Free Markets, Free People
OK, we now have Obamacare. Absent a November election of Mitt Romney and Republican congressional majorities, we’ll simply have to live with it. Except, of course, we won’t, because Obamacare simply will not work. Its design practically ensures that it will meet none of the goals its proponents claim it will meet. The end result will inevitably be more people uninsured, higher costs, greater government spending, and higher debt.
If you want to see how a policy will work, then ignore all the claims made by it’s proponents—and opponents. All that is necessary is to look closely at the incentive structures the law creates. Those incentives will tell you how people will respond to the policy.
So, let’s take a brief look at just a few of the incentives Obamacare creates.
- First, health plans are more highly regulated. They must cover a wide range of preventative procedures, like pediatric or maternity care. This means that stand-alone catastrophic coverage will essentially be a thing of the past. This increases the cost of premiums across the board, and eliminates an entire class of individual insurance coverage.
- At the same time, insurers are forced to cover pre-existing conditions, with premiums limited to 2.5x that of the lower-risk groups. People with chronic conditions, such as diabetes, generally incur costs far in advance of 2.5x that of healthy people—as I well know, being diabetic—and the care for the seriously ill, such as cancer patients, is far higher still. This will, again, raise the costs of premiums overall to recoup the extra costs of insuring the chronically or seriously ill.
- Individuals who do not have have health coverage will be forced to pay what we learned this morning was a tax to the IRS instead. Rational people, then will choose not to buy insurance until their health costs + the penalty is greater than the cost of a health plan.
- Lower income people, with a family income of less than 400% of the poverty level ($88,000 for a family of four) receive a subsidy of varying value, declining with income increases until the 400% of poverty level, at which point it drops to $5,000. At 401% of the poverty level, the subsidy ends. So at that $88,000 level, any increase of income results in the loss of $$5,000. At that point, it is uneconomic to accept any increase in income to less than $93,000, as it will result in a net loss of income, or the family will have to forego medical insurance. This will trap low-wage workers.
- Companies with less than 50 employees that currently provide health coverage to their workers will face a broad range of new costs, mandates, regulations and coverage mandates. They will have to either require more costs to be paid by employees, or simply drop health coverage altogether and simply pay a nominal tax penalty. I suspect many companies will choose the latter, thereby forcing employees to pay for higher-cost individual plans, or forego coverage. Even worse, companies that employ fewer than 50 people have a huge incentive to ensure they never have more than 50 people on the payroll, lest they then be required to provide health insurance, and subject themselves to a much higher administrative burden.
These perverse incentives will result in higher health insurance costs, and an increase in the number of uninsured people. Additionally, the macroeconomic incentives will result in less income growth and lower employment. We will then be told that the "free market" has failed yet again, and be forced to submit to a fully government-run health care system.
Ultimately, Obamacare is nothing more than the latest in "a long train of abuses and usurpations" about which we have done nothing, and will do nothing. I mean, let’s face it, no one is going to call for a new constitutional convention, much less get together with a lusty, gusty group of fellows and head off into the hills with rifles.
But, there’s always a silver lining to every cloud. In this case, it’s that when we default on or monetize our debt and destroy the currency and economy, Obamacare will be irrelevant, as there will barely be enough money for food and shelter, much less expansive health coverage programs.
So, we got that going for us.
The following statistics were released today on the state of the US economy:
The Commerce Department’s final estimate of first quarter GDP was unchanged at 1.9% annualized.
Initial claims for unemployment were a higher-than-expected 386,000. The 4-week moving average dropped 750 lower to 386,750.
The Bloomberg Consumer Comfort Index rose to -36.1, the highest level in two months.
The Kansas City Fed manufacturing index rebounded 6 points to a reading of 9 in May.
Apparently the entire law has been upheld with Chief Justice John Roberts joining the liberal side of the court to declare the individual mandate survives as a tax. The political elite have once again wiped their collective rear ends with the Constitution.
You are now all destined to be required by law to purchase (via “tax”) whatever in the hell Congress decides it wants you to purchase. And this will, of course, translate into doing whatever Congress decides you need to do (again, I’m sure the clever totalitarians among us will find some way to accomplish those things through “taxation”).
Welcome to the new “America”.
Wait … didn’t we once revolt over unfair taxation?
UPDATE: Apparently CNN is reporting the mandate was struck down. SCOTUS blog says:
The court reinforces that individuals can simply refuse to pay the tax and not comply with the mandate.
CNN just corrected their previous release and said the entire ACA had been upheld (and they wonder why they’re losing viewers?).
The Court holds that the mandate violates the Commerce Clause, but that doesn’t matter b/c there are five votes for the mandate to be constitutional under the taxing power.
In Plain English: The Affordable Care Act, including its individual mandate that virtually all Americans buy health insurance, is constitutional. There were not five votes to uphold it on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, rather than all of their funding.
Just marvelous. Thanks Justice Roberts. </sarc>
SCOTUS opinion/decision here.
Me, I’m taking the rest of the day off. As an old libertarian I mourn for the freedom we just lost. It is another reason, in a long, long line of them, to clean that cesspool of Washington DC out. And, frankly, perhaps it is time we contemplated bolder measures.
Sorry … but this ruling all but guarantees the twilight of a great experiment. It lasted over 200 years, but it is definitely in its nadir now. This only accelerates the decline. We’ve just put ourselves in the same place as Europe, and we see who gloriously that’s going, don’t we?
Wow, just wow.
Just some random thoughts as we await the Supreme Court ruling on healthcare.
I can’t help thinking the title is precisely what is on the line today. Given the implications of upholding that odious law, I can’t help but feel this is indeed the most momentous decision in my lifetime. Oh, certainly, there have been many other important ones, to be sure, but never one that had the potential, at least as I see it, to give government carte blanc to expand and intrude into my life.
I’ve said it often, liberty (freedom) equals choice. Today’s decision will either uphold our ability to make individual choices (to include not having health insurance for whatever reason) in our lives or limit them – severely.
You know, when I was a kid I had to read the Constitution. I didn’t find it either difficult to read or understand. Yet since then, we’ve seen veritable oceans of words telling us what we read and the common understanding of what those words in the Constitution mean isn’t what they really mean. And the way the Constitution is treated by our politicians is simply shameful (and that applies to both sides).
It has also been ironic to me to see the “living Constitution” crowd whine and complain that the SCOTUS may be overturning “years of precedent”. That’s a true traditionalist argument. In fact, though, if it does strike down the mandate, then it will be a traditionalist ruling.
I’m not sure how the left will reconcile that without their heads exploding.
I’m also convinced that even if overturned, either partially or completely, this is only the beginning of the fight to have government take over health care. Next step? Single payer.
In fact, there are probably many on the left who actually hope this monstrosity will be overturned so they can proceed to what has always been the extreme left’s dream – single payer, government run health care. And, of course, Medicare provides precedence for that, doesn’t it.
So as we sit here waiting and hoping, it might behoove us to consider that even if the decision goes as we hope it will go, spiking the ball will be premature.
A ruling against the law won’t signal the end of this fight. I’m afraid it will only signal the end of round 1 of a multi-round championship fight.
Whatever the ruling, I worry for our country.