Socialists have established a beachhead against a meritocracy based on rational economic behavior in the area of healthcare. Leftists love the wonderful feeling from proclaiming that everyone is entitled to affordable state-of-the-art healthcare and that health insurers should be required to cover pre-existing health conditions. Leftists love to hand out free goods with other people’s money. It gives them power.
But let’s see if mandating insurance coverage for pre-existing conditions makes economic sense. Let’s start by examining whether pre-existing conditions should be covered for other types of insurance.
For example, should we take “Step #1” and require that pre-existing conditions be covered for homeowners insurance? Should people be able to buy the insurance after their house burns down? Of course not – elsewise nobody would buy homeowners insurance until after the event.
So, of course, leftists would then lobby for Step #2: mandating that all homeowners buy insurance. This is exactly what they did in healthcare under Obamacare. But if everyone is required to have some form of homeowner’s insurance (with pre-existing conditions covered), then people will tend to buy the cheapest policy possible (e.g., with minimal coverage) from an insurance firm with low rates, bad credit ratings and a poor reputation for paying claims. Then once an event such as a house fire occurs, homeowners can simply switch to a better policy and file a claim for the damage as a pre-existing condition!
Which leads to Step #3: Mandating that all insurance companies provide levels of government-prescribed coverage for various potential claims. Sound familiar? Of course that is exactly what leftists do when they mandate that every health insurer provide policies with government-prescribed benefits.
Drug companies love it when government forces health insurers to provide government-specified benefits. Drug companies can tweak their medicines, obtain new patent protection, and lobby government to require coverage for these tweaked medications. If free-market types object the leftists will have a field day labeling them as denying healthcare for the poor.
The final step comes after government has completely messed up a market for insurance and made it ridiculously costly with various mandates. They move to Step #4: require high-productivity taxpayers to subsidize those who do not have full time employment. Checkmate!
The same principles hold for other types of insurance such as life insurance. Can my executor or executrix buy a big policy for my estate after I die? Obviously mandating coverage of pre-existing conditions for all types of insurance would harm or perhaps destroy all forms of insurance. So what about health insurance? There’s the rub. Socialists can play their political power games with health insurance by arguing that it is a basic human right.
Collectivist thinking brought us to this sad state of affairs one step at a time. First it was allowing healthcare insurance to be a tax-deductible employment benefit. Then it was Medicaid for the poor and Medicare for the aged in 1965. Then George W. Bush brought pharmaceutical insurance into the public sector. And when it all became catastrophically expensive and efficient – blame capitalism!
Logic cannot be used against the left because they do not value being in a society that respects truth and logic. To leftists it is all about power: their power. The underlying economic war in America right now is a choice between two methods of producing and allocating resources:
- Conservative: Each person’s consumption (i.e., standard of living) is driven towards equaling their production. Values of resources are determined by markets. It is a meritocracy based on prices reflecting individual choices through voluntary trade.
- Liberal: Each person’s production and consumption need not match, but rather, should be determined by a political process. Similarly, values should be determined by a political process. It is a meritocracy based on political power and on political standards such as political correctness.
The problems with the leftist way (i.e., socialism) are that: (1) there is little or no incentive to produce goods that others want, (2) there is little or no incentive to innovate or refine, and (3) there are huge incentives to participate in the political processes. But political processes do not produce the goods and services. Rather they usurp them.
That is why socialism fails in the long run. The only thing keeping collectivism alive is that collectivist societies can free-ride by: (1) observing the innovations and technologies created by free enterprise, and (2) observing the information revealed by the prices from free markets.
If America loses its economic freedom, the whole world will suffer.