Obamacare’s Failure is Not Just a Technology Problem

by | Nov 3, 2013 | Healthcare

Like public education, public housing, and public toilets, the government's virtual takeover of the health insurance market is doomed to fail, because government intervention in the economy is always doomed to fail.

The rollout of Obamacare has been an unmitigated disaster. From a website that doesn’t work to skyrocketing premiums, Americans are finding out “what’s in it.” The administration and its lackeys have now begun characterizing the problems as due to nothing more than technical problems or so called “glitches” that will be fixed in due time with perhaps another billion dollars of funding. According to this National Review article, Biden “apologized for the disastrous rollout of the federal health-care website , saying that he and President Obama thought that the website was ready, but didn’t understand it themselves.” He added:

“Neither he and I are technology geeks, and we assumed that it was up and ready to run,” Biden told HLN’s Christi Paul in an interview. “The good news is — although it’s not, and we apologize for that — we’re confident that by the end of November it will be and there will still be plenty of time for people to register online.”

In other words, according to Biden, the failure of Obamacare is a short term technology problem that could have been fixed if only he and Obama were “technology geeks” that could have personally attended to the engineering of the website.  In another example, after voicing support for the law in September, Starbucks CEO Howard Schultz criticized the rollout of Obamacare but attributed the problem to practical implementation:

”Unfortunately, in this kind of situation, execution trumps strategy,” Schultz said on CNBC. “It might be a great strategy, but the execution is really flawed. It’s off the rails.”

Critics of Obamacare are committing an enormous error if they think the problem is simply a technology problem.  Like public education, public housing, and public toilets, the government’s virtual takeover of the health insurance market is doomed to fail, because government intervention in the economy is always doomed to fail. Socialism is not “good in theory” but bad in practice, it is bad in theory and therefore bad in practice.    

Socialism in all its forms must fail because it destroys the private ownership of the means of production and with it the profit motive and the price system.  In fact, socialism’s only purpose is the negation of the price system, i.e., the prohibition of private property and free exchange between individuals.  In destroying the price system, socialism destroys the central method of economic calculation by which individual businessmen and consumers weigh revenues and costs and substitutes for it the arbitrary judgments of government bureaucrats. In his treatise, Capitalism (chapter 8), George Reisman thoroughly demonstrates how “capitalism and the price system bring about a harmoniously integrated planning of the entire economic system” concluding:

…socialism, in destroying the price system, destroys the possibility of economic calculation and the coordination of the activities of separate, independent planners.  It therefore makes rational economic planning impossible and creates chaos.

The particular case of health care insurance is no different.  The entire system of health insurance was distorted by incentives in the U.S. tax code which led employers to pay employees in benefits rather than wages, a distortion compounded when states began mandating particular benefits which led to rising premiums, a distortion compounded yet again by Obamacare’s mandates of even more benefits and regulations which have driven premiums even higher (see FIRM for a detailed history of government intervention in health care).  It is simple to see the effects of this distortion by comparing the heavily distorted health insurance market to the relatively less distorted car insurance market and observing that there is no car insurance crisis nor even discussion of ObamaCarCare, yet.

At a more fundamental level, socialism represents a negation of man’s nature which requires the freedom to think, act, and own property in order to survive and prosper.  Socialism is therefore not “good in theory” but rather, vicious in theory.  It is not a coincidence that it has resulted in nothing but poverty, misery, and tyranny in practice.  On the other hand, as Reisman states:

Freedom and free exchange create an inherent harmony of the rational self-interests of people.  When the actions of individuals are free and do not represent the use of force, their effect is necessarily to benefit everyone involved.  This is because each individual acts to benefit himself and must at the same time benefit those whose cooperation is to be secured, or else he will not receive it.  In addition, no one standing outside the transaction can be harmed, because any evidence of harm to the person or property of others is grounds to prohibit the action as an act of force and violation of freedom.  ….As a result, the inherent tendency of my action is to produce improvement for others as well as myself, and thereby to improve general well-being.

The more frightening aspect of this debacle is that despite a hundred years of theory and practice, so many believe “this time it will be different.”  Unless the nature of the universe and reality change, it will not be different this time, whether Biden gets a computer science degree or not.

Doug Reich blogs at the The Rational Capitalist with commentary, analysis, and links upholding reason, individualism, and capitalism.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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