Remedial economics: Obamacare as teachable moment
November 14, 2013 2 Comments
Photo credit: peasap / Foter.com / CC BY
Here’s a good news article–from AFP of all places–that highlights the problem when government negotiates prices. The headline says it all: “Secret pricing spikes US healthcare costs.” The unflattering description of price negotiation, which is a favorite tool of economic liberals, is remarkable. The article quotes European health policy experts, who advise the US to follow their lead by turning pricing over to market mechanisms. What a concept!
Meanwhile, a blogger at Values and Capitalism reminds us of the importance of basic economic literacy. Her mention of “price signaling” triggers that part of me that must lecture everyone: prices communicate information about scarcity. When government offers subsidies or fixes prices, it distorts that information. These interventions produce illusion and falsehood. It’s quite arguably immoral.
The spectacular implosion of the Affordable Care Act that we are now going through is a teachable moment. Many fiscal conservatives spend a lot of time snarkily tweaking liberals and the Obama administration. It would be a serious waste not to turn aside for a moment, and soberly remind our fellow citizens that no one can wish away immutable economic realities. Central planning will never beat a free market.
About Lewis W
Cogitating Duck 
Competition is the best except when the greedy figure out ways to stifle competition by controlling vital goods such as food and energy. Regulation for the common good may not be the best answer, however there is a reality of wanted versus needed to protect the interests of the masses from the greedy.
Thanks for reading and replying scatterwisdom! I think I mostly agree with you. There’s no such thing as a totally free market or a completely regulated one. I do think though that the US will benefit by decoupling health insurance from big providers such as employers and government. If companies can offer reasonable plans across state lines, they will compete against each other and the premiums will lower.
I’m not sure what you mean though by the greedy and the masses. I find those labels hard to accurately apply to any single one my fellow Americans or human beings.