Sunday, March 21, 2010

Making History the Wrong Way

By almost all accounts, the health care bill will be law by tonight. Whether the reconciliation fixes are enacted is then almost inconsequential. This will, indeed, be an historic event.

There is much to like in this bill, but on balance its negatives substantially outweigh its positives. In the end, I would have preferred that it not pass for the following reasons:
  1. It transfers a huge amount of wealth from the poorest Americans--the young--to the richest Americans--the old. If the bill had done community rating by age bracket, I'd have been OK with the mandatory coverage provisions. As it is, we'll be taking money from people who need to be productive, people who have small children, and giving it to the unproductive.

  2. It is the mother of all unfunded mandates to the states, via the increased Medicaid burdens.

  3. It assumes that insurance is the problem, rather than health care. I fear that the ultimate result of that will be to make the non-exchange insurance markets increasingly unaffordable, forcing more employers to dump their employees into the exchange markets.

  4. By pushing more people into the exchange markets and more people into Medicaid, we have set the table for government-mandated price controls. This always ends with shortages.

  5. We have added yet another huge and substantially underfunded entitlement (cf. fantasy Medicare cuts, the doc fix, etc.) that further increases the size and power of government, and further degrades the fiscal stability of the United States. (Maybe this is good news; the sooner the inevitable crisis occurs, the more likely it is that the US will make the reforms necessary to ensure long-term stability, and the less likely it is that its power will be diminished.)

  6. It increases the insulation of the individual from exposure to the real cost of his or her health care, rather than increasing that exposure to the point where real market forces can go to work.
I am enthusiastic about the need for guaranteed enrollment. I can accept that the only cost-effective way to produce guaranteed enrollment is to have an individual mandate. I can even grudgingly admit that a system with some (age-adjusted) community rating is a fairer system than one where each individual forced to pay for his own simple actuarial risk. If those were the only things in this bill, I would wholeheartedly support it.

But that is just the tip of the iceberg on this bill. It is so sweeping, so complex, so ultimately incoherent, that it just isn't worth it.

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