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Why healthcare reform bill will eventually go down to defeat



The bill is full of fatal flaws, as I and many others have emphasized. Mandating the purchase of anything just because you're alive is unconstitutional. Prohibiting insurance companies from refusing policies to those with pre-existing conditions will bankrupt the industry, because the penalties for noncompliance with the purchase mandate will be much less than the cost of insurance. Regulating the price that insurance companies charge, in addition to their profit margins, is also unconstitutional. Perhaps most important of all, the collapse of the Soviet Union proved once and for all that governments are utterly incapable of restructuring and efficiently managing industries, much less economies; it's simply too complex a job for mere mortals. And then there's that old economic maxim that says you can't impose price controls and hand out subsidies in a market without eventually facing the need to ration the product or service in question.

The bill, which amounts to the biggest restructuring of the American economy in history—of any economy, for that matter—and which promises to deeply impact the lives of every single one of its 300 million residents, was passed against the will of the people. Not a single vote from the opposition; every major poll prior to its passage showed that a majority of people were against it. Even today, the majority of people believe it should be repealed. Never before has anything this big passed in such an undemocratic, partisan manner.

It will almost certainly be a budget buster, at a time when we are already staggering under the burden of $1.5 trillion dollar deficits for as far as the eye can see, and a rapidly rising debt/GDP ratio that will soon take us to the lofty heights previously occupied by such economic titans as Japan and Italy. Never before has a major government program not ended up costing significantly more than projected, and this is one of the biggest to come along.

Arnold Kling has some pithy observations that bear repeating. Excerpts follow:

The health care legislation represents a culmination of a sequence of unpopular major initiatives from Washington. First, there was Henry Paulson’s massive transfer of wealth from the people most hurt by the financial crisis to some of the people most responsible for it. Next, came the massive, ill-conceived stimulus bill, which was not timely, targeted, or temporary but instead a pure power grab by Washington. Health care legislation is merely the latest straw.

The American people are watching their country being transformed from an exceptional, vibrant free economy to a broken European welfare state, and many of us do not like the direction of change. We may not know exactly what is in the health care legislation (does anyone?), but we know its intent to assert government authority over health insurance. We know that it creates a large entitlement, paid for in large part by unspecified future cuts in Medicare.

Thanks to the projected Medicare cuts, the Congressional Budget Office scores the health care legislation as deficit-reducing relative to current law. However, current law is unsustainable. Medicare spending will have to be cut in the future in order to avoid national bankruptcy. By diverting projected Medicare cuts into a new entitlement, this legislation makes the impending budget crisis in Medicare loom sooner and deeper.

The public probably does not understand this budgetary legerdemain, but their instinct is to distrust Congress. In this case, the populist instinct is valid, and the elitist contempt for ordinary citizens is quite unjustified.

The Tax Foundation has put together a summary of how the healthcare bill is to be financed. Note the huge portion (44%) that is paid for by cutting Medicare spending. How many are gullible enough to think these cuts will actually occur? And won't they just make the Medicare deficit even worse than it already is? There is some really serious, runaway deficit spending lurking inside this bill, and it's way too big and ugly to keep hidden for long.


This whole thing is so outrageous that it simply cannot survive. There is plenty of time for the people to look inside this healthcare box of surprises and come away horrified. Spread the word.

UPDATE: Here is an excellent paper written by Barnett, Stewart, and Gaziano that makes a very strong case for why the individual mandate is unconstitutional.

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