Archive for obamacare

Roy Cordato Explains Obamacare

6839833657_c7b0ecf372_bRoy Cordato has written an insightful piece on Obamacare at the Carolina Journaldemonstrating that the “right” to health care granted by Obamacare is really a “legal obligation” to purchase health care insurance:

For decades pundits have been debating whether people have a “right” to health care. The notion of rights that is typically invoked is distinct from the question of whether people have a right to enter the market for health care services and engage in exchange activity in order to obtain health care.

“Rights,” in the view of the president and those who believe in a specific “right to health care,” imply a guarantee that the right holder can obtain health care services either without charge or at prices that are “affordable,” hence the official title of Obamacare: the Affordable Care Act. (See this previous “Economics & Environment Update” newsletter for a more detailed discussion of different conceptions of rights.)

This notion of rights therefore implies an obligation on the part of others. There are two possibilities. The first, typically not invoked, is that health care providers have an obligation either to provide their services for free or to adjust the prices of their services according to the incomes of their clients. There is a reason why this kind of obligation is not advocated by anyone, although Medicaid reimbursement schemes do attempt to invoke this approach to a limited extent. It is a form of price control that would dramatically curtail the supply of heath care services, as occurs in the Medicaid system.

The other, and more typical, scenario is that the obligation to sustain this right falls on taxpayers. That is, the cost of health care to the health care rights holder is made affordable through taxpayer subsidies. This is the single-payer model in which the government, within limits defined by the government, picks up everyone’s health care tab.

So how does Obamacre fit into this picture? The fact is, it doesn’t. The centerpiece of Obamacare is not a universal right to health care but a universal obligation to obtain health insurance. Because of this, it does not recognize or grant rights of any kind but denies them while mischaracterizing obligations as rights.

What distinguishes all rights from obligations is the ability to refuse to exercise the right. If someone is not legally allowed to refrain from engaging in an activity, then there is no right, only an obligation.

Allegedly Obamacare guarantees a right to access health care by guaranteeing a right to obtain health insurance, either by purchasing a plan through the Obamacare exchanges, through an employer plan, or, if income-qualified, through Medicaid. But since it is illegal to refuse to exercise this so-called right, it is not a right at all but a legal obligation.

It cannot be both. The right to say no is an implication of the right to say yes.

In examining Obamacare’s so-called right to health insurance, the farce of using the language of rights can be exposed easily. This point is made quite obvious with the individual mandate, which imposes a fine on any person who does not purchase a government-approved health insurance policy. Obamacare guarantees a right to health insurance only in the way that the draft guarantees a right to serve in the military.

Read the full article. 

Image credit. 

What’s Next for Obamacare in the Courts?

CaduceusJacob Huebert, author of Libertarianism Today, summarizes the current situation:

Two federal appeals courts issued conflicting decisions about the future of ObamaCare on Tuesday.

In one, the Halbig v. Burwell decision, the U.S. Court of Appeals for the D.C. Circuit ruled that the Affordable Care Act means what it says: ObamaCare insurance subsidies are only available in states that have established their own health-insurance exchanges, and an IRS rule that tried to make these subsidies available in all states – even those, such as Illinois, which did not create their own insurance exchanges – is invalid.

In the other case, King v. Burwell, the U.S. Court of Appeals for the Fourth Circuit, which sits in Virginia, reached the opposite conclusion, ruling that Congress intended to make subsidies available in all states – even though that’s not what the law says – and therefore the IRS rule could stand.

The decisions are important because, as Newsweek has put it, if the IRS rule is ultimately struck down, the entire ObamaCare system “could come crashing down in the 36 states that have opted not to run their own exchanges.”

But what happens now, with conflicting decisions from different courts?

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Per Bylund on Obamacare in the ‘Wall Street Journal’

800px-Barack_Obama_reacts_to_the_passing_of_Healthcare_billPer Bylund’s column “What Sweden Can Teach Us About ObamaCare” is in today’s WSJ:

President Obama has declared the Affordable Care Act a success—a reform that is “here to stay.” The question remains, however: What should we expect to come out of it, and do we want the effects to stay? If the experiences of Sweden and other countries with universal health care are any indication, patients will soon start to see very long wait times and difficulty getting access to care.

Sweden is praised as a rare example of a socialist country that works. A closer look at its health-care system tells a different story.

The overall quality of medical services delivered by Sweden’s universal public health care consistently ranks among the world’s very best. That quality can be achieved by regulating treatments to follow specific diagnoses as well as by standardizing procedures. If ObamaCare regulations do this, the quality of American health care may not go down either.

Sweden’s problem is access to care. According to the Euro Health Consumer Index 2013, Swedish patients suffer from inordinately long wait times to get an appointment with a doctor, specialist treatment or even emergency care. Wait times are Europe’s longest, and Swedes dependent on the public-health system have to wait months or even years for certain procedures, or are denied treatment.

