Markets, the Missed Opportunity

As President Obama’s health insurance reform becomes a reality, its clear that what’s missing is the one best opportunity to get things right: the free market.  Although the president dismissed the market in saying  “Well, we’ve tried that,” nothing could be further from the truth.  Throughout the year of debate on the health bill, repeated calls by conservatives to allow for interstate competition of insurance plans were roundly ignored.  But if we were to try this, as well as decouple the plans from employer benefits, we would lower the barrier to market entry.  Then many firms would rush to compete for each state’s population of savvy customers, offering plans at lower prices.  Instead of looking to unsustainable free lunch subsidies and depending on the guesswork of Washington bureaucrats, we could have a dynamic system not unlike our current auto insurance market.  Then even a 25 year-old Starbucks barrista would not need to stay on his parents’ plan,  and maybe would no longer need to shack up in their basement as is the rage in nanny states like Italy.

The twenty-something loafer subsidy is not the only incentive in the current insurance reform working against us.  A redistributive tax-and-subsidy transfer of wealth will now extend the entitlement ethic to families making up to $88,000 a year!  While these perverse incentives further undermine our collective sense of personal responsibility, we also must cope with a general rise in taxes resulting from the legislation’s inevitable cost overruns.  Gird your wallets also as progressive activists file lawsuits to expand the entitlement footholds established by this legislation.  All this trouble heaps on top of Medicare and Medicaid sustainability issues that went unaddressed in the current reform.

As we begin to see the impacts of the reform legislation around us, we will do well to return our attention to the promise of the free market.  Top-down solutions failed the centrally-planned economies of the twentieth century, but the free market brought unprecedented prosperity to people of all stripes in the West.  Even glorious nanny state paradises like Sweden have turned away from big government after a time of accepting high unemployment and economic dysfunction.  Instead of propagating the lie of the free lunch, we should accord respect to individuals and let them make the tough choices only they can make to improve their own lot.  If we let go of the temptation to tax and subsidize beyond the scope of our already-established obligations, we will be able to sustain our collective prosperity.  Real progress for those in need does not come from redistribution but through opportunities afforded only by the free market.