Trumpcare is 20 years behind

President Trump wants to do everything he can think of to free American businesses to invest more, hire more and, you know, make America great again. So why is he pursuing an outdated health-reform plan that’s a vestige of a bygone industrial era?

President Trump Speaks At The White House After The House Voted On Health Care Bill (Photo by Alex Wong/Getty Images)
President Trump Speaks At The White House After The House Voted On Health Care Bill (Photo by Alex Wong/Getty Images)

Trump, of course, wants to repeal the Affordable Care Act, passed under President Obama in 2010, and replace it with a different plan to be named later. But the giant battle in Washington over the future of Obamacare completely ignores the way America’s health care system shackles the entire economy. “Our manufacturers have a huge competitive disadvantage caused by the health system, because the manufacturers are providing medical care for all the employees,” Berkshire Hathaway (BRK-A, BRK-B) vice chairman Charlie Munger told Yahoo Finance editor-in-chief Andy Serwer at Berkshire’s annual shareholder meeting on May 6. “The European companies we compete against fob it off on the government.”

Healthcare has become such an explosive issue in Washington that Republicans and Democrats fight epic battles over relatively small parts of the healthcare system–while completely avoiding the biggest problems. Obamacare, for instance, extended coverage to an additional 19 million Americans or so. The reform plan passed recently by the House—and endorsed by President Trump—would probably reduce that number by a few million, if it ever passed the Senate. Loss of coverage would undoubtedly harm some of those people, which is why the fight over repealing Obamacare is so intense. Yet the portion of working-age Americans covered by employer-sponsored insurance—150 million—is nearly 8 times as many as those covered under Obamacare.

Soaring costs

Employer-sponsored coverage works reasonably well, except for a couple things. First, costs are rising far faster than inflation in this part of the healthcare system, just as they are in Obamacare, Medicare and virtually every other program. Critics of Obamacare blame the 2010 law for soaring costs, but they’re wrong: healthcare costs began to soar in the mid-1980s, and the trend has been consistently worsening since then. When those rising costs hit employers, they pass them on to workers, one way or another. That’s why premiums, deductibles and co-pays have been rising for everybody, taking a bigger and bigger bite of the family budget.

The other problem with employer-sponsored coverage is what Munger is talking about. Most big companies must compete globally these days, and multinationals in Europe and Japan typically don’t have to devote an entire wing of the company to administering healthcare coverage. US companies have other advantages, but nobody designing a national healthcare system from scratch would ever put the burden of healthcare for millions on companies that might have expertise building cars, designing electronics or selling insurance, but have no inherent capability when it comes to healthcare.