Mises Wire

Ryancare is Failing — What Should Happen Next?

The beltway Republicans are scrambling now that it seems the Obamacare replacement package put forward for Paul Ryan and endorsed by Donald Trump can’t get enough support to get through the House. The failure of the American Health Care Act should surprise no one, as it is a piece of legislation that managed to please no one. The Freedom Caucus, made up of the “true believers” of the Tea Party, balked at its similarities to Obamacare, while more moderate members found the bill’s modest change to the ACA too radical for their tastes. 

While the failure of the Ryan/Trump/Whatevercare represents a political defeat for the president and GOP leadership, it is probably a net-win for those who oppose socialized healthcare. After all, nothing could be more beneficial to the Bernie Sanders-wing of the Democratic party than for the nominally “free market” Republicans passing its own brand of reform that fails to fix America’s insurance market. Much like the 2008 financial crisis, its collapse would absurdly be seen as a defeat for “capitalism” and be used as justification for even more government control.

The unfortunate reality going forward is that more significant approaches to healthcare reform, such as the bill pushed by Senator Rand Paul and his allies in the House, are unlikely to find enough support in the Senate. Further, considering the way the media portrayed the Congressional Budget Office’s analysis of the ACHA, which noted that 14 million consumers may no longer purchase healthcare without an individual mandate and therefore are “losing coverage,” any healthcare plan that comes close to pricing real healthcare risks (like properly accounting for the costs of those with pre-existing conditions) will be skewered relentlessly. This is all before even addressing the problems caused by Medicare and Medicaid.

This is precisely why attempts to push grand “free market” reforms in the Federal government end in failure. Few politicians in DC have the economic lens required to appreciate how necessary these tough decisions are, so Federal politics simply becomes a race to see which party can buy more votes than the other.

Given this grave reality, is there anything that can be done to improve American healthcare?

The answer is it is already happening because of the market.

Increasingly, doctors are abandoning the broken insurance model and claiming their own independence by offering direct patient care. As Business Insider profiled recently, around 1,000 doctors (and counting) are moving toward charging patients a monthly membership fee for service and then patients pay a la carte for the services they actually need. This allows clinics to eliminate most of the administrative costs and it restores the relationship between doctor and patient that has been undermined by a century of government intervention. For more specialized care, clinics such as The Surgery Center of Oklahoma, also use a cash-for-service business model without the monthly fee. 

Given that this is happening naturally on the market already, the legislative focus for those in Washington concerned about American healthcare should be preventing any future laws and regulations that would destroy this model going forward. Further, rather than trying to completely overhaul Obamacare, simply eliminating the individual mandate tax and allowing Health Savings Accounts to be used for healthcare membership would be subtle ways of empowering the market to revolutionize American medicine. This should be coupled with real tax cuts, not “revenue neutral reform” to help Americans keep their own hard-earned money to help pay for it.

Steps can also be taken on the state level to further empower medical professionals. For example, expanding the abilities of medical practitioners would help mitigate doctor shortages. Reforms to medical licensing — such as recognizing the real-world experience of military trained medics — would also make it easier for skilled individuals to enter the market.

This more modest approach to healthcare reform shouldn’t be seen as a defense of Obamacare or the status quo. It’s not. Obamacare was a deplorable piece of legislation, designed by people who were either utterly delusional or intentionally crafting a framework that would fail. In a just world, everyone who played a hand in crafting it should be forever stuck with the fruits of their labor for their own personal care.

Yet we can’t be blind to the realities of modern politics — Washington is dominated by progressive ideology in both parties. While the long-term solution to this has to be political decentralization, in the short term we can settle by defending the ability of markets to compete along side government regulated disasters. This was how Ron Paul sought to destroy the Fed, it’s how homeschooling parents are able to free their children from public education, it’s how Patrick Byrne plans to undermine government cronies on Wall Street.  

As the Soviet Union was collapsing, Murray Rothbard wrote a paper outlining how to desocialize an economy. Gradual reform would fail, he noted, because “the giant socialist bureaucracy will only seize upon such delay to obstruct the goal altogether.” Instead, he advocated prioritizing the protection and normalization of already established black markets.

America doesn’t yet have completely socialized medicine, but the same approach is true here. As long as we preserve the functioning markets that currently exist, and allow them to grow, Americans can maintain hope for a functioning healthcare system in the future.

The same cannot be said for Washington politics. 

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