Insurance ‘Reform’ Equals Single-Payer

Nope. It’s all a surprise. Here’s another: Political pressures to weaken the individual mandate, supposedly the quid pro quo for nonexclusion of insurance applicants with pre-existing conditions, are and will remain irresistible, for two reasons. First, the individual mandate is necessary to preserve the private insurance sector if all applicants must be given coverage, because of the obvious problem of adverse selection. Who in their right mind will buy coverage before they get sick, given that the hospitals obviously will have an insurance sign-up desk immediately inside the emergency-room door? And why should the political left support effective enforcement of such a mandate? Their goal is maximum dependence upon government, and without real enforcement of an individual mandate, the private insurance market will collapse within months. Pay no attention to the purported “firewall” provisions of the Baucus markup; if those with access to employer coverage do not receive a large subsidy available to others, it is axiomatic that the labor market will evolve in such a way as to capture the subsidy for everyone. Employers will drop their coverage, give their employees raises sufficient to cover the (already-declining) fines for those without coverage, and then turn their people loose with the government subsidy.

Moreover, the fines for noncoverage status will quickly disappear; the reasons given will be “fairness,” and all the rest. More fundamentally, large numbers of voters — the young, the healthy, etc. — will not want to be forced to buy coverage not perceived to be worth the cost, and they will vote their pocketbooks. Subsidies sufficient to induce them to buy coverage will prove unaffordable compared with the purportedly “cheap” insurance that the government could offer by imposing price controls, exercising its monopsony power, regulating ever more intensely, and turning the plaintiff attorneys loose.

And that is why the industry groups were utterly silly — make that self-destructive — not to oppose this monstrosity from the very beginning, as its evolution was and remains easy to predict. That is why it is absolutely essential for the preservation of American liberty — not to mention health care — that no bill pass this year.

Benjamin Zycher is a senior fellow at the Pacific Research Institute.

This blog post originally appeared on National Review’s Critical Condition.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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