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Obamacare "wasn't fundamental change at all, just a big political mess": Steven Levitt

Aaron Task
Daily Ticker

In their latest book, Think Like a Freak, co-authors Steven Levitt and Stephen Dubner tell a story about meeting David Cameron in London before he was Prime Minister. They told him that the U.K.’s National Health Service -- free, unlimited, lifetime heath care -- was laudable but didn’t make practical sense.

"We tried to make our point with a thought experiment," they write. "We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance...everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home?"

Rather than seeing the humor and realizing that health care is just like any other part of the economy, Cameron abruptly ended the meeting, demonstrating one of the risks of 'thinking like a freak,' Dubner says in the accompanying video.

"Cameron has been open to [some] inventive thinking but if you start to look at things in a different way you'll get some strange looks," he says. "Tread with caution."

So what do Dubner and Levitt make of the Affordable Care Act, aka Obamacare, which has been described as a radical rethinking of America's health care system?

"I do not think it's a good approach at all," says Levitt, a professor of economics at the University of Chicago. "Fundamentally with health care, until people have to pay for what they're buying it's not going to work. Purchasing health care is almost exactly like purchasing any other good in the economy. If we're going to pretend there's a market for it, let's just make a real market for it."

As for the idea, often suggested by ACA's supporters, that Obamacare does put more decision making in consumers' hands, Levitt is highly skeptical.

"It's maybe 1% of the way toward a solution," he says. "If you took an economist...and let them set up a health care system it would look nothing at all like the system we have. To not separate health care out from the employer -- no economist in the world will tell you it's a good idea to link health care to employers."

Indeed, America is unique in having a system where many citizens get health care via their employer, which both puts a burden on corporations to provide and administer plans and often compels workers to stay in jobs 'just for the benefits'.

"We did it by accident -- it was a way to get [health care] started -- and now it's hard to change it," Levitt says.

Furthermore, opponents say Obamacare gives employers an incentive to stop providing health care plans -- for most businesses, the cost of fines will be far less than the cost of health care -- making it a Trojan Horse for a British-style national healthcare system.

In the end, Levitt says the Affordable Care Act "wasn't fundamental change at all, just a big political mess."

Aaron Task is the host of The Daily Ticker and Editor-in-Chief of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com.

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