How to fix Obamacare

The Economist, September 20, 2014

It is now nearly a year since the roll-out of Obamacare.

Ironically the “socialist” Mr Obama did not do the one thing that might have cut taxpayers’ costs dramatically: introduce a European “single payer” health-care system. Instead he tried to tweak America’s system in two ways – to expand coverage and to reduce costs.

The results are mixed. Practically every competent health-industry lobbyist managed to insert a line protecting the services his paymasters provide – so Obamacare is too costly and too complicated.

So what would make American health care better now? Since its failings lie more within the system than with the president’s attempt to reform it, health reformers should concentrate on three areas that could make its flawed market work better: directing handouts towards the poor rather than the affluent, nudging individuals to take charge of their own health care, and making sure that prices are transparent.

If America wants to stick to the idea that it has a health-care market, then it should focus on trying to make it more like a market – with prices, competitors and some form of choice.

http://www.economist.com/news/leaders/21618788-americas-health-care-syst…

After telling us that it is ironic that President Obama did not introduce a single payer system, The Economist tells us that we should use prices, competitors and choice if we want to make our health care system more like a market. That seems odd advice since their system is not only single payer, it is socialized medicine – a national health service.

The Economist is not naive. They certainly know of the work of Nobel laureate Kenneth Arrow showing us that markets do not work in health care. Maybe their recommendation for market reform of U.S. health care stems from their reputation as excelling in understated wit, but what the market approach has done to drive up costs and impair the functioning of our health care delivery system isn’t really very funny.

Let’s just take them at their word that a single payer system would have been a much more effective choice. And we can still make that choice.