Friday, November 15

Obamacare: Not a Sweet Deal

I get my sweet corn for free.  People in town have to pay as much as $6.00/doz, and this of course, is why Obamacare (and most other liberal programs and policies) will never work.  Huh?  What does my advantageous position in sweet corn procurement have have to do with Obamacare?  Keep reading.

First of all we got this guy, who was interviewed by Chuck Todd:

source: Real Clear Politics

Obamacare Architect: Genetic "Lottery Winners" Have Been Paying An "Artificially Low Price"

JONATHAN GRUBER, M.I.T.: Let’s start with understanding that we're not talking about the vast majority of Americans. This law is really leaving those with employer insurance, those with government insurance alone. We’re talking about a small minority of Americans that buy insurance on their own through the individual market.

CHUCK TODD: Still millions of people.

GRUBER: Exactly. It's 12 million people, about a third of which will end up paying more under this law. And that as you said in the introductions sort of the idea. We currently have a highly discriminatory system where if you’re sick, if you’ve been sick or [if] you’re going to get sick, you cannot get health insurance.

Jonathan Gruber is a professor of economics at MIT (OOOOOH!), and one of the primary architects of Obamacare, and I only have a B.S. degree in agricultural economics.  He makes a lot more money than I do, but he said this...

The only way to end that discriminatory system is to bring everyone into the system and pay one fair price. That means that the genetic winners, the lottery winners who've been paying an artificially low price because of this discrimination now will have to pay more in return. And that, by my estimate, is about four million people. In return, we'll have a fixed system where over 30 million people will now for the first time be able to access fairly price and guaranteed health insurance.

...and I say this:
OK Jonathan, you economic guru, how can you possibly expect four million lower cost people to subsidize 30 million higher cost people, and not have a disaster?  
Let’s take my personal sweet corn example and see if such a thing could possibly work, even in the simplest of markets.  30 million to 4 million, that’s about about an 8 : 1 ratio.  Now I live next door to a farmer who grows sweet corn, and he lets me pick as much as I want, for free.  It’s a better deal than having my own garden.  I don’t have to prepare any ground, I don’t have to plant it, I don’t have to weed it.  All I have to do is walk 100 feet out my back door and pick it, moments before I have it for dinner.  Not only do I get it for free, I get the freshest, highest quality corn possible, and it’s due to nothing more than my being lucky enough to live next door to someone who grows it.

People in town are paying $6.00 for a dozen less than fresh, ears.  Now what could possibly be more unfair than that?  What if we had some liberals come in and try to make it fair?  If eight people were to buy a dozen ears of corn, that would come out to a total expenditure of about $48.  If we wanted to make things fair, we would see to it that everyone pays the same price.  How could we do that?  By including me in the sweet corn buying pool, and dividing the total cost evenly among all the buyers.

We would now have nine, instead of eight people paying the same $48 dollars for 8 dozen ears.  I would still get my corn for free, but I would have to pay a special tax, to subsidize the other eight corn buyers, who would now be paying “only” about $5.33, instead of $6.00/dozen. (48/9=5.33)  Not much of a break for those poor city folk being gouged by high sweet corn prices, but I would be paying $5.33 more in taxes.  Subsidies are hardly ever a good idea, but are even worse when a relatively small number of people are paying for a relatively large number, and in the case of Obamacare, it is even worse.

In a supermarket, the price of sweet corn and other items are the same for everyone who walks into the store.  What Gruber is suggesting will happen with Obamacare is that 4 million people are going to offset the unusually high cost of 30 million people who either have preexisting conditions, or have not been paying into the system at all.

This would be like me having to offset the cost of some people who for whatever reason, had to pay $20/dozen ears of corn, plus cover the people who were able to just walk into the store and get their corn for free.  Suddenly, my sweetcorn tax is equivalent to paying about $12/dozen ears.  

On top of that, this situation does nothing but encourage more people to figure out how to be included in the group that gets their corn for free, and is a disincentive for other people to avoid falling into the group that would otherwise have to pay more.  Not even the Democrats would go along with me having to support all the people in that situation, so they would have to have the other sweet corn buyers start kicking in too.  This is why Obamacare is going to cost almost everyone, not just 4 million people, a lot, lot, more.

At the new market cost of about $10/dozen for the average buyer, many people decide that it is just not worth having sweet corn on the menu, the market collapses, farmers don’t grow it, and I lose my source of free sweet corn.  All because some liberals tried to make things “fair”.

As I have stated in previous posts. Obamacare is really only about two things, 1) increasing government’s control over our lives, and 2) preventing what I described in the above paragraph from happening to the healthcare industry through forced participation.  What do you think would happen to the price of sweet corn if everyone was required to buy it regardless of its cost?  I’ll give you a hint.  It would remove much of the incentives to control its cost.

Obamacare is a slow-motion train wreck happening right before our eyes, but how couldn’t it be?  In about the simplest example that I could think of, straying away from the free market leads to disaster, even for the people that liberals would be trying to help.  Imagine what will happen in a much more complex industry, such as healthcare, where there are more places for corruption to hide than even an expert with a lifetime of experience in the field, could ever foresee?

Since it’s beginning, how much talk about Obamacare has been about controlling costs?  It’s been mostly either paying lip service to that issue or imposing more restrictive regulation.  Think of anything that has actually gone down in price over the years.  Electronic goods are probably the best examples.  What caused the prices to drop?  It wasn’t government control, it was free market forces.  There is no reason to expect that free market forces couldn’t reduce healthcare costs if allowed to do so.

The only way to improve on our current healthcare system is to do as much as possible to allow the free market system to function without government interference.  Yes, there would be problems.  Yes, some innocent people would fall victims to unscrupulous profiteers, but that’s what we have a legal system for.  The end result would be however, more people paying for, and receiving affordable healthcare coverage than any other way imaginable.

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