A tip on debating healthcare

The debate over repealing Obamacare is not so simple as free markets vs. human lives.

The market principles here are simply fact. Health care is a scarce good – this is why we have a problem in the first place. People can’t get as much as they want. We need a balanced economic solution, not mere demands that “healthcare is a right or people will die.” That gets us nowhere. It does nothing to solve the problem of scarcity, cost and sustainable rationing.

The health care debate ought to be about tradeoffs and maximizing utility beneath an equitable regulatory framework. Not a discussion of moral absolutes (i.e., “By repealing the ACA, you just voted to kill people!”). That’s unhelpful and immature and, frankly, exhibits a gross misunderstanding of how almost anything in life works.

Health care is a scarce good. The laws of economics should confine our thinking about moral absolutes with regard to who “deserves” health care. It’s simply unhelpful to demand healthcare for all without first deciding exactly how that is going to be possible.

Fact: Obamacare is failing

Some sad facts on Obamacare (that is, this isn’t up for debate):

Average premium increases above 25%, roughly one-third of U.S. counties projected to lack any competition in the Affordable Care Act (ACA) exchanges next year, and enrollment less than half of initial expectations provide strong evidence that the law’s exchange program is failing. Moreover, the failure is occurring despite massive government subsidies, including nearly $15 billion of unlawful payments, for participating insurers. As bad news pours in and with a potentially very rough 2017 open enrollment period ahead, the Obama administration signaled on Friday that it may defy Congress and bail out insurers through the risk corridor program.

More from the Mercatus Center.

Obamacare as jobs creator? Not so fast.

According to Thomas Black and Caelainn Barr writing at Bloomberg.com this morning, 2014’s surging hiring pace indicates broad economic recovery. Whether this is driven by stronger fundamentals or the illusions of easy money is yet to be seen.

But my reason for highlighting this article is for one particular phrase near the end:

Positions for software developers, computer systems analysts and financial compliance officers are getting hard to fill, said Paul McDonald, senior executive director at Robert Half International, Inc., the Menlo Park, California-based professional employment service company.

The boom in technology has driven the unemployment rate below 1 percent in the industry. New financial regulations and requirements for the Affordable Care Act are also boosting demand for professionals, he said.

I added the emphasis in the second paragraph. Even the slightest bit of thinking about this comment should lead you to understand that these new jobs aren’t actually a positive development. That’s because, I’ll remind you, more employment itself is not necessarily a good thing. More employment only indicates economic growth if the new jobs create real value–something ACA compliance officers probably don’t do. Of course, executives wouldn’t hire such compliance officers if they weren’t convinced such officers add value to their companies (even if, at the very least, by keeping them out of trouble with the IRS/HHS). But compliance officers don’t necessarily add value to the real economy.

For example, consider the hypothetical ABC Company. Since the beginning of 2014, ABC Company has spent $50,000 on ACA compliance initiatives. This was money that could have been invested elsewhere, like R&D or towards hiring another salesperson. Instead, it was “invested” toward ensuring compliance with an overbearing state regulation that itself impedes economic growth, and that the ABC ‘s owners are more than likely to believe either doesn’t help or harms their company’s long-term prospects. In effect, this is hardly different than simply giving $50,000 to some stranger on the street.

I’m reminded of the famous Milton Friedman/William Aberhart quote regarding government program jobs:

At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained, “You don’t understand. This is a jobs program.” Milton replied, “Oh, I thought you were trying to build a canal. If it’s the jobs you want, then you should give these workers spoons, not shovels.”

While this story is not about regulatory compliance, it might as well be. Creating jobs by requiring spoons instead of shovels is hardly different than creating jobs by requiring companies to hire more people to ensure compliance with new, confusing, overbearing and unwanted regulation. In both cases, business owners are hiring people they wouldn’t have otherwise hired for the sole purpose of complying with rules they don’t believe will help their businesses.

Finally, on a somewhat related note, new government audit reports reveal Obamacare is still a total mess. Sources here and here.