While the Supreme Court is deciding the future of Obamacare, we should not be distracted by only the constitutional issue.  There are many ways to pass bad laws that do pass constitutional muster.

John Cochrane writes in his blog, The Grumpy Economist, Supreme Court and Health Insurance, 3/31/12.

Excerpt:

As blog readers will have guessed, I think the central problem is pathology of previous legislation and regulation, and the answer is  competition and deregulation. (Links below) I was interested that Solicitor General Verilli also pretty clearly blamed the dysfunction of the health care market on…previous legislation and regulation! From his opening statements:

.. for more than 40 million Americans who do not have access to health insurance either through their employer or through government programs such as Medicare or Medicaid, the system does not work. Those individuals must resort to the individual market, and that market does not provide affordable health insurance.It does not do so ..because the multibillion dollar subsidies that are available for the.. employer market are not available in the individual market… That is an economic problem.No, that’s a regulatory problem!  But if “multibillion dollar subsidies” for the employer-based group market are what killed the individual market, maybe, just maybe, the answer is to get rid of those subsidies?

Economists left, right and center have bemoaned the effects of the tax deduction for employer-provided group insurance. If your employer or you contribute to an individual plan, which you can take with you from job to job, and has guarantees that you won’t be dropped if you get sick, it’s not tax deductible.

Why is individual health insurance “unaffordable?” Because both Federal and State regulators have salted it up with mandated coverage that people wouldn’t buy on their own. Young, healthy, uninsured need simple catastrophic coverage, or even just a contract that allows them to buy insurance later if they need it. They can’t buy it because it’s regulated out of existence.

HKO comments:

I have seen more and more mandates consistently added to health insurance for decades. Each mandate removes choice and drives up cost. After years of such government interference we lament the high cost of health care and seek to blame the insurance companies, doctors, or just about anybody except the government who mandated coverage and higher expenses.  And then we ask the government to solve the problem.

The government has so mucked up the market for health care that a free market for health care has barely existed.  It is about time we tried it.

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