As Congress begins to consider repealing and replacing the Affordable Care Act, it's a good time to think about how we arrived at the walled-city model, what its effects are and how we might move to a broader, seamless, competitive health insurance market.
One of the biggest problems with American health insurance is a lack of fences. With some frequency, my neighbors and I lean over our fences to discuss where to obtain food, entertainment, tree surgeons, computers, mechanics, carpenters and so forth. With friends and co-workers, I offer and receive recommendations on investment advisors, attorneys, physicians and so forth.
But I never lean over the fence to discuss purchasing health insurance. This is because Americans have sealed health insurance in a landscape of separate walled cities. Seniors go to Medicare, lower-income people to Medicaid. Large employers offer Employee Retirement Income Security Act, or ERISA, plans. Small businesses offer small business plans. Military get TRICARE and veterans, the Veterans Administration. Some people go to brokers and others, the Obamacare exchanges. American Indians get coverage through the Indian Health Service. Certain children get the Children's Health Insurance Program, or CHIP. Very sick people go to high-risk pools.
Thus, demographic qualities and personal circumstances largely determine where you get your health insurance. My employer offers one health insurance plan, so I take it. I couldn't choose Medicare, a small business plan, TRICARE or the Indian Health Service. Plus, the U.S. tax code is structured so it's much more expensive for me to get insurance on the individual market than from my employer. I can't buy my neighbor's plan, and he can't buy mine, so there is no fence chatter.