Sunday, May 6, 2012

The Case Against ObamaCare (Summarized Version)

(With a Supreme Court ruling on the constitutionality of Obamacare expected any week now, I felt it fitting to post the essay I wrote the month before it passed about why it was a bad idea. This is a highly condensed summary of that 24-page editorial. The full version will be posted soon.)

In order to effectively cure our ailing healthcare system, it is critical that its specific ailment is accurately diagnosed. In reality, American health insurance is not sold on a free market, and the places it deviates from a free market are the sources of the problems it sees today. Examples of this deviation abound. One is the third-party-payer system used by 85% of insured Americans. Ones employer providing ones health insurance makes no more sense than providing ones house, car, or any other expensive and individualized purchase. Another hindrance to the free market in healthcare is government intervention. Government actions like Medicare, Medicaid, a ban on out-of-state insurance purchases, HIPPA, SCHIP, COBRA, and supply-restrictive licensure laws are largely responsible for rising health insurance costs. These are the real problems in the health insurance industry, yet those pushing through the healthcare bills give the industry give a false diagnosis; they instead blame the industries ills on corporate greed and “profiteering”. Not only does their legislation ignore the true causes of soaring insurance prices, it exacerbates them. Instead of removing middle-man interference with market dynamics, the plans expand this senseless system by forcing employers to provide insurance for their employees under penalty of fine or tax. And instead of removing government meddling with the industry, the legislation creates over 1900 pages of new mandates, regulations, fees, and bureaucracy. Any prescription written to cure a system ailing from government intervention with more government intervention is surely doomed to failure.
Perhaps the most outrageous aspect of this bill is its blatant encroachments on individual liberties. The bill forces insurance companies to cover those with pre-existing conditions at no extra charge, the equivalent of selling life insurance to a dead man, insuring a car that has already crashed, or insuring a home that has already burned down. Why should any company in any field be forced by the government to do something sure to lose it money? In order to pay for this costly policy, the legislation forces nearly all Americans to buy/obtain health insurance whether they want it or not, a law called the “individual mandate.” Fees or even jail time await those who fail to comply. Obama’s argued in September that those who fail to obtain insurance practice “irresponsible behavior” which “costs all the rest of us money” because “it means we pay for these people's expensive emergency room visits.” What the president calls “irresponsible behavior” might also be called “choice”, and when he says such emergency room visits are “expensive”, he means is that they account for less than 3% of our healthcare budget. The true motivation behind the individual mandate is making the young and healthy subsidize the old and sick. The bills also dictate that all insurance plans meet the government’s specific qualifications. Consumers may not pay for merely what they want insured, they must instead fill whatever insurance parameters the government deems appropriate. This removes the incentive to check ones healthcare consumption, as it’s already paid for. If people are covered for more products and services than they are now, they will naturally use more products and services than they do now, and this increased usage will force up the costs of care. All of these measures have been tried before in several states, where they have repeatedly increased costs. The present legislation will merely repeat this failure on a grander scale.
Such mandates eradicate any semblance of free market principles the current system has left. The sale of any product is based on the premise that both consumer and producer agree to the transaction. If the producer is forced to sell, and the consumer is forced to buy, the principles of choice and market freedom through which so many industries have flourished cannot exist. Under no circumstances should the government have any power to force any citizen to purchase any product at any time. As Forbes columnist Shikha Dalmia writes, the proposed legislation “will tell patients when, what and how much coverage they must buy; it will tell sellers when, what and how much coverage they must sell.” If that isn’t a government takeover of healthcare, what is? And it’s a costly takeover at that. The most uncertain issue of the healthcare debate has been the budget hit of the proposed changes. Estimates of total cost run anywhere from $800 billion to over $2 trillion. For a nation already $12 trillion debt, with a soaring national deficit, such a price tag is an irresponsible expenditure even if the bills were effective. The bill is partially funded through diverting $475 billion of so-called “inefficiencies” from Medicare; a half trillion dollars of inefficiencies in a prior government healthcare reform hardly argues for further government intervention! Current projections are vastly underestimated; the healthcare plans are tremendously costly endeavors America simply cannot afford.
The legislation aims to a) open access to health insurance to the 45 million uninsured Americans, and b) lower soaring healthcare costs. But it is economically impossible that both of these things take place without rationing. Healthcare products and services do not grow on trees; they are of a set, limited quantity and require much human research and funds to create. Only entrepreneur initiative can increase the set supply of healthcare in the country, not a government bill. In fact, government liscensure laws and the AMA keep this supply low. But by bringing in 31 million more insured Americans elligible to receive these things, the demand for this set supply skyrockets! Simple economics tells us that when there is greater demand for the same set supply of products, the price of those products inevitably increases.
The proposed healthcare legislation fails to reform the health insurance industry by misdiagnosing the causes of the healthcare crisis, finalizing an illogical third party system, further infringing on individual liberties, and unfairly expanding government powers at an unacceptable cost. For these reasons Congress must vote against the proposed healthcare bills and instead pass a reform bill that will more fairly, cheaply, and effectively fix the industry. Ronald Reagan once accurately stated that “the American people, if you put it to them about socialized medicine and gave them a chance to choose, would unhesitatingly vote against it.” Here’s hoping the American congressmen will do the same.

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