For example, Sweden’s National Board of Health and Welfare reports that as of 2013, the average wait time (from referral to start of treatment) for “intermediary and high risk” prostate cancer is 220 days. In the case of lung cancer, the wait between an appointment with a specialist and a treatment decision is 37 days.

This waiting is what economists call rationing—the delay or even failure to provide care due to government budgetary decisions. So the number of people seeking care far outweighs the capabilities of providers, translating into insurance in name but not in practice. This is likely to be a result of ObamaCare as well.

Rationing is an obvious effect of economic planning in place of free-market competition. Free markets allow companies and entrepreneurs to respond to demand by offering people what they want and need at a better price. Effective and affordable health care comes from decentralized innovation and risk-taking as well as freedom in pricing and product development. The Affordable Care Act does the opposite by centralizing health care, minimizing or prohibiting differentiation in pricing and offerings, and mandating consumers to purchase insurance. It effectively overrides the market and the signals it sends about supply and demand.

Continue reading at WSJ.

See also, Bylund’s Mises Daily articles on health care and Sweden’s economic system:

The Market is Taking Over Sweden’s Health Care

How Government Cutbacks Ended Sweden’s Great Depression

Bylund on Resistance Radio

I’ll be on Resistance Radio 98.9FM WGUF at around 12:15 EST discussing Obamacare and Sweden’s health care. My take on the former is that it is much like the latter used to be, but that as America is going for public health care Sweden is going for markets.

Obamacare Delay: Good Politics, Bad Economics

Ace of heartsD.W. MacKenzie writes in today’s Mises Daily:

The Obama administration has in the same week admitted that the burdens that the ACA places on small businesses are onerous. The costs of the ACA will therefore cause smaller employers to demand fewer workers.

Economically speaking, there is not a real difference between workers supplying fewer hours of labor and employers demanding fewer hours of labor. In terms of the production of real wealth fewer hours of labor used in industry translates into reduced overall production. Politically, however, there is a very real difference between workers wishing to supply more hours, and employers demanding more hours.

Richard Posner’s Conversion to Keynesianism

Gary North writes:

In September of 2009, Judge Richard Posner, one of the creators of the sub-discipline known as law and economics, announced his conversion, at age 70, to Keynesianism. He had been a Chicago School economics advocate for over 40 years.  His confession appears here.

He had long been an advocate of property rights. Recently, he voted with the majority to deny the University of Notre Dame an exemption from ObamaCare’s requirement that employers provide health insurance that provides free condoms.  A report is here.

He wrote: “If the government is entitled to require that female contraceptives be provided to women free of charge, we have trouble understanding how signing the form that declares Notre Dame’s authorized refusal to pay for contraceptives for its students or staff, and mailing the authorization document to those (insurance) companies, which under federal law are obligated to pick up the tab, could be thought to ‘trigger’ the provision of female contraceptives.”

The key words are these: “If the government is entitled. . . .” That is precisely the legal issue. He said that it is so entitled. It is clear that Posner’s conversion to Keynesianism is complete.

Bylund on Liberty Talk Radio

I’ll be on Liberty Talk Radio, KFAQ-AM in Tulsa, OK, tonight (2/22) discussing the similarities between the Affordable Care Act and Sweden’s public health care system. I’ll be on from around 7:35 PM CT (8:35 PM ET), and for those interested the radio show also airs nationally on LibertyTalkRadio.com.

Dumb Consumers Make Infallible Voters

In a recent Mises Daily article, Julian Adorney noted that a central tenet of the gospel of social democracy is that the majority of the people are too stupid to buy or consume the “correct” products and services without government diktat, but that when it comes to voting, the opinions of the majority are infallible and never to be questioned.

Here, we see a woman who claims a mandate to rule based on the opinions of the same people she declares too stupid to see to their own healthcare:

Obamacare: Repeal is not Impossible

NewDealNRAby Dominick Armentano

[LewRockwell.com, February 12, 2014]

Obamacare was sold to the American people as a humanitarian attempt to provide health insurance to the poor and to individuals with a pre-existing medical condition who had been denied coverage. If you were not poor, did not have a pre-existing condition, and already had health insurance and were satisfied with its coverage and rates, you were repeatedly assured that you could keep your plan and doctors. Right.

We now know that the selling of Obamacare was a giant con job. After all, if its proponents had really been sincere, they would have argued that the alleged poor simply be provided vouchers (similar to food stamps) to help purchase insurance; further, a simple one-sentence piece of legislation could have required that insurance companies not automatically exclude potential customers based on some pre-existing medical condition. Done deal. Instead, what we all got smacked with was a 906 page regulatory and tax monstrosity that amounts to a federal makeover and takeover of the entire health care industry.

