To rift on the Beatles, Democrats on Capitol Hill are all set to take a moderately bad situation and make it worse, worse, worse, worse, worse, oh. … Many of the problems in the health care market today were created by government interference. William Tucker, a writer who has a long history of defending the free market, has an excellent piece on today’s American Spectator. Tucker observes:
The basic axiom of free-market economics is that government regulations mess up a market, which leads to misdistributions, which leads to more cries for government regulation.
You couldn’t find a better example than the current health insurance “crisis.” This week Congress is poised to take a problematic situation and make it much worse. There are indeed 45 million people who are uninsured in this country. Some of them (like my 23-year-old son) don’t want to spend $100 a month for what seems like a useless precaution but others are in dire need of insurance coverage and can’t get it. The basic reason is that, instead of allowing a free market to operate, we’ve done the following:
a) Allowed the states a free hand in regulating insurance, and
b) Shrunk the market by allowing 62 percent of the market to secure its coverage as employer-based “health benefits.”
The result is that only 6 percent of the non-elderly population actually buys insurance directly from insurance companies and these tend to be a perversely self-selected group who are too sick to work or can’t get a good job. As a result, the insurance companies can’t create large risk-pools and have to charge everybody a high rate.
Understanding all this requires a little analysis, of which Democrats seem to be incapable, and so the easiest thing is to blame it on “greed.” Thou and I are certainly not greedy, nor are our favorite politicians greedy, but someone out there is greedy — the insurance companies! — and therefore their greed must be countered by the government, mainly by getting the government into the insurance business.
Because of a torturous course of history whereby health insurance companies aren’t allowed to sell their product nationally but rather must work on a statewide basis, we end up with a very peculiar system of regulation:
So what we have is not the big health insurers versus the public. What we have is government versus government. The states have overregulated insurance, erecting barriers to entry and even encouraging consolidation on the theory that all this will help consumers. And when it has the opposite effect, the federal government decides insurance companies are the problem and they have to be supplanted by a federal entity.
There are simple ways to fix this, including letting insurance companies sell across state lines and repealing regulations that force companies to provide coverage for services many of us don’t want:
The result would be that, instead of today’s oligopolized insurance market, a thousand Willie Lomans would start trudging door-to-door trying to sell people health insurance at prices they could afford. Congress could just sit back and watch — until it found something else it can try to mess up. How about energy?