Alpha Blog

Obamacare

1. Once Obamacare is fully implemented, many more Americans will be getting health insurance directly from the government.


Right! Starting in 2014, many Americans with income under 133% of the poverty line ($31,322 for a family of four, in 2013 dollars) will receive health insurance through Medicaid, a government program funded by both states and the federal government.

Learn why some Americans with income under 133% of the poverty line will not be insured under Medicaid.

Learn about another way that the Obamacare legislation will increase the number of insured Americans.

Learn about other proposals to provide health insurance directly through the government.

Besides the Medicaid expansion, Congress considered two other ways of having the government directly provide health insurance. Neither proposal was enacted in the Obamacare law. The first was a "public option", a government insurance program that would compete with private insurance companies. The other plan was to lower the age at which people become eligible for Medicare, a government program which mainly provides health insurance for the elderly.

Many liberals would like the government to directly provide health insurance for all Americans; this is called a "single-payer" system.

2. When people have insurance that covers the cost of medical care, they are more likely to use medical care without worrying about how much it costs. This phenomenon is called "adverse selection."


That's it! In fact, that phenomenon is called "moral hazard", not "adverse selection". Adverse selection is something else.

3. Many liberals argue that the government ought to play a large role in health care because the health care market is uniquely inefficient. Many conservatives argue that when the government tries to solve problems in the health care market, it makes things worse.


You are correct! The health care market is considered to be significantly more inefficient than most other parts of the economy. This is because the health care sector is plagued by market failures such as adverse selection and information disparities between buyers and sellers.

That's why many liberals, who support capitalism and free markets in many other economic sectors, believe the government ought to play a large and unique role in the health care market.

Although many conservatives acknowledge that the health care market has flaws, they argue that attempts to solve them with government may lead to "government failure" that is worse than "market failure". This is because politicians often have perverse incentives; for example, politicians may be more interested in winning elections and appeasing special interests than doing what is in the public's general interest.