What Is The "Plan" To Replace Obamacare?
/The official prediction here is that Obamacare will inevitably fail because it is based on the flawed premise of attempting to compel people to behave contrary to their own economic self-interest. Of course, what we don't know is whether Obamacare will fail quickly or slowly. Medicare and Medicaid are failing slowly, and the only respect in which they ask people to behave against their own economic interest is by paying taxes. By contrast Obamacare asks people to go through enormous effort to purchase a hugely complicated product often priced at double or triple fair value. There are lots of ways for a citizen to take evasive action. So I'm predicting much quicker failure. In any event, it's not too early to start asking the next relevant question, namely, what next?
A frequent talking point of the Obama house media is that the opponents of Obamacare "have no plan" for what to replace it with. For example, from Think Progress on June 29 we have:
More than two years after Obamacare passed, a longtime Republican congressman admits that his party has “no” plan to replace it if they succeed in getting rid of the landmark health law.
Or this from Talking Points Memo on November 18:
More than four years after initiating an all-out war to block -- and then destroy -- what they derisively labeled "Obamacare," Republican leaders remain at a loss on how they'd replace the law if their dream of repealing it should ever come true.
The implicit idea here is that it is the legitimate, and indeed necessary, function of the federal government to solve all human problems with the infinite credit card. The government must have a plan! As phrased in an article I linked a few days ago by Jonathan Capehart in the Washington Post, nothing short of grand government solutions to every human problem can constitute "viable alternative proposals worthy of national debate."
Well, Jonathan, my response is that grand government solutions to every human problem are themselves inevitably so deficient that they are not "worthy of national debate." Due to fundamental limitations of human knowledge, any significant human problem can only be solved by a long-term process of trial and error involving millions of people acting in their own economic self interest, where knowledge is shared among the entire population through the process of market exchange. If you think you can cut off the ongoing trial and error process and have a few specially smart people impose the final solution to a major problem, well, you just don't understand the first thing about how the world works.
In fact our government does not have a "plan" for producing food, or buildings, or computers, or almost any of the things you find in stores. The processes for producing these things work fine. The government does have at least a partial "plan" for education; and that field is screwed up. It has a partial "plan" for financing residential housing; and that field is screwed up. And it has a "plan" in a big way for health care; that field is really screwed up. "Plans" are what Stalin did. They all failed.
So as an opponent of Obamacare, I say that reversion to the market exchange system is the plan, and it's the only plan. That system will never be perfect, but it will always be better than any grand scheme that the government comes up with.
Now we have to consider a few things that inevitably follow. First, the demise of Obamacare is going to be messy. What we had before Obamacare was an imperfect system badly hobbled by various sorts of government meddling, but it did solve a lot of problems (although of course far from all). It had developed over many decades through the spontaneous processes of the market, as modified of course by the government meddling. Now that system has been substantially destroyed. When Obamacare fails or is repealed, the pre-existing system will not magically reappear in one day. Something else will develop over time, but it may be years or decades. It is critically important that the government resist the temptation, the hubris, to think it can step in and solve all the problems in one day with a grand solution. Whatever that supposed grand solution is, it can't and won't work.
Second, if there's something useful the government might do it's to reduce or eliminate its other meddling in health care that's separate from Obamacare. For example, get rid of the rules that prevent sale of health insurance across state lines. Also, change the tax treatment that makes it appear advantageous for high income people to have routine health expenses paid with before tax dollars. Outside medical care, nobody thinks it makes any sense to pay for routine expenses with "insurance," and this is the one thing that has most driven the spiraling cost of medical care.
Finally, a word about pre-existing conditions. Sadly, it is not possible to insure against pre-existing medical conditions, any more than it is possible to insure your house against fire after it has already burned down. Part of the fundamental deception of Obamacare is its pretension that pre-existing conditions must be "covered" and then continuing to call the product that covers them "insurance." If the condition is pre-existing, then the product is not insurance; instead, it is income redistribution. You may think that income redistribution is a good idea generally, or you may think it's a good idea in this particular instance, but that doesn't make this product "insurance."
Once you realize that coverage for pre-existing conditions is income redistribution rather than insurance, you will look at this problem differently. For example, some people with pre-existing conditions are wealthy. Why is it the problem of taxpayers, or alternatively of healthy holders of healthcare policies, to "cover" the pre-existing conditions of people wealthier than themselves? Obamacare overall is a massive income redistribution scheme, but where the winners and losers are not the poor and the rich, but rather almost randomly selected politically favored and disfavored groups. The young and healthy are disfavored, even though most of them are relatively low on the income scale. Those with pre-existing conditions are favored, even though some of them are wealthy. If there is to be an income redistribution scheme, shouldn't it be only from the rich to the poor?
You have a million dollar house and you decide not to buy fire insurance to save a buck. One day, it burns down. You just lost the million dollars. At least as of now, the taxpayers aren't going to step in to help you. Now say you own the same million dollar house and you decline to buy health insurance to save a buck. One day, you find out you have a severe heart condition that will cost a million dollars to treat. At this point you can't buy health insurance. You are in the exact some position -- essentially, an uninsured loss has cost the value of the house. The fundamental question is, do you have to expend the value of that house before the taxpayers are on the hook for your treatment? If not, why should the health problem be treated different from the problem of the destruction of the property? Under Obamacare, you get to have your medical problem paid for by young healthy people at the bottom of the income scale who can't afford any house while you keep the million dollar house.
Here's my fundamental proposition: any government-orchestrated income redistribution should be a safety net only, should be on budget and in cash, and should go only to those who clearly demonstrate a need and for only so long as they demonstrate the need. So-called compulsory "insurance" for pre-existing conditions violates all of these principles.