The passage of the Democrats’ healthcare bill this evening is a government seizure of 1/6 of our nation’s economy. Democrats in Congress have ignored the will of their constituents, as poll after poll in recent months has shown. However, Democrats have also overlooked another important fact: basic free market economic principles. The proposed health insurance mandate creates an inelastic demand for health insurance, meaning that regardless of price, EVERY American must purchase health insurance. This means that prices can, and will rise greatly because health insurance companies have no incentive to lower prices. Why would they? You have to buy their product regardless of price. However, the bill allows the health secretary to set price caps on insurance premiums, which would limit how much insurance companies could charge. In this case, the price ceiling creates deadweight loss in the market. In essence, deadweight loss means that the market is not operating at maximum efficiency, further damaging our broken economy in the midst of a recession. Efficiency is something that doesn’t occur through invasive restriction from government, but through maximized competition, which empowers consumers to control the market.
This bill contains some good ideas, namely allowing individuals with pre-existing conditions to get coverage, creating a healthcare exchange, and allowing dependents to remain on their parents’ plans until age 26. None the less, the other major components of the bill blatantly disregard free market principles. By opening state borders to competition, along with many other reforms proposed by Republicans that wouldn’t stifle free market economics and drive our nation into paralyzing debt, prices would have dropped dramatically and improved market efficiency without perpetuating the growth of unsustainable government entitlements and welfare programs. To pay for these sweeping changes to the healthcare industry, Democrats will cut a half-trillion dollars from Medicare, hurting seniors, and raise taxes on prosperous Americans by a half-trillion dollars. When our unemployment rate hovers near the double digits, why would lawmakers find it acceptable to raise taxes on the very Americans who would be the using their income to hire more people and expand their businesses? Now, rather than hire more Americans in need of work, business owners will be paying their hard-earned money to the federal government.
As if these provisions of the bill weren’t offensive enough, the bill also allots for the hiring of over 16,000 new IRS agents to enforce this monstrosity. It also yields unprecedented power to the health secretary to make decisions about citizens’ healthcare that should be made by individuals, not some politician in Washington. For those of you who think this bill will lower premium costs for hardworking Americans, notice that health insurance companies’ stock prices are at 52 week highs. People are anticipating the passage of this bill to create record profits for these companies; basic economics says this will happen. Even the CBO says this bill will raise premiums by as much as 10% and when all associated costs are accounted for, this legislation INCREASES our nation’s deficit by over $50 BILLION over the next 10 years. However, it is important to note that the increased taxes and Medicare cuts go into effect immediately, and the expensive “reforms” do not begin until 2014. This means that 10 years of taxes and cuts can’t even cover 6 years of these new programs, in fact, it comes up over $50 billion short! This “fiscal Frankenstein” (as it has been cleverly dubbed by Rep. Paul Ryan) will drive this nation into financial oblivion. This is a grave mistake on the part of Democratic lawmakers, and Republicans warned them of this; but more importantly, the American people warned them of this. Democrats will answer for this misjudgment in the months to come, and in November.
