Healthcare reform has been an omnipresent and contentious national issue ever since the passage of the Patient Protection and Affordable Care Act in March of 2010.
President Obama’s signature legislation that set in motion broad reforms to the way healthcare is paid for in the US has been threatened no less than 40 times with repeal votes in the GOP-controlled House of Representatives; the most recent attempt took place last week ahead of the House’s 5-week summer break. Furthermore, “Obamacare” has become a rallying point for just about any opposition to the administration that currently occupies the White House.
Opponents of Obamacare have sought to present the legislation and its provisions as everything from a costly expansion of government, to an all-out crypto-socialist assault on the notion of American freedom. And while their efforts to oppose the ACA may seem overwrought, for show, or even paranoid overreaction, there has been some indication recently that they are also having some success.
With the full implementation of the ACA less than six months away, it was starting to look as though Obamacare was finally on its way to being the law of the land. In early July however, doubts about the whole enterprise returned when President Obama announced that one of the most controversial and also most crucial aspects of the law, the mandate that compels businesses employing 50 or more people to provide health insurance for their employees, would be postponed until 2015.
Irrespective of the strategic reasoning behind the decision, it certainly appeared as though the administration had caved to pressure resulting from the claim that businesses with around 50 employers had been doing their best to cut workers’ hours to part-time, or otherwise to freeze hiring before they employed their 50th worker, in order to escape the provisions of the employer mandate.
The decision to postpone the mandate stirred up increased discussion about this apparent flaw in the employer mandate, with pundits warning that Obamacare would be detrimental to the still-ailing job market, not to mention placing onerous and unnecessary burdens on small business that would otherwise be seeking to expand their operations.
Rather than debate the merits of these opposing views, however, a look at other countries' single-payer model of healthcare provision is in order, particularly in the context of the debate over the mandate that is so crucial to the functioning of Obamacare.
A single-payer healthcare system is one in which the government pays for the cost of health insurance instead of private companies. The costs are financed by the public out of a single fund, and this paves the way for universal coverage for all citizens. It is the system that is in place in the majority of the world’s developed nations, such as Canada, Australia, and the UK.
To give some perspective on political views of single-payer healthcare, back in 2008, then-candidate Obama claimed on the campaign trail that if he were starting from scratch, the healthcare system he would prefer would be single-payer. Conversely, Republicans who have opposed Obamacare such as Oklahoma’s Tom Coburn, see the President’s signature legislation as a “gateway” to single-payer.
Regardless one’s views about the role of government in ordinary everyday life, however, from an economic standpoint, a single-payer system would bypass this contentious issue of the employer mandate, and of the mandate to purchase health insurance in general through the mechanism of universal coverage.
Furthermore, the single-payer system is not ideological or monolithic by any means, and is certainly not hostile to the private sector as has been claimed. While it is true that the government taking responsibility for making all payments related to the provision of care would put the insurance companies out a little, there is nothing to say that it cannot contract with private partners in the effort to provide care. This is what we see in countries such as Canada, France, and Australia, where the governments there do indeed work with private concerns in order to ensure care.
In other words, the guarantee of universal or near-universal care precludes the need for a mandate, and can also carve out a space for the private sector as well. Private insurers would still be free to offer their services, either on the exchanges or not.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer