Why I love Obamacare

I am an independent conservative.  I believe in American ingenuity, and in free market capitalism.  When I think of problems our country faces, sometimes I dream up free market solutions that no one ever thought of.  I understand the perverse consequences of high marginal tax rates, and can explain the Laffer curve.  I’ve voted for lots of Republicans.

All of this suggests, you would think, that I oppose Obamacare, which Republicans have labeled socialism.  You would be wrong.  I’ll vote for the guy who wants to keep it and against the guy who wants to “Repeal it on Day 1.”  This is the story of why I love Obamacare. 

Of course you’re now thinking I suffer from a terrible cancer.  You are wrong again.  I am healthy, thank God.  My wife, son and daughter, thank God, are all healthy too.  I can afford insurance.  All four of us have been continuously insured since the day we were born.

Imagine someone starting off on his own as a consultant after years of employment.  There are millions of people like this, including me.  We need to move from my group insurance policy at Blue Shield to an individual insurance policy at Blue Shield.  We have been with Blue Shield for years.  This will be easy, because this is America, and America is exceptional.  Whatever faults the health insurance market may have, and some argue it has many, I know it has no problems at all dealing with healthy families that have been continuously covered and can afford insurance. We are the perfect health insurance customers.  It may not be fair, but financial services companies of all kinds fawn all over me in their attempts to win my business. 

In another, less exceptional country, this trivial change from “group” to “individual” insurance could be a bureaucratic nightmare.  But in America, staying with the same insurance company, a paragon of private enterprise efficiency, it’s a single, two-minute phone call.  Three minutes, tops.

Wrong.  After about 6 hours filling out the world’s most humiliating medical underwriting form, plus another three hours in follow-up phone calls, Blue Shield decides to issue an insurance policy for me and my son, while refusing to cover my wife and daughter at any price.  At.  Any.  Price.

Did I mention my wife and daughter had been insured by Blue Shield for years?  Did I mention my wife and daughter are healthy, and that they have been continuously covered since the day they were born? 

What does it say when a free market can’t even address the needs of its ideal customer? 

I don’t blame this fiasco on Blue Shield, and you shouldn’t either.  Blame it on an individual insurance market that’s unable to function properly due to a problem called adverse selection, where the people who buy insurance tend to be those the insurance company will lose money on.  This is a market failure.  Every free market capitalist knows that markets can fail.  This is, however, where American ingenuity shines.  We’re exceptionally good at structuring free markets such that they can function properly and work their Adam Smith magic.

And we know exactly how to make the individual health insurance market function properly.  Although it gets technical, a properly functioning health insurance market requires four critical characteristics:

(1) Guaranteed issue – an insurance company can’t cherry pick the best customers, and neither can its competitors.

(2) A ban on exclusion of preexisting conditions.

(3) Community rating – everyone in a given age group pays the same premium.

(4) The widest possible risk pools – virtually everyone is covered, as is the case in the group insurance market and with seniors, solving the adverse selection problem.

That is exactly what Obamacare delivers on January 1^st, 2014, a date that cannot come soon enough.  A humiliating, bureaucratic, expensive, nine-hour medical underwriting process?  Gone.  A decision to decline coverage, or charge more?  Illegal.  You should be able to go to a web page, supply your name, address, birth date, social security number, credit card and expiration date, and, paraphrasing an iconic Silicon Valley entrepreneur, boom, you’re covered.  As fast as an Amazon book order, except for the two additional pieces of information (birth date and social security number).  It would be impossible for Blue Shield to make these improvements unilaterally, because if they did, it would put them in an adverse selection death spiral.

As you probably know, there are other narratives about Obamacare.  There’s the Supreme Court decision; the death panel conspiracy theory; the Blunt amendment which, had it succeeded, would have allowed any employer to exclude any medical service from coverage for any reason, and which caused Olympia Snowe to retire from politics.  There are the people with cancer who can’t get coverage; the businesses of all kinds stiffed by medical bankruptcies; the poor.  There are the Republicans incensed by “socialist” Democrats, and the Democrats incensed by “heartless” Republicans.  There is the “Medicare-for-all” crowd.

I empathize with all those narratives and the emotions behind them.  And I believe a country without universal health insurance can’t call itself a first-world nation.

But these narratives don’t reflect my story.  I neither expect nor deserve your sympathy.  There is trouble in paradise, however, when a market can’t even address the needs of its perfect customers, and, by the grace of God, I am a perfect customer.  I love Obamacare because it represents American ingenuity at its finest.  I revel in the audacity of a classical American question: Can we make the individual health insurance application process not twenty percent faster, not twenty times faster, but two hundred times faster?

Maybe you support Obamacare for one or more of its other provisions: the ban on lifetime caps; the filling of the Medicare drug benefit donut hole; the refunds when premiums are too high; the ‘no one left behind’ expansion of Medicaid; the subsidies for those who can’t afford insurance; the incentives for small businesses; the provisions related to accountable care organizations; the ban on co-pays for certain preventive services.

Maybe you oppose Obamacare, or maybe you don’t love Obamacare as much as I do, because, like many, you are covered by group health insurance or Medicare, and the fact that the individual health insurance market can’t function properly is irrelevant to you, at least for now.  Or you’re a medical underwriter, and the humiliating, time-consuming process we experienced represents good money.  Whether you support it or oppose it, however, Obamacare represents an ingenious free market solution.  Anyone who calls it socialism doesn’t understand free market capitalism. 

To those of you who have to apply for individual health insurance prior to 2014, you have my deepest sympathies.  It will not be like ordering a book from Amazon, although it should be.  If you’re 26 or younger, Obamacare provisions that have already taken effect might spare you from the horror I experienced.  If not, and if you are any less perfect a health insurance customer than I am, I shudder when imagining what your experience could look like.  I pray you survive until January 1^st, 2014, when you can join me in celebrating American ingenuity.

(Postscript: after enduring a second humiliating medical underwriting process, my wife and daughter are now insured by Aetna.  Having two insurance companies means our family deductible is essentially twice what it should be.)