Can we repeal Obamacare? Defenders of the law, and even some moderate critics from both political parties, assert that repeal is impossible at this point. After all, Obamacare was passed by both houses of Congress, signed by the President, and parts of the law were declared constitutional by the Supreme Court. Moreover, billions of federal tax dollars have already been spent on the bungled website and countless bureaucrats (including those in the IRS) to administer the new regulations and taxes. Thus, defenders assert, there is simply no precedent for repealing a federal law that’s this important and complex.

Nonsense to that. There is in fact major precedent for repealing important and complex federal law that destroys personal freedom and raises costs and prices to consumers: The Supreme Court’s de facto “repeal” of the National Industrial Recovery Act (NRA) in 1935.

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Incentives, Income, and Welfare

[Editor's Note: The debate over the effects of the Affordable Care Act on incentives to work continues. In this selection from Chapter 11 of Man vs. The Welfare State (1969), Henry Hazlitt discusses some impacts of welfare programs on incentives.]

by Henry Hazlitt 200px-Hazlitt-photo

I should like to return here to the question of incentives. I have already pointed out how the guaranteed income plan, if adopted in the form that its advocates propose, would lead to wholesale idleness and pauperization among nearly all those earning less than the minimum guarantee, and among many earning just a little more. But in addition to the erosion of the incentive to work, there would be just as serious an erosion of the incentive to save. The main reason most people save is to meet possible but unforeseeable contingencies, such as illness, accidents, or the loss of a job. If everyone were guaranteed a minimum cash income by the government, this main incentive for saving would disappear. The important habit of saving might disappear with it.

The more affluent minority, it is true, also save toward a retirement income in old age or for supplementary income in their working years. But with the prevalence of a guaranteed-income system, this type of saving also would be profoundly discouraged. This would be certain to mean a reduction in both the nation’s capital  accumulation and the investment in more and new and better tools, plants and equipment upon which all of us depend for increased national productivity, increased real wages, more lucrative employment, and economic progress in general. We might even enter an era of net capital consumption. In other words, the long-term effect of a guaranteed-income plan would be to increase poverty, not to reduce it.

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2014: Thoughts on Economics, Empires and Their Sophists

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by Ira Katz

As 2014 begins I, like all sensible people, ponder how long the dollar can last, for both my personal financial decisions and as a world event of the greatest importance.

Empires can be sustained only as long as they can be economically sustained. The Soviet withdraw from Afghanistan was certainly not for any normal human or moral reason, but simply because they were going broke. In hindsight we can see that the days of that evil empire were numbered with that strategic military retreat.

The dead canary in the coal mine for our current aggressive evil empire built on military strength will be the real withdrawal from one of the imperial outposts; say Korea or Japan, due to economic emergency, namely, the collapse of the dollar.

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Audio: Robert Murphy Explains Obamacare

In case you missed it, here is Bob Murphy explaining Obamacare on the Tom Woods show.

What You Were Never Told About Obamacare

170px-Caduceus.svgWhile the costs of providing health care insurance are beginning to skyrocket because of Obamacare, insurance company executives are sleeping very soundly. A respected consultant to health insurance companies, Robert Laszewski, reveals that there are two obscure provisions in Obamacare that guarantee that insurance companies will be subsidized and bailed out by Amercian taxpayers. Indeed the Congressional Budget Office estimates that $1.071 trillion will be coercively transferred from taxpayers to big insurance companies over the next decade.

This massive redistribution of wealth will take place via two programs stealthily embedded in the Affordable Health Care Act. The first is the Reinsurance Program under which large claims are capped for insurers offering individual plans under Obamacare. Insurers pay for claims up to $45,000, while the Federal government picks up 80% of the costs exceeding $45,000 up to a maximum of $250,000. This means that Obamacare is a public-private insurance scheme and that we are already half-way to the “single-payer” insurance program that Obama and his left-wing cronies so keenly pine for. Needless to say, neither President Obama nor the establishment media have publicized this provision of Obamacare.

Obama and his media supporters have also scrupulously avoided public references to the Risk Corridor Program that limits total losses for insurance companies via a complex formula. Basically, under this provision, taxpayers would be on the hook for 75%-80% of an insurance company’s losses. The enormous taxpayer-funded subsidization of costs and socialization of losses will make Obamacare more palatable to insurance companies and the public at least for a while, since insurance companies will not need to raise their premiums as much as they would have if they were forced to bear the full burden of cost increases and the risk of huge losses. This may give this destructive program time to take root and wreak havoc with what quality remains in the American health care system. Should Obamacare become permanent, Americans as taxpayers and as consumers of medical services will spend many sleepless nights worrying about how they will pay their tax bills and where they will find quality medical care.

