I hate ObamaCare—but probably not for the reasons you might think.

I’m not an Obama basher, and I consider the latest republican threats to shut down the government unless ObamaCare is defunded to be a carnival sideshow.  But nonetheless, I hate the program and I’d love to see it scrapped.


Because it is a façade of reform that does nothing to actually fix our broken health system.  Rather than the radical change it is billed as by both its supporters and its detractors, ObamaCare is an incremental reform at best and one that does nothing to address the real reasons for soaring health costs: a system in which the user of health care—the patient—is generally not the payer and in which doctors are compensated for the amount of care provided, regardless of benefit, rather than for actual results.

All of this is made worse by the peculiar American notion that it is the employer’s job to provide health insurance.  Most other Western countries have socialized medicine paid for by the taxpayer.  But don’t think that the American taxpayer gets off easy.   The American taxpayer foots the bill too, albeit indirectly through corporate tax breaks.  The end result is a quasi-socialized model that effectively funnels public money to private insurance companies.  It also makes American labor more expensive than its foreign competitors and wastes company resources that would be better spent maximizing profit on providing social services.

There are other negatives that are underappreciated.  America is rightly proud of its dynamic, flexible labor market, and Americans are unique among Westerners in their willingness to uproot and move halfway across the continent for the right job.   Yet tying insurance to employment locks many Americans into less-than-optimal jobs, and worse, it discourages risk taking.  Given that most small businesses are run on a shoestring budget, losing employer-provided insurance is a major disincentive to the aspiring entrepreneur.  We’ll never know how many small businesses fail or are never even attempted due to the prohibitively high cost of health insurance.

To be fair, ObamaCare didn’t cause these problems, but it does makes this worse with its individual mandate.  Today, an entrepreneur can take his or her chances and choose to go uninsured  in the early stages of a new business when the shekels are tight.  And for a young person without a family to support, that is a sensible option.  But under ObamaCare, that will no longer be possible.  “Self insuring” is not allowed.

I actually believe that President Obama had good intentions when he created the tax subsidies for low-income purchasers of health insurance.  But good intentions often have unintended consequences.  Subsidizing insurance for low income earners does nothing to address the reasons for it being expensive in the first place, and it actually exacerbates the problem by shielding patients from the true cost of the services they receive.  If there were not a deep-pocketed insurance company or government program to bilk, patients would push back against unnecessary or extravagant costs, and doctors and hospitals would be forced to run their operations more efficiently.

You want real reform?  Outlaw health insurance for everything but catastrophic injuries or illnesses.

Think about it.  You have homeowners insurance for major damage; think fires and tornados.  But you don’t use it every time you need to pay someone to re-caulk your bathtub.  Why should health insurance be any different?  It should be there in the event you need chemotherapy or brain surgery.  But do you really need your insurance to cover a round of antibiotics for strep throat?

Yes, there are some people who cannot afford even basic health care.  But provisions can be made for them.  And in any event, offering free basic care to low-income patients  is still cheaper than the status quo, which sees the uninsured clogging up hospital emergency rooms with non-emergency cases.

The other option, of course, is to go the direction of Canada and the UK and offer fully socialized medicine.  That’s not my preferred solution, but it’s not quite the horror story it’s made out to be in the American press.  I used the National Health Service while a student at the London School of Economics, and I had no complaints.  The UK’s medical services are roughly on par with those of the United States yet cost only half as much as a percentage of GDP. The difference in cost is shocking and indefensible.

And this brings us back to ObamaCare.  I still hate it.  Mr. Obama didn’t create the health care cost crisis, but his attempt at fixing it does nothing to address its root causes.  Until patients are aware of the costs and benefits of services they receive and doctors are incentivized to heal rather than perform a series of reimbursable procedures, there can be no real reform.

This article first appeared on InvestorPlace.

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