DeMuth on Obamacare
By Alberto Mingardi
Chris DeMuth has an excellent article on Obamacare in the last issue of The Weekly Standard. DeMuth points out that the new American mandatory insurance system has shortcomings that are not necessarily related to the idea of mandatory insurance – as instead with the bureaucratic superfetations of such a system engendered by the way the US Administration has planned it.
DeMuth argues that liberals should dislike Obamacare as much as conservatives do. Obamacare, according to DeMuth, creates an extensive and arbitrary bureaucracy, which considers “the dignity and autonomy of the individual–central liberal concerns” as “secondary matters” and doesn’t score well insofar as fairness is concerned.
He maintains that:
Obamacare does (…) appear to include one form of systematic redistribution–from young adults to older people. This is regressive on the whole, because older people are wealthier, and it piles onto the already enormous intergenerational transfers of Medicare and Social Security. Taken together, these transfers are demographically unsustainable in the near term and bound to collapse.
The article can be read here. De Muth provides some interesting information also on Obamacare’s legislative history:
The penultimate version of the Affordable Care Act established a government insurance carrier as an optional alternative to private insurance. Proponents calculated (privately, in the Democratic caucuses) that commercial firms, bound to actuarial and financial standards, would be unable to comply with the statute’s requirements without widespread policy cancellations and dramatic rate increases, and that the public would blame the firms rather than the government. The government carrier would then step in to save the day from the greedy private insurers, thereby bringing “single-payer” medicine to the United States that could not be enacted forthrightly.
But in the legislative end-game, Senator Joe Lieberman–a thoroughgoing liberal in domestic policy although a neoconservative in foreign policy–held the decisive vote, and he insisted that the government insurance feature be dropped. But for that step, Obamacare’s troubles would today be leading smoothly to the expansion of direct federal health insurance to pick up millions of canceled policies and undercut rate increases on terms no private firm could match.
In a digression over Hayek and healthcare, DeMuth fairly summarises the attitude of the great Austrian on healthcare and the welfare state:
Friedrich Hayek explained more than 50 years ago (in The Constitution of Liberty) that the welfare state does not require, and should renounce, exclusive monopoly provision by the government itself. Hayek was a classical liberal –he rejected both “libertarian” and “conservative”–but his approach to health care for the poor, retirees, and those in chronic ill health was strikingly like that of today’s conservative reformers. Guarantee equal, continuous access through financial support and legal rules (and if necessary even an individual insurance mandate!)– but avoid the stultifying effects of government monopoly, and let recipients reap the same benefits of competitive supply, variety, and freedom of entry and experimentation that prevail in the rest of the economy.
Obamacare is not an outright government monopoly, but it achieves the same dreary results through standardization and regimentation. It establishes a profusion of regulatory controls over prices, entry, and services in insurance and medical care, policies whose systematic anticonsumer perversities have been documented by generations of economists of all political persuasions.
This reminded me of a “prophecy” in Hayek’s The Constitution of Liberty:
though socialism has been generally abandoned as a goal to be deliberately striven for, it is by no means certain that we shall not still establish it, albeit unintentionally. The reformers who confine themselves to whatever methods appear to be the most effective for their particular purposes and pay no attention to what is necessary to preserve an effective market mechanism are likely to be led to impose more and more social control over economic decisions (though private property may be preserved in name) until we get that very system of central planning which few now consciously wish to see established.