"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Wednesday, August 14, 2013

"The Wheels Are Coming Off of Health Care Reform"

A pretty good summary by a fellow blogger of where we stand with Obamacare:

The Administration pushed hard for passage of health care reform, asserting that everyone who disagreed with any provision of the law was a liar for pointing out flaws. Now, nearly every critic has been proven right. Premiums are higher when the government mandates that insurance policies cannot limit their downside risk. Duh. Employers are less likely to offer coverage when they are required to pay higher costs for more coverage. Duh. Employers are likely to drop coverage when the government is offering a subsidy to individuals, but not employers, and when the penalty for dropping coverage is much lower than the cost of continuing it. Duh. Employers are going to cut employee hours to avoid triggering the threshold at which they are required to absorb tens of thousands of per-employee health care costs. Duh. 
The bottom line is that the wheels are coming off of health care reform.

I would add that all of these problems with Obamacare all stem from the same fundamental ideological flaw.   People (liberals in government) who have not run businesses and ideologically do not approve of the concept of business (profit maximization through rational control of inputs, including labor costs/employee benefits), do not understand that employers are rational actors, insurance companies are rational actors, employees are rational actors, individual people facing choices in the markeplace are rational actors (do I spend my marginal income on health insurance if I am a young healthy person or do I bet that I won't get sick and/or that, if I do get sick, under Obamacare they can't turn me down for coverage?), etc.   Anyone with rudimentary understanding of economics would have told you (a) premiums will go way up when insurance companies can't turn down people with pre-existing conditions; (b) businesses will cut employees and/or hours and/or not hire additional people if doing so means they will have to incur the costs in both cash outlays and bureaucratic transaction costs of providing health insurance benefits; (c) where penalties are relatively low for not having coverage (both IRS tax penalties and the penalty for not having coverage, which is now negligible since people with pre-existing conditions cannot be denied) and the costs of coverage are much higher, people will opt out rather than opt in.  

On the other hand, the cynic in me might think that the libs intended this train wreck from the outset, so that single-payer government health care would be the only thing left standing after the crash.

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