The Broken State of American Health Insurance Prior to the Affordable Care Act

Summary
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• The health insurance system in America is plagued with problems, such as continually rising premiums and the difficulty of finding coverage. The Obama administration’s diagnosis of the situation was clear: health insurance companies have too much freedom. The solution, therefore, is for the government to restrict this freedom, through provisions of the Patient Protection and Affordable Care Act (ACA).
• Many in America accept President Obama’s diagnosis and solution because they assume that the health insurance industry pre-ACA was an essentially free industry. This paper challenges that assumption.
• A survey of some of the major controls pre-ACA reveals that health insurance was already one of the most government-controlled industries in America. This is the context in which we must assess the causes of our problems in health insurance.
• Contrary to proponents of further intervention, evidence presented in this paper suggests that government regulation plays a major role in the poor state of health insurance today. We must be willing to entertain the possibility that our diagnosis is mistaken: the patient’s illness stems not from too much freedom but from too many controls.