This Thursday, the House of Representatives will vote on a Republican bill
that supposedly repeals Obamacare. However, the bill retains Obamacare's most
destructive features.
That is not to say this legislation is entirely without merit. For example,
the bill expands the amount individuals can contribute to a health savings
account (HSA). HSAs allow individuals to save money tax-free to pay for routine
medical expenses. By restoring individuals' control over healthcare dollars,
HSAs remove the distortions introduced in the healthcare market by government
policies encouraging over-reliance on third-party payers.
The legislation also contains other positive tax changes, such a provision
allowing individuals to use healthcare tax credits to purchase a "catastrophic-only" insurance
policy. Ideally, health insurance should only cover major or catastrophic health
events. No one expects their auto insurance to cover routine oil changes, so
why should they expect health insurance to cover routine checkups?
Unfortunately the bill's positive aspects are more than outweighed by its
failure to repeal Obamacare's regulations and price controls. Like all price
controls, Obamacare distorts the signals that a freely functioning marketplace
sends to consumers and producers, thus guaranteeing chaos in the marketplace.
The result of this chaos is higher prices, reduced supply, and lowered quality.
Two particularly insidious Obamacare regulations are guaranteed issue and
community ratings. As the name suggests, guaranteed issue forces health insurance
companies to issue a health insurance policy to anyone who applies for coverage.
Community ratings forces health insurance companies to charge an obese couch
potato and a physically-fit jogger similar premiums. This forces the jogger
to subsidize the couch potato's unhealthy lifestyle.
Obamacare's individual mandate was put in place to ensure that guaranteed
issue and community ratings would not drive health insurance companies out
of business. Rather than repealing guaranteed issue and community ratings,
the House Republicans' plan forces those who go longer than two months without
health insurance to pay a penalty to health insurance companies when they purchase
new policies.
It is hard to feel sympathy for the insurance companies since they supported
Obamacare. These companies were eager to accept government regulations in exchange
for a mandate that individuals buy their product. But we should feel sympathy
for Americans who are struggling to afford, or even obtain, healthcare because
of Obamacare and who will obtain little or no relief from Obamacare 2.0.
The underlying problem with the Republican proposal is philosophical. The
plan put forth by the alleged pro-free-market Republicans implicitly accepts
the premise that healthcare is a right that must be provided by government.
But rights are inalienable aspects of our humanity, not gifts from government.
If government can give us rights, then it can also limit or even take away
those rights. Giving government power to enforce a fictitious right to healthcare
justifies government theft and coercion. Thievery and violence do not suddenly
become moral when carried out by governments.
Treating healthcare as a right leads to government intervention, which, as
we have seen, inevitably leads to higher prices and lower quality. This is
why, with the exception of those specialties, like plastic surgery, that are
still treated as goods, not rights, healthcare is one of the few areas where
innovation leads to increased costs.
America's healthcare system will only be fixed when a critical mass of people
rejects the philosophical and economic fallacies justifying government-run
healthcare. Those of us who know the truth must continue to work to spread
the ideas of, and grow the movement for, liberty.
