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Healthcare: The Political Means vs. The Economic Means

The reason opponents of the recently legislated health care reform have such a high degree of certainty regarding the failure of the cost saving features of health care reform is simple.

There can be no cost savings by substituting the economic means of allocating capital with the political means.

The health care industry, consuming 1/6th of the US economy, already sees somewhere in the neighborhood of 1/2 of all money being spent having some level of government as the consumer. Already, there are gross market distortions, but they were implemented gradually and piecemeal, with no obvious abrupt, identifiable effects. With the imposition of so-called reform, we have entered a phase of market manipulation where capital and resources will, more so than before, be allocated for political reasons, with a regard for economic reasons only as an unintended byproduct of government's intentional gaming of free market dynamics.

A market can be made more efficient by practices of contract law, transparency, the imposition of a system of debt liquidation, and a formalized mechanism dedicated to the preservation of private property rights. A market cannot achieve a greater degree of efficiency, in the form of lower prices, by government exercising the political means over the economic means when deciding how to allocate capital. It is important to note, before one dime is spent, any law that is passed by Congress, which regulates or tries to affect market dynamics, always has two primary reasons for its passage:

1) The continued re-election of Congressmen who voted for the law/regulation
2) The imposition of a condition whereby one favored group receives an advantage at the expense of some other group, enforced by state monopoly control of violence

What does any of this mean with regards to health care reform?

In one area of the market, allocating capital via the political means, over the economic means, will disproportionately shift costs to younger health care consumers.

"Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans—a shift expected to raise insurance premiums for young people when the plan takes full effect. Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press."

This should be surprising given endless promises of cost reduction, correct?

How could this happen?

The article continues:

"The law relies on Higdon and other young adults to shoulder more of the financial load in new health insurance risk pools. So under the new system, Higdon could expect to pay $300 to $500 a year more. Depending on his income, he might also qualify for tax credits. At issue is the insurance industry’s practice of charging more for older customers, who are the costliest to insure. The new law restricts how much insurers can raise premium costs based on age alone. Insurers typically charge six or seven times as much to older customers as to younger ones in states with no restrictions. The new law limits the ratio to 3-to-1, meaning a 50-year-old could be charged only three times as much as a 20-year-old."

The core reason this can happen is because young people don't vote or participate in the political process at the same rate as older health care consumers. They also don't have massive, expensive groups of lobbyists representing their economic interests to Congress. Young people don't write letters to their Representative and they certainly don't make many political donations. So, by way of the political means, it has been determined that the cost of insurance shall be shifted from those who statistically need it most and can statistically afford it most, to those whom statistically need it least and can statistically afford it least.

And it’s because of voting patterns.

This is economic justice?

For whom?

And, of course, there will be tax subsidies for individuals who in the past were perfectly capable of paying their own way. Now they will be dependents of a government which, no doubt, will use the newly hired 16,000 IRS agents to help them understand their anonymous charity at the point of a gun in the most explicit terms possible. (Our first clue about the true nature of this bill should be when we realize it was not 16,000 doctors hired, but instead revenue agents.)

Individuals who were not dependent upon the government before, will be pushed in that direction soon enough. Every time some would-be fiscal reformer threatens to upend a world where 6 in 10 of the richest counties in the country surround Washington, DC, or a political movement threatens a status quo where federal employees earn double your average private sector employee, the young, newly dependent health care consumer can have one of the most intimate aspects of his or her life politicized and made a bargaining chip in a game played by our increasingly unaccountable ruling class that shrugs off $800 billion giveaways to foreign banks and endless wars of aggression. There will be no reform. There can be no reversal. There will only be calls for electing Republicans and a reminder that the bill provides for its own perpetual lifespan by being non-repealable.

In time, the insurance companies, who thought they were pulling one over on everyone, will be bled dry to cover the losses of every other failed, bankrupt, and insolvent enterprise of the federal government -- from social security, to the Fannie/Freddie (and soon Sallie) debacle, to Medicare, to the money pit of Mesopotamia. Soon enough, actuarial tables will be disregarded all together and substituted with maps of Congressional districts. The numbers will get fuzzy. And in time, the zeros and ones will resemble the fantasy of government accounting we see today where spending more means spending less. The centuries old concept of insurance, and the role its vast pools of capital play in a democratic society and a market economy, will give way to yet another legalized Ponzi scheme which, in time, will fail, and require further eradication of our markets of voluntary exchange and sovereignty of self.

After being burdened, regulated, taxed, twisted and shaped to fit political goals, insurance companies will be one more pale ghost from which revenue is consumed and never efficiently replaced. Once insurance companies fully cease operating via the management of risk, and instead exist to support legislative and political agenda, bankruptcy can be the only result. And, again, government will play the victim and the free society will be painted as perpetrator.

We have civil rights, unless we are declared a belligerent.
We are secure in our person and papers, unless the IRS demands our accounting ledger.
We are enlightened, until our soldiers are forced to betray our traditional Humanist/Judeo-Christian virtues and torture.
We have our privacy, unless some TSA agent wants to see us naked again.
We have fundamental human rights, unless the President declares us non-persons.
We are protected, until a couple of illiterates with box cutters outwit a $500 billion defense budget.
We have religious liberty, until our church's tax status is threatened.
We own property, but don't forget rent payable to the county.
We can travel, until we need a license and a body cavity search.
We all love, but only fully when state-sanctioned.
We are not slaves, except on the day we file our 1040.
We own our bodies, until we self-medicate.
We are a Free People, until we're not.

To stand before the American public and to tell us this Intolerable Act will save us money, while blocking drug re-importation, refusing to negotiate drug prices, and maintaining state-sanctioned insurance monopolies by Congressional refusal to enforce Anti-Trust law, is at best a farce. There will be no savings. No market efficiencies can be brought about by monopoly force, none ever has. Capital allocated via the political means will always result in market inefficiencies, as the most inefficient markets are those dictated by force and the quest for the maintenance of political power. The only beneficiaries of this gross invasion of our freedoms will be favored constituencies and interests critical to the maintenance of the political status quo that brought us this all but officially bankrupt welfare-warfare state in the first place.