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.