilege that only the few people whose wealth is bigger than their diseases or disabilities should be able to receive?

        That, libertarianism, is sick, sick, sick in the head and the heart — heartless, totally devoid of even the most elementary compassion. And stupid, because such policies harm everyone. Libertarianism harms the entire society and reduces its productivity — it makes no sense as a practical matter, and it makes no sense as an ethic either. It is evil.

        • cityspeak

          It isn’t so much a sickness as a delusion that a complete free market is possible and doable. There has never been a “true free market ” in the history of the world. Even if there is a germ of one in no time flat are there people rigging the markets to squeeze more profit, cut off competition and secure monopolies.
          It is like communism. If you think of the equally distribution of wealth, labor and resources it sounds fair and not abad idea.. It will never work out in reality because the guy in charge soap will be hoarding it and selling it on the side for profit.

          • diogenes

            Yes. This is well understood by people who look into it, but not by parrots, ideologues, and shills of plutocrats. Surprise!

          • cityspeak

            Well I recommend keeping the anger at a slow burn and pointing out the weaknesses in their argument whenever possible.

          • Blank Reg

            Except for one: the completely free and untrammeled market in personal computers, handheld devices, and related software applications, which have improved 1000-fold over the last 30 years, while the prices have plummeted in constant dollars. This uncorrupted free market is what enables many here to spew their utter anticapitalist bilge on the internet.

            Applied to medical care delivery, many procedures that insurance will simply not pay for are relegated to market forces alone, and, as a result have unsurprisingly enjoyed similar economic outcomes. Lazik eye surgery and boob jobs are two such examples. Imagine if that was allowed to happen with cardiac surgery or cancer treatment….?

          • cityspeak

            Allow me to shatter your overly zealous Messianic beliefs about he “untrammeled market in personal commuters”.

            The Internets creation federally funded and created in the bowels of government.

            You haven’t followed Bill Gates career closely as he was notoriously creating monopolies and destroying burgeoning competitors.

            Steve Job’s slaves in China.

            The shenanigans Zuckerburg was up to creating Facebook and screwing over his colleagues.

            Like I said you are delusional believing in something that never existed in reality.

            Being critical of capitalism doesn’t mean you are anti capitalist but are able to see its strengths as well as its limits.
            You are Citizen Kane trying to forces his mid life crisis mistress into a great singer.
            It doesn’t fly and won’t work. Come down to earth and see things for what they really are and how they really work.

        • cettel

          This is Eric Zuesse, and I’m still not seeing an answer from “sionnach liath” to the two questions I asked him/her? If none are soon forthcoming, one can reasonably assume that “sionnach liath” spouts off without having thought things through in any intelligent way.

      • diogenes

        The “public welfare” is our government’s primary concern, it says so in the preamble of the Constitution. America’s presentday government is controled by Wall Street finance corporate cartels — not “liberalism.”

      • cityspeak

        The death knell of this country?
        How about the death knell of your fellow citizens dying unnecessarily and prematurely?

        The promise of a “glorious future” if only the “true free markets” would be given breathing room is as false as the promises of “true communism” being practiced. The latter never happened because human greed got and will always get in the way. Just like this false promise of an unrealistic true free market. It has never existed and will never exist because of human greed that can never nor will ever get out of the way.

        That said a system that covers everyone and the burden is shared by everyone is the best way to make certain that the greedy bastards stay at bay as much as possible. You will also have the opportunity to buy private extra insurance but that will be possible for only a few Americans that can afford it.

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  • David S

    Clearly we have different definitions for “free market” and “libertarian.” This is basically Obamacare-lite. Sorry. More education on the free market and libertarianism needed.

  • cityspeak
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