There is a difference between product-driven and market-driven business strategies — the former being a concentration on what the company builds and the latter a concentration on what the customer wants. Back in the 1950s, when the Big Three — GM, Ford and Chrysler — dominated the domestic auto market, they were entirely product driven. Their cars rusted out in about three years, but they were hugely profitable.
Then a comparatively small Japanese automaker named Toyota tried to compete, using a market-driven approach that offered Americans cars that were cheaper, smaller and more reliable. Lee Iacocca, president of Ford, said, “We’ll drive them back into the sea.” We all know how that turned out.
I raise this because a very interesting fact is emerging in the continuing saga of Obamacare. As the website gets fixed and the number of people getting through it increases, a fundamental flaw in its design is becoming clear — something that has nothing to do with political ideology. Obamacare is a product-driven enterprise, created with little or no thought given to the question of how the market would react to it.
Like American 1950s auto executives, the designers of Obamacare thought they knew better than the customers what the product — in their case, a health insurance plan — should be. The individual mandate that was the center of the debate for so long doesn’t just say, “Everyone must have health coverage,” but rather, “Everyone must have our particular kind of health coverage.”
It’s not working. Even as website problems get fixed, a significant number of healthy customers are refusing to buy, and ironically, Obamacare actually encourages that. By eliminating pre-existing conditions as a reason to be turned down, which is a good thing to do for health reasons, it allows people to wait until they get sick to sign up if they don’t like the plan. The fines they will pay if they do so — assuming that such fines can actually be collected — are less than the premiums they would have paid.
That’s a potentially serious problem. If too many healthy people decide to stay out of the system because it isn’t flexible enough to give them what they want, there won’t be enough money in it to pay the bills of the sick. It also won’t meet its stated social goal of getting health care to every American. Only a relatively few of the uninsured are coming in, which is causing some experts to say they may have seriously misunderstood exactly who the uninsured are and what they want.
I am not one who defended the state of health care in America pre-Obama. Its deficiencies were clear and I worked with Sen. Ron Wyden, D-Ore., to try to change it, telling him I would support his goal of universal coverage if he would support my goal of a market-driven system — one in which customers had truly meaningful choices. He agreed, and we got nine Republicans and eight Democrats to join us as co-sponsors. We were naïve enough to think we had the beginnings of a bipartisan deal that would work.
Not so. The authors of Obamacare told us to get lost. Substituting their judgment for the customer’s, they created a product designed to take Americans out of plans they considered to be “sub-standard” and into ones they deemed to be “full coverage” instead. The result is a health care version of a 1955 Pontiac. It’s large, expensive to own and maintain, and burdened with features many customers don’t want. It’s also likely to rust out in about three years.
Robert Bennett, former U.S. Senator from Utah, is a teacher, researcher and lecturer at the University of Utah's Hinckley Institute of Politics and a Fellow at George Washington University's School of Media and Public Affairs.