I had never heard of John H. Cochrane before I read this piece this morning in the Wall Street Journal. That was my loss. He is a professor of finance at the University of Chicago Booth School of Business and a senior fellow of the Hoover Institution, and he has a clear sense that even most Republicans miss about what was really wrong with health care pre-ObamaCare, and why ObamaCare was not the right solution at all.
ObamaCare: a wildly inefficient payment plan for routine expenses
Better, Cochrane has a game plan for what to do once ObamaCare has collapsed:
Only deregulation can unleash competition. And only disruptive competition, where new businesses drive out old ones, will bring efficiency, lower costs and innovation.
Health insurance should be individual, portable across jobs, states and providers; lifelong and guaranteed-renewable, meaning you have the right to continue with no unexpected increase in premiums if you get sick. Insurance should protect wealth against large, unforeseen, necessary expenses, rather than be a wildly inefficient payment plan for routine expenses.
People want to buy this insurance, and companies want to sell it. It would be far cheaper, and would solve the pre-existing conditions problem. We do not have such health insurance only because it was regulated out of existence. Businesses cannot establish or contribute to portable individual policies, or employees would have to pay taxes. So businesses only offer group plans. Knowing they will abandon individual insurance when they get a job, and without cross-state portability, there is little reason for young people to invest in lifelong, portable health insurance. Mandated coverage, pressure against full risk rating, and a dysfunctional cash market did the rest.
Rather than a mandate for employer-based groups, we should transition to fully individual-based health insurance. Allow national individual insurance offered and sold to anyone, anywhere, without the tangled mess of state mandates and regulations. Allow employers to contribute to individual insurance at least on an even basis with group plans. Current group plans can convert to individual plans, at once or as people leave. Since all members in a group convert, there is no adverse selection of sicker people.
What sets Cochrane's ideas apart from many Republican plans is that it's not just about how you buy health insurance, but it's also about changing the whole idea of health insurance so that it works in the way insurance is supposed to work - as protection against risk, and not, in Cochrane's words, as "a wildly inefficient payment plan for routine expenses."
He also takes on the most frequently trotted-out lies of the left about there being no alternative to ObamaCare, or even that ObamaCare is some sort of necessary evil because there is no other way to fix the problems that were inherent in the system. That's nonsense. Of course there were other ways to fix them, and much better ways, but all Democrats wanted to do was further sink the tentacles of the federal government into the economy - and ObamaCare was a monstrous method of doing so.
Please send a copy of Mr. Cochrane's piece to every member of Congress. The Republicans need to know how to really talk intelligently about what needs to be done on the health care front. And the Democrats need a clue. This offers many of them, if only they will listen.
