Congress: Please Replace Newbamacare with Nobamacare
Originally published on Patriot Post, March 11, 2017
This week’s proposal by the House of Representatives, the American Health Care Act (let’s just call it NewbamaCare), appears to be a diet ObamaCare at best and not the repeal and replace for which most Americans had hoped. Perhaps we were not clear enough with “Repeal and Replace.” Perhaps we should have said “Repeal…selah (Hebrew for ‘pause quietly and think’) and Replace.”
The hubristic political elites who fashioned ObamaCare initially believed that despite the fact that national health care in every other country has caused long lines, expensive medications and decreased service, the United States could somehow create a superior program. The problem lies in ignoring the basic laws of economics and the very mechanism that keeps customers happy and service at its peak: the free market.
The free market has a way of getting rid of bad products, keeping good products, managing prices and supporting technological advances. Here’s a simple example to prove how this happens. Judy has a business making pillows for $30 but they are hard and uncomfortable. Cindy, however, makes soft, wonderful pillows for the same price of $30. In a free market economy, customers will generally buy the better product (the soft pillow) while the hard pillow sales decline. Now Judy, the owner of the hard pillow company, has a few choices: 1) reduce her price so that even if it’s a terrible product, people might buy it just because it’s cheap, or 2) change her pillow formula to be soft and more appealing to customers. If Judy’s hard pillows still don’t sell at a cheaper price or she is unwilling to improve her pillow quality, her business just goes away. In this way, the market phases out bad products, correcting imperfections of both price and quality over time.
In a mixed economy that combines government intervention and free markets, the government tampers with this natural economic life cycle of products and services. ObamaCare has closed off the protective mechanisms of a free market economy and replaced it with government-mandated purchases. To recall the earlier example, ObamaCare is basically the government selling Judy’s hard pillows for $3,000 and forcing everyone to buy them.
In contrast to the original ObamaCare, the NewbamaCare plan, proposed by the House this week, does promise some positive changes such as repealing the taxes on prescription drugs, over-the counter medications, health-insurance premiums and medical devices. According to the website, it eliminates the penalties associated with the individual and employer mandate, allows patients to not be denied health insurance based on pre-existing conditions, and it keeps children on their parents’ health insurance until age 26. These seem like moderately worthwhile (though, admittedly, debatable) changes. However, keep reading.
The NewbamaCare plan also establishes a “Patient and State Stability Fund” that gives states $100 billion in order to design programs for their patient populations. It also gives a monthly tax credit (between $2,000-14,000) for low- and middle-income families not receiving health insurance from their employer or other government program. Note that although the word “give” sounds benign and charitable, remember that whenever the government “gives” anything, it actually means taking it from someone else.
To return to the earlier example, NewbamaCare doesn’t force people to buy hard pillows, but it does use tax subsidies that interfere with the market. It says, “You can’t afford a $3,000 pillow? No problem. We’ll factor it into your (or someone else’s) taxes and give you a tax credit of $,2000. So then you only have to pay $1,000.” Any bargain shopper knows that this qualifies as a rip-off, not as a good deal.
Further, there seems to be little oversight into how these funds are used, which boils down to billions of dollars being collected by the government and then being thrown around to create a string of programs that have no market-based incentives for actually working.
In reality, most Americans would rather be taxed less, keep more of what they earn and buy the services (and insurance) that they want. If a private company wants to spend $100 billion in community programs, then great … but don’t strap the taxpayers with this burden.
The House Freedom Caucus, composed of some 40 conservative members, have stood against the NewbamaCare bill and have rallied behind the original 2015 repeal bill. As Congressman Mark Meadows (R-NC), chairman of the House Freedom Caucus, said recently in criticism of the recent House bill, “Repeal and replace is not fix and keep.” The 2015 repeal bill, which actually is a repeal bill, passed through both houses of Congress in 2015 but was vetoed by Obama in January 2016. The American people don’t want NewbamaCare. They want NobamaCare.
Ludwig von Mises, founder of the Austrian School of economic thought and champion of the free market economy, attributed his life motto to Virgil: Te ne cede malis sed contra audentior ito, which translated means, “Do not yield to the bad, but always oppose it with courage.” With this attitude and resolve, our citizenry and our leadership can oppose the bad with courage, bravery and steadfastness in order that we may leave, not squander, a legacy of liberty for future generations.