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This Is Why Government Shouldn't Be Involved in Health Care

• https://www.libertarianinstitute.org

The Republican-controlled House vote to "repeal Obamacare" – if that is what this was – was a stunning mess.

Did they get it right? The answer is obviously no, and that's inevitable. Just imagine a bill that sets out to reorganize any industry that is currently mostly market driven, such as shirts, software, groceries, or furniture. Would any bill coming from Congress that pertains to the whole of any of these be wonderful? It's impossible.

This is because the minds of politicians working together – with all their mixed motives of special-interest acquiescence, electoral fears, and general ignorance – cannot possibly replicate, much less improve upon, the brilliant mind of the market at work.

Fortunately, we don't have to deal with such bills in most markets. But the health care industry is different. It's been heavily regulated for more than a century. Obamacare went in the wrong direction, toward more rather than less government control. It actually disabled the mind of the market. The result has been soaring deductibles and premiums, insurers going belly up, and average citizens being forced to pay for insurance they can't afford to use.

Change is necessary. Sadly, any structural change in the industry is pushed through via legislation. That is a tragedy. The challenge is to sort out real vs. fake reform, and do this amidst grandstanding, bombast, posturing, ideological panic, rhetorical bombast, and media mania.

The Miasma of Politics

The House had little more than one day to consider a bill that would affect the lives of every single living American in the most fundamental way. Meanwhile, those of us in the peanut gallery had to try to make sense of whether or not this bill is a promising development, remembering that not backing something necessarily means de facto settling with the legislative status quo.

Even getting the core facts of the legislation was a challenge.

What is the core standard by which any health care bill should be evaluated, given that nothing coming out of Congress that can gain a majority of Republicans will ever be right? The test is this: does this bill take us in the direction of restoring market competition and market signaling, or does it preserve the current managed, artificial, coercive, and unworkable system that relies on government control?

Features of Obamacare (explains David Henderson) disable market competition: guaranteed issue and community rating. Guaranteed issue mandates that everyone who shows up must be accepted. Community rating forbids insurance pricing from being influenced by risk assessment, which takes the insurance out of insurance. And a third issue is the one that is perhaps most absurd: essential benefits. This mandates what is covered under all health insurance, thus ruling out flexibility and choice on the part of either buyers or sellers.

A reform worthy of support must deal directly with these problems. Donald Trump does not understand this at all. He keeps tweeting that he absolutely insists on keeping the mandate that all health insurance must cover pre-existing conditions, without an awareness of what this implies about existing law. The dogmatic demand painted the Republicans in a corner. They couldn't repeal the very mandates and disabled-pricing schemes that have created such a mess in the industry.

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