ObamaCare Is Coercion, Period (2013 Dec)

by Barry A. Liebling

In October 2013 parts of ObamaCare officially went into effect. The public relations disaster was spectacular. Two major failures occurred at the same time, and even the leftist news media could not effectively make excuses that were convincing to most citizens. The first fiasco was the ObamaCare website itself which, although three years in the making with a huge monetary outlay, was non-functional. The second was the cancellation of millions of healthcare insurance policies where gulled Americans were informed that their contract did not comply with the rules set forth by the Affordable Care Act and that they would have to buy more expensive policies. This was a rude surprise to many naive citizens since President Obama touted his signature legislation with the reassurance that “if you like you healthcare insurance you can keep it, period.”

ObamaCare boosters admit that the rollout was a debacle. But they steadfastly insist that the “glitches” in the law’s execution can be fixed, and when the repairs are done Americans will benefit and appreciate it. The progressive theme is that until the Affordable Care Act the healthcare system was dysfunctional largely because insurance companies had too much freedom. These companies were allowed to do anything they wished, the price of policies was going up every year, and the government did not step in forcefully enough to set things right.

In fact, characterizing healthcare insurance before ObamaCare as free market is either ignorant or a deliberate attempt at deception. The legacy system is a classic example of how government coercion taints what should be decided by private individuals.

Start with the fact that healthcare insurance is handled differently in each state. Every state has a healthcare insurance commission that controls which companies are allowed to sell policies, what benefits the policies must have, and how much the companies can charge their customers.

If a provider wants to do business in a particular state it has to petition the insurance commission. State government officials have the power to decide whether the state “needs” another healthcare vendor and if the vendor seeking entrance will meet the state’s requirements. Notice that the few insurance companies that operate in any state are likely to argue that there are enough rivals trying to get business already – adding another one would only lead to “wasteful competition.”

Insurance companies in the legacy system are not free to offer benefits at will. The packages must be approved by the state commission. In every state there are pressure groups that lobby vigorously for mandates. For example, chiropractors and mental health professionals (and plenty of other rent seekers) plead that all policies be required to include reimbursement for their services. This gives them more customers than they would have otherwise and an income stream that is partially dependent on government coercion. The insurance companies go along with the mandates because it means they will collect higher premiums. The losers in the deal are policy holders who are forced to pay for benefits they do not want and would not buy voluntarily.

The management of a healthcare insurance company has to obtain permission from the state government before it can raise its rates. The negotiation is an exercise in begging – where the company hauls out evidence that it “really needs” the extra money to continue operating effectively. Their pleading is more convincing to state bosses if they can demonstrate that their costs are going up. So they have a perverse incentive to avoid running their business economically. Of course, government officials typically do not categorically say no to these companies since there is a risk that the firm will decide to pull out of the state all together.

So in the pre-ObamaCare world there is a corrupt symbiosis between insurance companies and state governments. Each is helping the other at the expense of individuals who could get a better, less expensive policy for themselves if the game was not rigged by a public-private partnership. Notice that while the insurance companies are enablers and participants, the government is the prime malefactor. It is the government that has the legal use of force. It can make life difficult for any business, can confiscate its assets, and can close it down at will. It is the government that, if it did the right thing, would refrain from interfering in the healthcare market.

If you understand and appreciate the concept of individual rights it is obvious that the way to improve the healthcare system is to reduce the role of government in regulating insurance. But progressive true-believers push for the exact opposite approach and advocate the use of gasoline to put out a fire. The Affordable Care Act represents a giant leap in the wrong direction. It switches masters from local state governments that are coercive to a tyrannical federal government that is even more so.

Consider how ObamaCare changes the landscape. Where previously there were 50 state-run health insurance systems (none free market but some better than others), ObamaCare ushers in the authoritarian hand of the feds on a new scale. Where previously an individual had the option to refrain from participating in the healthcare insurance system, ObamaCare mandates by law that everyone buy insurance. Now every citizen is trapped, and it is more difficult than ever for the government to pretend it is not bossing everyone around.

The legacy system required insurance policies to include benefits that people would not buy if they had a choice, but the Affordable Care Act takes this to a new obnoxious level – larding up policies with a host of “required benefits” (such as maternity coverage for men) that exist to funnel money from the productive to those whom the federal government favors. Note that ObamaCare bullies insist that policies that are not stuffed with extra benefits are “sub-par” and should legally be abolished.

The real solution to the healthcare insurance problem is conceptually simple but politically difficult. Unfortunately, many Americans are mesmerized by the idea of a strong, coercive government. Both federal and state mandates should be eliminated. Let insurance companies construct policies with any benefits and prices they like. And let insurance buyers shop across state lines for the best deals they can get. There will be a plethora of suppliers and plans to choose from. Government has an important role in a genuine free market – make sure that force and fraud (especially from the government) are strictly proscribed. If enough people understand the real stakes government coercion will not be tolerated, period.

*** See other entries at AlertMindPublishing.com in “Monthly Columns.” ***

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