Wednesday, April 30, 2003

Gephardt of Darkness

Part 1: “Imagine the growing regrets, the longing to escape, the powerless disgust, the surrender, the hate..."

Dick Gephardt has announced the outlines of his National Healthcare plan, which he plans to make the centerpiece of his 2004 presidential campaign. Chuck suggested that I should “kindly destroy him, with extreme prejudice” on this site, and I’m strongly tempted. However, there’s just too much to say all in one post, so I figure I’ll do it one argument at a time.

The most glaring flaw in the Gephardt plan is that it would *require* all employers, regardless of their number of employees, to provide a health insurance plan for their employees. I’ll set aside the standard objections about imposing costly mandates on business (or rather, I’ll postpone them for another day’s blogging), and instead simply point out that “health insurance plan” is not a well-defined notion. There are many different health insurance plans, from the barest of bare-bones to the most bloated plan you can imagine. To enforce the policy – hell, even to *define* the policy – the government will have to state the contents of a health insurance plan that satisfies the mandate.

Adopting a vacuous phrase like “basic healthcare products and services” will not solve the problem, because what is basic to some is crucial to others. Does contraception constitute basic healthcare? How about psychotherapy? Dental care? Chiropractic? The phrase “medically necessary” is just as problematic, because there is no objective definition of necessity. And if even if there were, it wouldn’t matter, because the content of the law will be determined by the legislative process. The “basic” package to be included in all healthcare plans might initially be minimal, but over time it will succumb to the same special-interest lobbying that affects every other area of public policy. If psychotherapy is not initially included in the package, eventually it will be, once the psychotherapists’ lobby has its way. And likewise for contraception, dental care, chiropractic, acupuncture, hair transplants, liposuction, ad infinitum.

Don’t believe it? That is *exactly* what has happened in every state in the union, where mandated benefits laws require that any health insurance policy sold must include coverage for various products and procedures, including most or all of those listed above (yes, even hair transplants). Mandated benefits drive up insurance premiums, thereby pricing people out of the market and increasing the ranks of the uninsured. Given that medical interest groups have found it worth their time and money to lobby the 50 state legislatures to pass laws that affect only the individual state’s residents, it’s a no-brainer that they’ll do the same at the federal level. With Gephardt’s plan, the stakes will be immeasurably higher because (a) the law will affect the entire country and (b) businesses will be *required* to buy policies with the specified benefits (whereas with state-mandated benefits, individuals can choose to go uninsured).

As the number of medical products and services included in the government’s mandated “basic” healthcare package increases, the price of health insurance will inexorably rise. People who will now be covered for all these products and services, and who will have been forced to pay for them already (most likely in the form of reduced wages and compensation), will avail themselves of the medical products that will be effectively free at the point of sale – and the prices charged for those products will also go through the roof. (Indeed, that’s precisely why the medical lobbies will push to have them included in the standard package: because it will massively inflate demand, prices, and profits.) In short, Gephardt’s plan will lead to dramatic increases in the cost of both health insurance and healthcare products and services. All of this will, of course, get blamed on the free market, thereby fueling political demands for further state intervention in the healthcare system. I wouldn't be surprised to find Gephardt himself leading the charge.

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