Why Obamacare Is Probably Not Going to Work

by Aug 1, 2013Health & Vaccines17 comments

"Health care reform, President Obama’s signature policy achievement," Paul Krugman assures us, "is probably going to work."

“Health care reform, President Obama’s signature policy achievement,” Paul Krugman assures us, “is probably going to work.” Why? Because

the Affordable Care Act is based on three simple ideas. First, all Americans should have access to affordable insurance, even if they have pre-existing medical problems. Second, people should be induced or required to buy insurance even if they’re currently healthy, so that the risk pool remains reasonably favorable. Third, to prevent the insurance “mandate” from being too onerous, there should be subsidies to hold premiums down as a share of income.

So, is it “probably going to work”? No, it isn’t. Why not? Because Obamacare is based on three idiotic ideas. First, bumbling bureaucrats got the great idea to force insurance providers to provide insurance to everybody and at the same rates, even if they already have a chronic condition requiring a lot of medical care, which would naturally just drive premiums up even higher for everyone in addition to creating a disincentive for young, healthy individuals to buy an insurance policy unless and until they actually got sick, thus driving premiums higher still. Second, to solve the problem of increasing premiums created by this first policy, Washington central planners decided that they should do away with the Constitution and individual liberty and force young, healthy people (many of whom are healthy because they choose to eat right and exercise) to buy an insurance policy against their will and contrary to their own financial interests under threat of penalty in order to subsidize the costs of health care of those who require a lot of it (many of whom are sick because they choose an unhealthy lifestyle). Third, to offer a carrot in addition to the stick to get young, healthy people who have low incomes to subsidize the costs of health care for older, less healthy people who generally have higher incomes, these same brilliant bureaucrats got the idea just to use force to expropriate wealth from those higher income folks in order to redistribute it back to those younger people with lower incomes.

Krugman’s description of the ideas behind Obamacare as “simple” is quite accurate, if by “simple” we take him to mean

4 a : lacking in knowledge or expertise <a simple amateur of the arts> b (1) :stupid (2) : mentally retarded c : not socially or culturally sophisticated :naivealso:credulous

It won’t work, because you can’t legislate away the free market without unintended negative consequences, as each of the government’s “solutions” above for the problems it created with its own legislation in the first place illustrate. Government bureaucrats seeking to use force and coercion to centrally plan the economy do not know better than the free market, in which individuals engage in voluntary exchange for mutual benefit, how to efficiently direct scarce resources towards productive ends. They can’t, since absent the free market’s pricing system, their decisions about how to direct resources are at best arbitrary and at worst a product not of good intentions but of corruption and the desire to use political influence for the benefit of one class of special interests at the expense of everyone else in society.

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About Jeremy R. Hammond

About Jeremy R. Hammond

I am an independent journalist, political analyst, publisher and editor of Foreign Policy Journal, book author, and writing coach.

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17 Comments

  1. jjs

    You sir are spouting nonsense. Everybody will need healthcare eventually, and thus insurance. There is no reason you shouldn’t pay for it all along just like car insurance. That’s the way insurance inherently works. It has nothing to do with policymakers decisions. And for those young healthy people who have accidents, in the car, playing sports, etc. What about that? Nobody knows when disease or injury strikes. In order for the insurance companies to have a viable business model, everybody has to pay something in, for the someday that they will need it.

    Reply
    • John Gardner

      If hedging against risk is as good an idea as you make it out to be, then why do you need government to force people to make that choice?

      On a side note, it’s not the job of consumers to make insurance companies’ business models viable.

      Reply
      • Jeremy R. Hammond

        “If hedging against risk is as good an idea as you make it out to be, then why do you need government to force people to make that choice?”

        Exactly.

      • dalibertarian

        “On a side note, it’s not the job of consumers to make insurance companies’ business models viable.”

        Exactly.

    • Jeremy R. Hammond

      Let’s see who’s spouting nonsense.

      “Everybody will need healthcare eventually, and thus insurance.”

      Non sequitur. It is possible to receive health care without insurance, such as paying costs out of pocket.

      “There is no reason you shouldn’t pay for it all along just like car insurance.”

      False premise. I can think of plenty of reasons individuals shouldn’t be forced against their will to purchase a health insurance policy. It infringes on individual liberty, for one. The individual mandate is a violation of the Constitution, for another. There is no parallel as the one you are trying to draw to car insurance. The parallel would be forcing individuals to buy car insurance even if they didn’t own a car.

      “That’s the way insurance inherently works.”

      No, it isn’t. The way insurance inherently works is that you voluntarily pay into a pool in order to spread the risk of unexpected future costs for whatever it is being insured. There is nothing inherent about insurance that says everybody must buy it, or that insurers must provide it to everybody, or that it must cost the same for everybody. If this was how insurance “inherently” worked, it wouldn’t require idiotic government bureaucrats making laws to force everyone to do it that way. Obviously.

      “It has nothing to do with policymakers decisions.”

      Of course it does. It has everything to do with the decisions of government bureaucrats. See above post and above comments.

