Image by KAL, at The Economist.
The Supreme Court will soon pass down their decision on the most hotly-contested and highly influential policy decisions in recent years: the Affordable Care Act (ACA). As CNN has put it, this is "an issue that affects every American." If fully implemented, the ACA is projected to extend coverage to millions of Americans—a huge victory for universal coverage advocates. It has also received opposition from those who claim that it represents an unprecedented intrusion of government into the free market. But free market lovers also have reasons to cross their fingers that the ACA will be upheld in its entirety. Here's why:
1. The ACA is market friendly: The ACA is among the most market driven universal health care proposals that has, to date, been tried in other universal health care systems around the world—beat only, perhaps, by the Swiss model. Ezra Klein shares this view: “I think conservatives would be smart to embrace the Affordable Care Act structure…giving private insurance a central role in those markets and leaving us with a health system that looks more like Switzerland than like Canada.”
Many free market advocates point to the fact that our current insurance structure is the problem—patients are shielded from the costs of their medical care, so market forces don't play into their choices. The ACA will, to some extent, level the playing field in that area. The creation of state insurance exchanges, with minimum coverage requirements, demystify the health care shopping process, allowing patients to compare apples to apples and buy a plan based on the best value. Unlike systems in other countries, where government officials negotiate prices, this will force insurance companies to compete for your business, pushing them to provide the best service at the cheapest price. As Austin Frakt puts it, "That's, essentially, competitive bidding." The ACA allows the private markets to stay in the game, increases competition, and buys us more time to tinker with free market solutions to escalating costs.
2. Inaction will kill us: Inaction—the very thing that the anti-ACA legal case claimed the government is trying to regulate—is the thing that will bring us down. The rising cost of health care is unsustainable and represents, according to the bipartisan Social Security Advisory Board, "perhaps the most significant threat to the long-term economic security of workers and retirees." If something isn't done, we will be spending one of every five dollars on health care by 2020. Imagine the jobs that could be created if we weren't paying so much to the health care system! (And no: more health care jobs are not always a good thing!)
Some sort of major health system reform is coming in the next decade or two, regardless of how the Supreme Court rules. As a nation we will soon come to the point when we have to decide if we want to keep spending a fifth (or a fourth? a third?!) of our paychecks on health care. We can either willingly enter the realm of 21st century health insurance (like the rest of our industrialized buddies), or we can have our tattered economic carcass dragged there when our ever-burgeoning health care costs squash other economic activity. Fast forward fifty years to when more than a third of our GDP--one third of all economic activity--goes to pay for health care. At that point, public and market pressure will force the government to move to contain costs, and it's hard to imagine they'll do anything 'market friendly.' Then will free market advocates look back, longingly, to a time when we could have had a health care system with maximum free market involvement?
We are waiting with bated breath to see how the court will rule. Regardless of what happens, one group will bemoan the end of the world and another will throw a party. Free market advocates should think twice about where they would be most comfortable.