Robin Hood was a mythical figure from 12th Century England whose legend became famous for stealing from the rich to help the pool. His legend wasn’t lost on Obamacare proponents, who incorporated the idea into health plan regulations. As I’ve explained in the past, the Affordable Care Act (ACA) had two primary goals: to expand health coverage to the uninsured, and to force everyone into health plans where premiums could not rise or fall based on health status. Purportedly, prior to Obamacare a small segment of the public could not find affordable coverage due to health concerns that made them unprofitable customers or their health plan rather costly. The number was relatively small, about 4 million individuals out of a society of 320 million by some estimates. Most could have gotten coverage, but not on terms they were willing to pay. Obamacare was intended to “fix” that problem by banning discounts to favorable risks or people with healthy lifestyles.
Obamacare is a bad deal for most people by design. Most individuals have few health concerns. For instance, about half the population spends less than $500 annually on medical care. For a decade prior to the ACA I often heard liberal public health advocates chant the imbecilic phrase, “health coverage won’t be affordable until everyone has coverage.” What they meant by that was if insurers were required to cover money-losing customers at rates that did not reflect their costs, new regulations would have to force healthier individuals to purchase coverage that was overpriced compared to their health costs. Thus, at its core Obamacare is a wealth redistribution scheme. This is true not only because of taxpayer subsidies that decrease with income, but also as a function of health literacy and lifestyle. Uninsured households are more likely to be less educated and have lower-income. Healthy behaviors and health literacy (that is: understanding what a healthy lifestyle is) tends to rise with income and education. Obamacare regulations are designed to transfer some of the wealth (and health) of the healthier, better educated households to poorer, less healthy households.
Allow me to explain. The socioeconomics of health have to do with the study of so-called “health disparities.” An article in the policy journal, Health Affairs, explained the effects socioeconomics have on health status. Poorer people spend less on medical care. They may live in areas with more pollution, environmental hazards and often work riskier jobs. Finally, poor people tend to engage in lifestyle behaviors (smoking and obesity being two) that are detrimental to their health. Basically, the poorer you are, the less educated you are, the greater the likelihood of health problems or behaviors that could lead to health problems. Although they are loath to blame lifestyles, liberal health policy folks worry about health disparities. But the reality is most health disparities are due to behavior, not lack of health coverage. Indeed, about 60 percent of medical spending is on conditions linked to lifestyle. This includes diabetes, hypertension and high cholesterol.
Obesity and diabetes are more common among the poor. One theory is poor people tend to be fatter because food is a low-cost, enjoyable experience in a life lacking in many other pleasures. Poor people may also discount future costs and benefits at a much higher rate. That’s a roundabout way of saying someone may value smoking cigarettes or an extra helping of comfort food at every meal for the next 40 years (more than the health benefits of weighing 80 pounds less 40 years from now).
Some people discount future costs at rates most of us find illogical. Variations in healthy behaviors are quite rational - even within the same income group. Some people like to eat bonbons, while others like to jog. Some people would rather buy a carton of cigarettes than spend a similar amount on a doctor visit. Some of those bonbon-eating cigarette smokers prefer to plop down in front of the television after work and down several beers. Many of them would probably benefit more by hitting the gym and spending their beer money on a daily regimen of generic antihypertensive medications and lipid-lowering drugs. But they choose not to.
Obamacare aims to solve these perverse behaviors and poor lifestyle choices with mandatory health insurance that aims to beat those health disparities into shape with medical intervention. BlueCross of Texas, the BlueCross plan of New York, and a host of other insurers report previously uninsured enrollees getting a volume of care that far exceeds the average. People who probably had not spent their own money on medical care in the past decade now have encouragement to get a decade’s worth of care the first year or two they are enrolled. As a result, everyone’s premiums are skyrocketing and the state and federal exchanges are descending into an adverse selection death spiral. The more costs escalate, the more healthy people drop out - causing a repeat cycle of healthy people fleeing Obamacare’s high costs.