Not Every Health Condition Is Insurable

6620David Howden writes in today’s Mises Daily:

The Austrian economist Ludwig von Mises helped clarify what types of events are open to insurance when he defined two types of probability. Case probabilities are those events for which we know some of the factors that will determine an outcome, but for which there are other factors we know absolutely nothing about. Football matches fall into this category, as do wars. Class probabilities are those events that we know or assume to know everything about a broadly similar category of events, but with regards to any individual occurrence within the category, we know nothing.

Offering insurance without reference to the specific insurable class, or by purposefully grouping uninsurable risks with an insurable class, removes any economic rationale in determining the appropriate insurance coverage and rates. If you think healthcare pricing seems nonsensical now, just wait until you see what happens when mandated coverage removes any semblance of rational insurance pricing to the healthcare “ insurance” market.

The Mises View: Obamacare and Interventionism

Recently, Peter G. Klein appeared on the “The Wilkow Majority” radio program. In this excerpt, host Anthony Wilkow and Peter Klein discuss government intervention in healthcare and some of the resulting unintended consequences and market distortions.

 

How Government Regulations Made Healthcare So Expensive

Guest Post: The U.S. Offers Obamacare to Those Who Don’t Remember When Markets Controlled Medical Costs

By Mike Holly

“Those who cannot remember the past are condemned to repeat it,” declared philosopher George Santayana.  The U.S. “health care cost crisis” didn’t start until 1965.  The government increased demand with the passage of Medicare and Medicaid while restricting the supply of doctors and hospitals.  Health care prices responded at twice the rate of inflation (Figure 1).  Now, the U.S. is repeating the same mistakes with the unveiling of Obamacare (a.k.a. “Medicare and Medicaid for the middle class”).

holly1

Figure 1:  An Indexed Comparison of Health Care Inflation and Consumer Price Index in US from 1935 to 2009  (Source: US Census 2013)

Nobel Prize-winning economist Milton Friedman wrote that medical price inflation since 1965 has been caused by the rising demand for health-care coupled with restricted supply (Friedman 1992).  Robert Alford explained the minority view: “The market reformers wish to preserve the control of the individual physician over his practice, over the hospital, and over his fees, and they simply wish to open up the medical schools in order to meet the demand for doctors, to give patients more choice among doctors, clinics, and hospitals, and to make that choice a real one by public subsidies for medical bills” (Alford 1975).

The majority of policymakers support either monopolization (e.g. typically Republicans) or nationalization (e.g., typically Democrats).  Both have claimed “physician supply can create its own demand,” which means increasing the supply of doctors and hospitals will just motivate them to convince “ignorant” consumers to order more unnecessary and expensive health care.   During the 1970s, Frank Sloan, a Vanderbilt University health care economist, explained the success of the most influential pro-regulation health care economist, Uwe Reinhardt: “His theories are highly regarded because he is so clearly understood.  Unfortunately the evidence for them is not good; it is not bad either, it is just not there.  And it would be a shame to see federal policy set on such a poor, unscientific basis.”

Since the early 1900s, medical special interests have been lobbying politicians to reduce competition.  By the 1980s, the U.S. was restricting the supply of physicians, hospitals, insurance and pharmaceuticals, while subsidizing demand.  Since then, the U.S. has been trying to control high costs by moving toward something perhaps best described by the House Budget Committee: “In too many areas of the economy – especially energy, housing, finance, and health care – free enterprise has given way to government control in “partnership” with a few large or politically well-connected companies”  (Ryan 2012).  The following are past major laws and other policies implemented by the Federal and state governments that have interfered with the health care marketplace (HHS 2013):

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Why Are Obamacare Exchange Policies So Bad?

6608Hunter Lewis writes in today’s Mises Daily:

Insurance companies respond to this dilemma in the only way they think they can. They squeeze the doctors fees and gamble that enough of them will go along to take care of the policy holders. Will this gamble pay off? It is doubtful.

Many doctors, doctor networks, and hospitals are already refusing to go along, so the policy holder will be stuck with insurance that is useless because no doctor will take it. Expect to see hospital emergency rooms flooded with even more patients under Obamacare, and expect to see the waits get even longer.

Older and sicker insurance customers may think they like the idea of price controls that work in their favor. But will they like insurance companies taking every available legal means to discourage their buying a policy or staying on that policy? Would you want to be covered by a company that does not want your business?

With Medicaid enrollees swelled by Obamacare, and much private insurance turned into what John Goodman calls “Medicaid Lite,” what will happen to medicine? The most likely result will be large numbers of doctors taking early retirement and fewer talented young people entering the field. The supply of medicine will shrink while the demand, fueled by government subsidies, increases.