At Palisades Hudson, the small company I work for, there is a baby boom.
We’ve already welcomed two new people into our extended family since last summer, and three more employees are expected to join us by the end of this year. Despite the fact that the boss is rarely the first to learn about such developments, I anticipate that our demographic minitrend will last for some time. A happy byproduct of having a staff that is still relatively young but is composed of confident professionals and mature individuals on a personal level.
However, the side effect is both expensive and enjoyable. The cost of prenatal and delivery room care in America far outweighs that of other developed countries, according to a recent investigation by The New York Times. A large portion of the exorbitant bill is typically covered by insurance companies, but not always. Even those with insurance now pay thousands of dollars out of pocket, which was unheard of when my own children were born a few decades ago. (1)
My staff is entirely responsible for these expenses, not me. When the fundamentally flawed Affordable Care Act was passed in 2010, I stopped buying health insurance for my employees. The new law created so many distortions in the insurance and healthcare markets—even though I fervently hope that all of my staff members have insurance—that the only sensible course of action was to leave. I will pay higher taxes to subsidize insurance for tens of millions of Americans, only some of whom work for me, in addition to giving my employees raises rather than directly subsidizing their health care.
The Affordable Care Act, meanwhile, did essentially nothing to lower the cost of healthcare. The Times article describes how the fee-for-service model has been used excessively in the field of obstetrics. A hospital in New Hampshire could only provide a range of $4,000 to $45,000 when a pregnant woman inquired about the price of childbirth. (1) The hospital might as well have said $100 to $1 million for all the good that kind of information does.
The Affordable Care Act’s full implementation next year won’t see many changes to the medical practices and billing practices The Times described. The only difference is that more people will have insurance companies between them and the entities sending the bills, which will further reduce consumer price sensitivity.
For a while, the new federal insurance subsidies will serve to further obscure these excessive costs, at least until the subsidies run out of money. The Affordable Care Act actually makes care less affordable for society as a whole by artificially inflating demand for these expensive and frequently unnecessary services. Not to mention the portion of the population that will not have insurance under the Affordable Care Act, including non-citizen residents and those who decide to pay the relatively small fine for not having insurance instead of high premiums.
A few years prior to ceasing to purchase employee insurance, I looked for a plan to cover the two or three people who were then working in our Florida office. I thought about paying for individual policies at the time because my business was too small to qualify for the majority of group insurance plans. The fact that the majority of these policies do not cover prenatal and childbirth services astounds me. It was impractical for me as an employer to provide such coverage to my staff, possibly even in violation of the law. I wouldn’t even want to offer it if it were legal. In the end, we managed to get everyone covered under a firm-wide group plan that covered maternity care.
That the Affordable Care Act did not directly address the astronomical cost of healthcare is regrettable. Prioritizing universal coverage over cost concerns was the guiding principle. That was absolutely backwards. After we’ve managed costs, we need to enroll everyone in a system that offers a respectable level of guaranteed health care. Long-term, this most likely means a publicly funded healthcare system that might coexist with private alternatives in a similar way to how public and private schools coexist today.
We were instead given a law that is an unworkable jumble of overregulation and wishful thinking, rather than a thoughtful discussion of how to proceed in order to achieve this desirable outcome. The law also created an opposition that has elevated resistance to insurance “mandates” into theology. Even so, we have long tolerated laws requiring military service, vaccinations, and even education. The issue with the deeply flawed law is not that a mandate is included in it.
I am grateful that our staff can afford to have children. Maybe one day an Affordable Babies Act will show up to pick up the pieces amid the havoc that I predict the Affordable Care Act will cause in the health insurance system.
Source:
1) The New York Times, “American Way of Birth, Costliest in the World”