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Wednesday, November 11, 2009

America’s Munich: The House Medical-Care Bill

A Total Unmitigated Disaster for the Economy and for Freedom

In the wake of the euphoria that passed through Great Britain after Prime Minister Neville Chamberlain displayed the Munich Agreement and declared “peace in our time,” Winston Churchill had a different view. The agreement between France, Britain, and Hitler’s Germany, Churchill told Parliament, was a “total and unmitigated disaster.”

I thought about this exchange after seeing the euphoric comments in the media following passage of the House bill late Saturday night. Instead of “peace in our time,” we have something akin to “universal coverage in our time,” which has been the dream of leftists and left-liberals since the Great Depression. Whatever they might call it, I call it an unmitigated disaster.

There is nothing good to say about a new law that is going to raise taxes to confiscatory levels and will place a huge financial burden on people at a time when the government is actively going to war against American businesses. We are looking at totally politicized medical care in which every decision made by doctors and patients potentially can be nationalized and thrown into the maw of “public debate.”

This is a bill that relies on coercion and criminal penalties to force people to do what they never would do on their own. This is a bill that proclaims that bankruptcies due to high medical bills will be a thing of the past, but the financial burden it places on each family will increase bankruptcies as people will find it harder to pay their other bills.

Courtesy of the Washington Post (which supports this legislation) are a few items that are sure to turn into huge costs:

The complex package would affect virtually every American and fundamentally alter vast swaths of the health insurance industry. Starting next year, private insurers could no longer deny anyone coverage based on preexisting conditions, place lifetime limits on coverage or abandon people when they become ill. Insurers would be required to disclose and justify proposed premium increases to regulators, and could not remove adult children younger than 27 from their parents’ family policies.

Like all socialistic policies, this bill contains “goals and mandates” that will become law in a few years. Like all socialistic policies, this bill is heavily backloaded with costs that will become oppressive not just for the wealthiest among us, but also others who will be inflated into higher tax brackets. (The income thresholds for the new taxes are not indexed for inflation.)

Furthermore, the bill has a stealth goal of driving private insurers out of business by overwhelming them with new costs.” To put it another way, Americans are going to have “single payer” coverage whether they want it or not.

I need to stress the point that I do not approve of our current system, which already is heavily regulated and is costlier and less-efficient than a free market in medical care would be. (Whenever we see true free markets at work, the costs for products always fall in real terms over time. Perversely, so-called economists like Paul Krugman continually claim that medical costs are rising because of the introduction of new medical capital and drugs, which is like claiming that the introduction of the microchip has driven up computer costs. That does not compute.)

For all of the talk of cutting costs and saving money, this bill will do the opposite. It flies in the face of everything we know to be true in economic analysis, and it flies in the face of natural law itself.

No matter how many people are thrown into prison for not obeying the new congressional mandates, this new policy will not have the supposed desired effect of making medical care more affordable and improving -quality. We are about to learn that hard lesson to our sorrow, but we will learn it.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.