Strings Attached: Obamacare and the Cost of “Free”
EspañolObamacare is quickly fading from the public consciousness, reports Bloomberg in a recent article. The Bloomberg story notes that Republicans have shifted their focus away from Obamacare in their campaign ads for the upcoming elections. The initial outrage over the issue has clearly waned, as the shock of its adoption and subsequent failures in its implementation fade into distant memories. Nevertheless, the underlying issues that once inflamed the nation have not gone away in the slightest.
The “individual mandate” that all US citizens and legal residents purchase health insurance persists, despite a challenge that made it all the way to the Supreme Court in 2012. The court’s decision marked the end of the era when citizens could choose for themselves whether or not to purchase health insurance.
There are several reasons why this individual is problematic. There are, of course, the practical reasons regarding adverse selection in insurance markets and the very low basic understanding among the public of how the insurance will work. Then there are the larger issues, such as freedom of choice and the proper role of the state.
These practical and moral issues, however, are not mutually exclusive. When states limit choice in nearly anything ranging from occupational licensing to land use, someone loses out, either directly or indirectly. When a city limits how tall buildings can be in a particular area, developers who would otherwise build taller buildings will lose. Worse still, low-income renters are also adversely affected with increased housing costs as a result of these sorts of regulations.
In the case of Obamacare, those who would otherwise not purchase insurance lose out directly, facing immediate, higher costs. In addition, by mandating that younger, healthier, poorer citizens pay for coverage, the program is also indirectly redistributing a portion of their earnings back to the older, wealthier generation that is more likely to use their benefits.
And things only get worse from there.
For example, the law broadened the scope of health products that insurance must cover. Individuals no longer have the option of choosing a plan that only has the things they feel they need, with lower associated costs.
Why do all people need prescription drug coverage, rehabilitative services, or maternity care? The government seems to think it would be nice if everyone had access to these services. The question is, however, should we all be forced to pay for services that we do not need or plan to use, especially when the only alternative is to forgo insurance altogether and be forced to pay a fine?
Even the worst off in society must take on this burden, the ones constantly forced to make choices between life’s basic necessities. Is it fair to force them to pay for services that they may not need, or, equally likely, do not understand?
While it’s true that there are subsidies attached to Obamacare to help cover this burden, lowering the cost of insurance for those who cannot afford it, they come with a host of problems of their own.
There are always strings attached to such programs, even those that hand out benefits to the poor. These people may receive cash benefits directly, but they must trade in their time and the mental burden of searching for an insurance plan, signing up correctly, paying their premiums, receiving the offsetting subsidies, and other related tasks.
While it may seem trivial to some, these are legitimate problems for the scores of people who lack easy access to the internet, the 7.7 percent of the country without a checking or savings account, and the large number that lack basic computer literacy, complicating the enrollment process. The fact remains that a sizable portion of the population is being forced to pay a high cost in time and effort, that can be hugely burdensome, despite the net cash benefit.
Even government programs that come at “no cost” to the individual are not free. Beyond time and effort, there is the lack of choice to consider, as well as other distortions. When governments attempt to give things away “for free” — or at a highly subsidized rate — problems will inevitably arise.
Such is the case in Venezuela and their shortage programs, in Canada and their long waiting periods for surgery, in Washington, DC and their affordable housing programs, and so on. Obamacare is one more in a long line of public programs that all face the same constraints. As Milton Friedman would say, there is no such thing as a free lunch, and free health care is no different.