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What, exactly, will ObamaCare do?

What could possible go wrong with ObamaCare?

What could possible go wrong with ObamaCare? (Click on image to enlarge.)

One of my nieces asked me a few weeks back how ObamaCare would be different from the status quo of health care in America.  Good question.   Certainly the status quo isn’t optimal.  But it’s still the best health care system on the planet.  And ObamaCare will make it much worse.  Here’s a partial answer to her question.

The status quo is this:

  1. If somebody needs medical attention, they can show up at the emergency room, the hospital is legally required to render assistance, and the cost is borne by the paying customers, and
  2. Low-income people can apply for and receive needs-based assistance from Medicaid or one of its state substitutes, e.g., TennCare.

I have some second-hand experience with health-care delivery to a low-income person.  A friend of mine did not have insurance to cover needed cancer treatments.  He received the treatments anyway, as needed, and now he pays a little bit each month toward his bills.  He will never completely pay off those bills, but he will do what he can.  He is thankful for the life-saving medical care he received.  He has since qualified for Medicare.

I’m not arguing for the status quo.  I believe that for most Americans, the dominance of the third-party payers (either the Government for those on Medicare or insurance companies for everybody else) has driven the cost of health care much higher (in fact, many times higher) than it should be.  There are two big reasons for this.

  1. First, there is zero cost competitiveness in the health-care delivery system.  If I wanted to look for a low-cost provider, I couldn’t do it.  The system wouldn’t let me.  When our son was one year old, we were told (falsely, it turns out) that he needed a test to confirm reflux disease, but they wouldn’t tell me what it would cost.  I needed to know, because insurance coverage for his condition was limited under a preexisting condition clause.  But they still wouldn’t tell me.  Is there anything else we buy where the supplier steadfastly refuses to tell us the cost before we buy it?  They get away with it because too few people have the slightest motivation to even ask, “What will it cost?”
  2. Second, the nearly universal customer disinterest in the cost of medical care means that most of us will buy as much of it as is offered.  I have myself purchased several unnecessary and overly expensive tests because (a) the tests were offered and (b) I had no incentive to pass them up.  I guarantee that I would not have had those tests had I been required to put down a 20% co-pay.  We must find a way to reinstate cost incentives/competition back into medical care, but still provide health care to people who truly cannot afford to pay.  By health care, I mean health care, not wealth insurance for people who choose to forego health insurance premiums in order to purchase beer, cigarettes, cable TV, cell phones, etc.

Now, back to your question.  Here are just a few of the ways that ObamaCare will be different from the status quo:

First, it will hasten our decline into financial insolvency.  We don’t have the money in the Federal treasury to pay for it.  We know it will cost hundreds of billions of additional dollars to implement, and it does nothing to reinstate cost incentives back into the system.  Let’s step away from health care and look at the big picture.  Every election cycle, one political party makes it a point to claim that an ever-growing number of Americans are entitledentitled, mind you — to a laundry list of free stuff.  Each election year, the number of “entitled” people grows larger and the list of free stuff gets longer.  And who is going to pay for all that “free” stuff?  It is to be paid for by an ever-smaller, ever more despised — despised, mind you — group of producers.  Can this continue?  Consult your own common sense.  If you need an example, see what’s been happening to Greece.

The ever-smaller group of producers couldn’t keep up with all of the Government spending even during the good economic times.  In the early to mid 2000s, the Government revenues were setting record levels, and we still had deficits.  During the more normal times, we have no hope of keeping up with spending.  And even less hope during the inevitable recessions that cycle around.  The cost of ObamaCare will only grow our debt even more, making our next recession even deeper and more painful.

As much as we would like to wipe away every human need in this country, there is simply not enough money to do it.  In the 1960s, it was estimated that if we “invested” 60 billion dollars into poverty programs, that poverty could be wiped out.  Trillions of dollars later, I could argue that the problem is worse now than then.  In fact, the Government instituted expensive programs that actually made poverty worse.  I have no reason to believe that ObamaCare won’t make health care worse than it is now.

Second, the implementation of ObamaCare will reinforce the belief that some people are “entitled” to the wealth created by others.  Without any incentives to limit their medical “needs,” they will demand more and more “free” services … “free” to them but not to those of us who will be paying the bill.  What is President Obama’s plan to deal with all the new demand for limitless health care?  Hire new doctors?  No.  His plan is to hire 10,000 new IRS agents.  (The CBO has said that the IRS would spend $0.5 billion to $1.0 billion to enforce the ObamaCare law.)

