14 Nov 2013

The Economics of ObamaCare

Health Legislation, Shameless Self-Promotion 10 Comments

I have a Mises Daily running through some basics. Example:

There are reasons for the particular provisions [of the Affordable Care Act], which sound superficially sensible (if you don’t know much about economics). Obviously, before the passage of the new law, there were millions of people without health insurance coverage. Although many of them were young and healthy — thinking they could risk going without coverage — many of them wanted coverage but couldn’t obtain it, either because of the price or an outright refusal of coverage because of a pre-existing condition.

Now, given that the government wanted to mandate that health insurers provide coverage to all applicants, there had to be specific rules on what premiums they could charge, and minimums on the type of policies offered. Otherwise, the health insurers could say, “Fair enough, President Obama, we will indeed give a policy to any applicant — even someone with brain cancer. It’s just that the annual premium for people with brain cancer will be $2 million, and we will cap our total payment at $100 per year. Who wants to sign up? We’re more than happy to comply with the new mandate.”

For those who want more than I discuss in the article, sign up for my forthcoming online Mises Academy class on “The Economics of ObamaCare.”

10 Responses to “The Economics of ObamaCare”

  1. Keshav Srinivasan says:

    Bob, out of curiosity do you agree or disagree with this post by Steve Landsburg, where he argues that it is mathematically impossible for the government to give healthcare to more people without some people losing their existing insurance policies?


    It seems absurd to me that it would be mathematically impossible.

    • Bob Murphy says:

      Keshav, yeah, I think Steve got into a little bit of trouble with the difference between insurance and health care, etc. I also think he was just being saucy with that post, since there were even people in the comments arguing that Obama was correct, so clearly it wasn’t so obviously false that it doesn’t classify as a lie (as Landsburg argued).

      • Ken B says:

        Bob you and I are living together (it’s aplay by Sartre)
        and we share a defibrillator. Having that defibrillator gives us each a certain level of safety and availability to the machine should we need it. Now Obama comes along and declares defibrillators must be shared throughout the neighborhood. The defibrillator is moved to a central location and shared between 200 people.
        Has your access to a defibrillator or the safety it provides been affected by this change?

        • Keshav Srinivasan says:

          But the question is not whether everybody can keep their current level of access to healthcare, the question is whether they can keep their current insurance policy. Obama did not say “If you like the level of access to healthcare that you are having right now from healthcare plan, you can continue to have that level of access.” He said “If you like your plan, you can keep it.”

          A health insurance plan guarantees payments if you receive care. It does not guarantee care.

          • Ken B says:

            The likelihood of a promise being fulfilled is a part of the promise. Part of landsburg’s hypothetical was that there would be no new resources added to the healthcare system nor new funds added to bolster feeling plans. In my hypothetical I was not guaranteed access to the defibrillator. Bob might be might be needing it at the same on it that I needed it. so my example fits your no guarantee premise. however my access to the defibrillator is much diminished after it is shared amongst 2000. It’s disingenuous to describe that as me keeping my access to the defibrillator.

            • Ken B says:

              I am experimenting using voice recognition So far the results of being mixed, as you can see above.

              • Tony N says:

                I am spare minting with choice wreck condition two. Think it twerks pretty well. 🙂

            • Keshav Srinivasan says:

              I’m not trying to say that an insurance policy is a promise rather than a guarantee. I’m saying that a health insurance plan is not even a promise of getting a certain level of care. It’s only a promise about what the insurance company will or won’t pay for.

            • Keshav Srinivasan says:

              Also, Steve wasn’t talking about no new funds being added to failing plans. He was trying to say that however much funds the government adds, the amount of healthcare supplied cannot increase in the short run. So he’s saying that no matter how much money you add to the system, in the short run you can only provide more healthcare to some by providing less healthcare to others.

  2. Samson Corwell says:

    Bob, the one thing I don’t understand about Austrian economics is why government is treated as if it exists in a category all unto itself.

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