From the standpoint of its economic consequences—not the intentions of those creatures in Washington who wrote and passed it, but its consequences—the “Affordable” Care Act now going into effect is a destructive, retrograde, pernicious piece of legislation.
American healthcare and health insurance have been badly in need of reform for decades, but the Affordable Care Act goes in exactly the wrong direction—toward more centralized control. While, if it lasts, it will surely make some small portion of the American public better off than they would otherwise be, at least for a while, it will just as surely make the great majority worse off.
A fine short statement of why this is so comes from Holman Jenkins’s column in this weekend’s Wall Street Journal, “ObamaCare Is Redistribution, Not Reform.” I pick it up in the middle and italicize and boldface the seven words most important from the economic standpoint:
But there is no right or wrong size for a deductible (or provider network for that matter), just one of the many features consumers trade off as they choose a policy.
The characteristic pathology of ObamaCare is that government is making the choices. Consumers aren’t. ObamaCare means higher deductibles than many customers would choose for themselves. It means a narrower choice of doctors and hospitals than many would choose for themselves. These sacrifices, in turn, are required to pay for a broader package of benefits than many customers would choose for themselves.
Who chooses determines the adaptability and intelligence of the system. When consumers are free to choose among the options available to them, and insurers are free to offer all sorts of different packages of benefits, deductibles, provider networks, prices, and the rest in hopes of winning consumers’ business; when that freedom exists the economic system, like an ecosystem, is constantly processing all that information, rewarding with profits the insurers (or policies) consumers like, and penalizing with losses the insurers (or policies) consumers dislike. The whole works is constantly learning. It’s regulated bottom-up, ultimately, by the choices of millions of consumers.
ObamaCare, by contrast, is regulated by politicians and bureaucrats. The system does not learn. It’s limited in principle from the get-go by the imaginations of government planners, and in practice by the less-than-ideal incentives of politics.
A final positive note (leaving unaddressed Jenkins’s persuasive main argument): the problems with the Affordable Care Act present an opportunity for actual reform.
But, lo, a seasonal miracle is occurring. As
liberals[“central planners” or “statists” is the right here—true liberals are those of us who believe in liberty, for consumers, insurers, and everybody else] are forced to take into account the actual, real people whom their schemes seem so characteristically ignorant of, a new chance for reform is opening up. Every piece in ObamaCare is being postponed or rewritten. The individual mandate is becoming a comatose letter if not a dead one. In the latest doomed innovation from the White House, insurers are being sandbagged by a new requirement to sell to older, sicker customers policies designed and priced for a healthier, under-30 crowd.
ObamaCare’s authors are being mugged by reality in real time, before our eyes. This is the most propitious development for health-care reform in decades.
Let’s hope he is right, and get free-market alternatives into the public awareness.