      “And for those young healthy people who have accidents, in the car, playing sports, etc. What about that? Nobody knows when disease or injury strikes.”

      Yes. That is why individuals must carefully weigh the benefits and drawbacks of buying insurance.

      “In order for the insurance companies to have a viable business model, everybody has to pay something in, for the someday that they will need it.”

      Non sequitur. This is obviously false, since insurance companies have been working on viable business models for a long time before the individual mandate was made into law. To have a viable business model, insurance companies just need to charge premiums to their customers who wish to receive the benefits. Obviously, anyone not wishing to receive the benefits would need not pay in. And that’s a perfectly good business model.

      Reply
      • dalibertarian

        “The parallel would be forcing individuals to buy car insurance even if they didn’t own a car.”

        This is the only point I disagree with. The parallel is forcing individuals to buy car insurance even if they do not want to. Unfortunately as far as I know you are mandated to buy car insurance to be licensed in each state, and you have to be licensed to use a car, so if you own and use a car you have to have car insurance.

        But you said “Yes. That is why individuals must carefully weigh the benefits and drawbacks of buying insurance.” The only reason I could think for having different views on these two types of insurance is that car insurance covers costs for damages that one can cause to others whereas health insurance only covers costs that one can cause to oneself (or congenital defects). Since someone without car insurance may not be able to cover the damages they cause to someone else, the state requires everyone to purchase car insurance. But I would say to that argument your comment still applies – people need to carefully weigh the benefits and drawbacks of buying insurance, or they may be straddled with debt when they cause an accident with expensive damages they have to pay themselves. Still no need for state intervention.

        I’m sure you framed your answer keeping that in mind, but I have two questions for you:

        1) Do you think mandating car insurance is ethical for the state to do just because it is responsible for licensing?
        2) Do you think the state should be responsible for providing roads and licensing for using those roads?

        BTW I’m sure I’m just reading way too much into your comment and you probably didn’t even think that much about the analogy you used.

      • John Gardner

        “Unfortunately as far as I know you are mandated to buy car insurance to be licensed in each state, and you have to be licensed to use a car, so if you own and use a car you have to have car insurance.”

        I don’t know every state’s rules, but I know a number of states simply require you prove you have the financial ability to cover damage you might do to another party in an accident. Whether you achieve that through purchasing insurance or posting a bond with the State is up to the individual. In fact, New Hampshire does not force you to purchase insurance or prove financial fitness at all.

      • dalibertarian

        Ya I live in California so it isn’t surprising to me that other states have more relaxed regulations, it’s something I normally assume haha. Thanks for informing me of this.

      • dalibertarian

        Stop you’re making me feel stupid now (jk). I disagree with these mandates all the same (and with the state controlling licensing and building of roads), but at least they’re more reasonable than the ones for health insurance. I’m surprised though to learn that my commie State is actually offering options for its coercion.

      • Jeremy R. Hammond

        I did not intend my comment as an argument in favor of state mandated car insurance, or even drivers’ licenses, for that matter. It wasn’t me drawing the analogy, I was just showing how the analogy provided doesn’t apply. I also think there is no need for state intervention in this area, but there is an important difference between the individual mandate under Obamacare and the requirement to have car insurance. Again, the parallel would be like requiring even those who do not drive to buy car insurance, since the mandate forces young, healthy people who don’t require health care to buy insurance. To apply jjs’s argument above to the parallel situation, it would be like requiring everyone to buy car insurance even if they don’t own a car on the basis that everyone will have to drive a car at some point in their lives sometime down the road. You also point out another important difference, which is that car insurance is intended to protect others in the event you cause an accident and can’t afford to pay damages to them, whereas health insurance is intended to protect yourself. Big difference there, too.

      • dalibertarian

        Thank you for your reply. Sorry I drew so many implications from your comment that were not intended by it. I do that sometimes. I also understand your analogy now, and see that I was wrong.

  2. dalibertarian

    I don’t think you need to have probably in your headline. With the track record of central planning working there is no reason it should be “probably not going to work” instead of “not going to work.”

    Reply
    • Jeremy R. Hammond

      I quite agree with you. I only included the “probably” as slightly tongue-in-cheek, since Krugman was hailing that it “probably” will work! I am certain it will not.

      Reply
      • dalibertarian

        Haha I didn’t think of that. I can’t believe Krugman, with all his consistency in supporting intervention (even after it fails), thinks it will just “probably” work. He seems like the guy who would think it “will” work until it doesn’t and then just say some crap about it not working because it isn’t interventionist enough.

      • Jeremy R. Hammond

        Well, he’s just setting it up so that when Obamacare fails, he can find some way to blame it on the free market. Then when people criticize him because he said it would work, he’ll just say, “No, I said it would ‘probably’ work, but I allowed that it might not because those stupid Republicans” or whatever lame reason he will come up with that has nothing to do with the real reasons it failed. This is what he does.

      • dalibertarian

        The “free” market pffft. The only thing more sad than Krugman is that people think the US has a free market.

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