The Obama Administration is in a bit of hot water because it wants to coerce just about everyone – including a lot of religious institutions - to provide health insurance policies that cover the cost of birth control and certain abortion-inducing drugs.
The White House already has tried to defuse the controversy by shifting the coverage mandate from insurance buyers to the insurance companies, but everyone with an IQ above room temperature realizes that is a meaningless cosmetic change.
Regardless of how one feels about abortion or birth control (or even how one feels about religion), this is a bad policy. Decisions about what sort of insurance to provide shouldn’t be the result of a one-size-fits-all government mandate.
Yes, the Administration’s religious intolerance is unseemly, but it is also symptomatic of why government intervention in the health sector is the underlying problem.
John Cochrane, an economist at the University of Chicago (and an Adjunct Scholar at Cato!) addresses the economic issues in a Wall Street Journal column. Here are some key passages.
Insurance is supposed to mean a contract, by which a company pays for large, unanticipated expenses in return for a premium: expenses like your house burning down, your car getting stolen or a big medical bill. Insurance is a bad idea for small, regular and predictable expenses. There are good reasons that your car insurance company doesn’t add $100 per year to your premium and then cover oil changes, and that your health insurance doesn’t charge $50 more per year and cover toothpaste. You’d have to fill out mountains of paperwork, the oil-change and toothpaste markets would become much less competitive, and you’d end up spending more. …Doubling the number of wellness visits and free pills sounds great, but who’s going to pay for it? There is a liberal dream that by mandating coverage the government can make something free. Sorry. Every increase in coverage means an increase in premiums. If your employer is paying for your health insurance, he could be paying you more in salary instead.
For all intents and purposes, Professor Cochrane is explaining the economics of third-party payer, which occurs when government intervention undermines the ability of markets to promote efficiency and low prices.
He also delves into the moral issues and explains that the only solution is to get the government out of health care.
Our nation is divided on social issues. The natural compromise is simple: Birth control, abortion and other contentious practices are permitted. But those who object don’t have to pay for them. The federal takeover of medicine prevents us from reaching these natural compromises and needlessly divides our society. The critics fell for a trap. By focusing on an exemption for church-related institutions, critics effectively admit that it is right for the rest of us to be subjected to this sort of mandate. They accept the horribly misnamed Patient Protection and Affordable Care Act, and they resign themselves to chipping away at its edges. No, we should throw it out, and fix the terrible distortions in the health-insurance and health-care markets. Sure, churches should be exempt. We should all be exempt.
I’ve explained four principles that should guide policy makers as they try to put the toothpaste back in the tube and restore free markets to healthcare.
And I’ve cited a real-world example of how the system would work if the third-party payer crisis was fixed.
We can implement free-market reforms, though they won’t be easy. Or we can keep on the current path, lose more of our freedom, and eventually have life-and-death decisions controlled by bureaucrats.
Should be an easy choice.