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Friday, August 29, 2014

Boehner's wrong-target lawsuit would turn Obamacare into Bonercare

Liz Peek describes six things people really hate about Obamacare that just might doom the Democrats in November. I couldn't help mentioning the one really stupid way that all of these things people hate about Obamacare could sink Republicans every November for years to come. Speaker of the House John Boehner could win his boner of a lawsuit against Obama's non-enforcement of Obamacare, forcing full enforcement of what would henceforth come to be known as "Bonercare."

The correct issue over which to sue Obama over his failure to faithfully execute the laws is his blatant subversion of border enforcement and immigration law. That would have been a win-win for the GOP. Win the lawsuit and the result is something everyone in the country wants: some forced enforcement of the nation's immigration laws. Instead Bonehead chooses the win-lose lawsuit. If he wins the GOP will be blamed henceforth for forcing the full enforcement of Obama's disastrous socialization of one sixth of our economy.

Why did Bonehead choose the win-lose case? Because he is on Obama's side on border lawlessness. Stupid RINO. I wish we could launch this idiot into space. Completely immoral and just idiotic beyond belief, and he is supposed to be our party "leader"?

Republicanism is the system of liberty under law. At the most basic level that is just two simple components: liberty and the rule of law. That means no socialized medicine and it means enforcement of our immigration laws. How can Bonehead get both of those completely wrong in one fell law-suit?

The proper long-term goal is health insurance for NOBODY

Boehner's strategic imbecility on Obamacare leaves the question of what is the way forward on health care, but I have already answered that question. The only reason the health care market ever became dysfunctional in the first place is because government provided powerful incentives for people to buy health insurance and health insurance creates massive market distortions.

When health care is covered by third party insurance people no longer have incentive to shop for price so there is no longer a normal competitive market. To keep prices under control it becomes necessary to impose cost controls, either through government regulation or by monopsonistic domination of the market by insurance conglomerates, and this destroys the other side of the market, which is what had already happened pre-Obamacare. Government had already succeeded in channeling the great majority of medical care through insured financing where government had also created an elaborate system of public-private price regulation.

Instead of going deeper into government takeover we needed to follow the guidance that government is always supposed to follow when it interferes with markets at all: target the result that efficient markets would arrive at. There can be sources of market failure that are not created by government and government has warrant in these cases (in theory if not under the Constitution) to "fix" the market failure by trying to achieve the market result that would occur if markets were not imperfect. In the health care market that perfect-markets result is an insurance-free outcome, at least in the long run. This comes from the simple fact that insurance is expensive, not only because of the loss of price competition and the unavoidable distortions that price controls create, but because insurance also creates a huge parasitic bureaucracy that has to be supported. This expensiveness means that whenever they can, people will prefer to self-insure (to take the money they would otherwise spend on insurance premiums and use it to build up savings/wealth from which they can cover what unexpected expenses may arise). Self-insurance is the better deal (not larded with parasitic losses).

Now put this in the larger market context. When markets are efficient everyone's wealth tends to increase, which automatically increases their effective level of self-insurance, giving them less and less need for or interest in third-party insurance. Thus the natural tendency of a market system is towards progressively less third-party insurance and progressively more self-insurance. (This is not an obvious result when consumers are looking at imperfect market prices but if the external costs of the inefficiencies caused by insurance are internalized--and this is what we are shooting for, the perfect market result--then it is obvious.)

This movement away from third-party insurance yields further increases in price competition which continues to drive medical costs ever downwards even as care makes huge leaps forward, the same as happens with computers and every other competitive industry. These decreasing costs bring the cost of self-insurance further down, driving third party insurance ever further out, and this direction marks the long term objective that government policy should be aiming for: not third-party health insurance for everybody (as the GOP's proposed alternatives to Obamacare all target) but health insurance for NOBODY.

What about people who can't afford health care? Bill all aid to account of the recipient!

The common stumbling block to rational market reform is always, "but what about the people who can't pay?", as if making provision for the needy requires a socialist system of production and distribution. No it doesn't. The answer is very simple. Afford all crucial health care services to whoever needs it, no questions asked, and if they can't pay the bill have government pay the bill with pay it tax money and charge every penny of this aid to the account of the recipient, to be repaid with full market interest over the life of the aid recipient according to an ability to pay formula.

Of course not all such aid will be repaid in full. It will not just give loans but in the end will also forgive a portion of those loans, which makes the system costly.  The important thing is that, by keeping incentives as intact as possible, the system of billing aid to the account of the recipient yields more bang-per-buck than any other way of giving aid. In particular, it is vastly more efficient than giving aid away, which also has the perverse effect of making recipients think that they must be owed, or why would society be giving them stuff? No, you are not owed, you owe, and we are keeping track to the penny exactly how much you owe your fellow citizens for the aid they have already loaned to you.

All aid should be billed to the account of the recipient, not just health care. Look at the insanity now of paying people not to work (unemployment insurance). If this aid had to be repaid over the life of the recipient according to an ability to pay formula nobody would take such assistance unless they actually needed it, but if they do need it then it is there, and because people have incentive not to abuse it the conditions for qualifying for such aid could be made more generous and more flexible at far less expense than our present system of perverse incentives incurs.

The costs of the perverse incentives themselves are huge. People don't work who otherwise would, making themselves a drain on their fellow citizens instead of a support. Not only to they take rather than contribute tax dollars, but they withhold their productivity from the market place, making the supply of goods lower and prices higher. At this point we are actually paying people to act this way.

Philosophers can argue about what level of assistance to the needy should be but how the aid should be given precedes philosophy. It's elemental economics. Whatever aid is given it should be billed to the account of the recipient. Any other system gives less aid for any given level of cost. No matter what the level of spending on aid is, society should get the most aid as possible for that expenditure, and that means keeping incentives as intact as possible by requiring repayment according to an ability-to-pay formula.

I've been trying to tell the world this for 20 years (and a lot of other stuff too). Nobody pays any attention. Stupid world.

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