Third, it will create a new bureaucracy to administer all the rules.  The law itself was 1,000 – 2,400 pages (depending on who’s counting and what’s counted) of stuff that few, if any, members of Congress even bothered to read.  The final regulations will be tens of thousands of pages.  In fact, bureaucrats had generated 13,000 pages of new regulations as of July 2012, and they’re not done yet.  Who will be tasked with making sure all those regulations are complied with?  Just to simply stay out of jail, medical providers will be forced to hire additional compliance staff.  (Medical providers are already being forced to hire new staff to meet the ObamaCare electronic medical record requirements.)  Of course, the Government will have to hire their own army of enforcement officers.  After all, what good are regulations if they are not enforced?  And guess who will pay for all of that!

Fourth, you mentioned that you have yourself benefitted from the ObamaCare law, because it forced your parents to pay for the cost of your insurance for more years than would otherwise have been the case.  There was no net benefit here; there was only a shift in the costs from one person to another.  Plus, it only reinforced the idea that Government action could create “free” stuff for your benefit.  If you are getting “free” stuff, then others will line up to receive it as well.  I’m not criticizing you for taking advantage of the free stuff that you will eventually have to pay for — with interest payments and bureaucrat labor costs added on, you and perhaps your children will be forced to pay for it many times over — but I’m merely pointing out that “free” benefits aren’t really free at all.  You will pay dearly.

Fifth, ObamaCare drives up costs by mandating that all insurance coverage includes everything imaginable, even free contraceptives.  (The very idea that the guy down the street should be forced to pay for my contraceptives is foreign to me.)  The Government is deciding that you should have an unlimited list of free services, and they make it palatable for you by pretending that somebody else will actually pay for it.  Apply the same kind of thinking to your auto insurance policy.  Imagine that you could buy car insurance that paid for every imaginable automotive expense, including oil changes, new tires, minor repairs, major repairs, etc.  Would you buy it?  No way!  You would never buy that policy because it would be prohibitively expensive.  It would be great for the automotive repair shops, because you and all your friends would be lined up around the corner, demanding that the scratch on your door and the little rust spot on your fender be fixed, but this would drive up the cost of insurance so high, you would not buy it (unless you were forced to do so by law).  A free person acting in a free market would almost always choose a reasonably-priced automobile insurance policy to cover only the catastrophic losses, and accept personal responsibility to pay for everything else.  Most people would agree to pay for such nonsense only if they were forced to do so under threat of incarceration.  It is just as true for health insurance; the only way they can force this system upon us is to (a) lie to us by saying that “somebody else” is actually paying for it, and (b) force us to pay for it under threat of incarceration.  That’s what all those new IRS agents are all about.

Sixth, ObamaCare forces people — employees are people, too — to purchase abortions and contraceptives, a clear violation of conscience for many Americans.  People shouldn’t have to choose between closing their businesses (i.e., firing their employees) and violating their consciences.

Seventh, when this is all over, it will create a gigantic transfer of wealth to the abortion industry.  At $450 per abortion, the industry generates revenues of roughly $550 million (not including premiums for late-term abortions).  I’m convinced that ObamaCare will be manipulated to force that number up to more than $7 billion. (Link here for an explanation.)  Keep in mind that the abortion industry sells abortions at $450 apiece, not $5,472 apiece (the cost of a similar non-abortive procedure), because abortions, unlike every other medical procedure, are paid for directly by the consumer and thus are subject to the normal pressures of consumer economics.  When cost competition in the abortion market is gone, prices will rise accordingly.

Eighth, the cost burden to employers will incentivize them to hire fewer people, thus increasing the unemployment rate.  Who pays for that?  The greatest burden will fall on minorities and young people, because they suffer the greatest rates of unemployment.  But we will all pay a price, because the fewer people working, the more the rest of us have to pay to keep the ship of state afloat.  Worse than the financial cost of unemployment is the human cost: unrealized personal growth and development.  People who are not working lose the opportunity to learn, grow, and increase their value to some future employer.  They are stuck.

Ninth, by decoupling bad behavior from its costs, you only incentivize more bad behavior.  There will never be any shortage of human needs around us.  Some are due to circumstances beyond people’s control, but most are the result of bad behavior.  In this case, bad behavior can include laziness … simply deciding not to work and letting somebody else pay the freight.  When you make it easier for people to leave the ranks of the producers and join the ranks of the “entitled,” you can be sure that more of them will do it.  We all pay for that.  We all lose.  Such people lose their self-respect.  Their children learn dependency instead of self-sufficiency.  We lose their participation in the economy.  Our culture degrades.  We see the victims of degraded culture all around us.

Bad behavior also includes health-destroying activities like drug abuse, overeating, drinking, smoking, etc.  If we really wanted to improve the health of American citizens, perhaps we should spend the extra money (the trillions of dollars of money we don’t have) on programs designed to improve moral fitness.

Anyway, that’s all I have for now, just off the top of my head.  I suspect I have just scratched the surface.

Your loving but fearful uncle,

Fletcher

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