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Jeffrey Robin: Why Can’t the Market Fix Health Care?

The nation would benefit from a market-driven approach to reform

For many months now — and most likely for a couple more still — Congress has been debating the most important issue of Barack Obama’s presidency: health-care reform.

It’s a debate that has been ongoing for the past century, and if Congress passes anything, even if it isn’t the most perfect system, it will undoubtedly be a huge accomplishment. But that’s the question, isn’t it? Are they devising the correct kind of overhaul, and will it work?

Despite rhetoric to the otherwise, the public-option-centered plan that emerged from the “debate” over health care is far from what we were promised: a deficit-neutral, bipartisan plan to cover most if not all of the 40 million to 50 million uninsured individuals in the country. Besides the theoretical consideration that the plan will severely restrict individual liberty, it’s likely to have unintended and serious consequences on future generations — beginning with our own.

First, the plan before Congress has stipulations providing for the compulsory obtainment of insurance. This not only greatly restricts individual liberty by depriving people of the choice not to have insurance without being punished monetarily, but it may and will have several severe side effects, including but not limited to the indirect elimination of health savings funds.

Further, compulsory coverage combined with the health-bill’s provision for price controls in the form of “community ratings” for insurance will have a direct and negative impact on the young. While premiums for those most likely to be sick — the elderly — will go down through price controls, premiums for those least likely to be sick — the young — will go up proportionally. This is nothing less than the expansion of direct social welfare already present in Medicare.

Finally, no part of the plan is more certain than its unlimited ability to come in well above cost. The government’s ability to properly project the cost of social programs has never been stellar (think Medicare and Medicaid), and this health-care plan is no exception.

The nonpartisan Congressional Budget Office’s own report fails to take into account several important factors, such as: 1) how businesses will change their behaviors to remain profitable and protect themselves from taxes, 2) the behavior of future politicians, who most likely will increase subsidies as they have with Medicare to please constituents, and 3) the increases in spending every year that will only be made more painful by the effects of economic contraction resulting from proposed tax increases, causing a precipitous decrease in expected revenue.

Don’t get me wrong. Just because I think the 1,990-page, $1.2 trillion health bill passed by the House is a monstrosity doesn’t mean I favor the three-page, $61 billion Republican alternative. Frankly, it’s naïve to believe you’re helping anyone in the long run with either plan. However, hardly anyone has asked a very simple and fundamental question: Why can’t the market fix it?

So often, harnessing the power of the market has greatly benefited the nation. This was true following the Reagan administration, when the nation experienced the longest stretch of uninterrupted prosperity. Why not now?

Expand the market by offering Medicare recipients vouchers to obtain health care of their choosing, reform taxes on health services to create huge health savings accounts, break state monopolies on regulating health insurance and allow people to buy insurance plans from other states. Add all of that, and what do you have? A formula to reduce the size of government while giving individuals more freedom and choice — not to mention a potentially huge tax break of $9.7 trillion for workers — give more people the ability to obtain quality health care, and promote economic growth.

To all progressives, I issue this challenge: You say meaningful reform using the market is a pipe dream. Why? Why is it impossible to trust individuals in the marketplace over the state? Why is it better to expand the state and eliminate freedom, rather than achieve the same goals and more by limiting government and giving people more freedom?

To those who are unsure on health-care reform, I ask: Which option would you rather have? The government’s, or yours?

— Jeffrey Robin is a student at UCSB.

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