September 29, 2011

Has the Affordable Care Act raised costs paid by the consumer?

The Government’s well intentioned Affordable Care Act, must now come to grips with a survey done by the Kaiser Family Foundation that reveals that the Act may have been counter productive in the aim to reduce the average cost of welfare across the nation.

The survey found that insurance premiums rose by 9 percent in 2011. Healthcare costs for a single worker went up on average from $5,049 to $5,429, and for a family, costs rose from $13,770 to $15,073, on average.

When confronted with damage from the report, the White House dismissed the report accusing it of, "looking backwards". Nancy- Ann DeParle, the White House Deputy Chief of Staff elaborated on the dismissal declaring  "When we look to the future we know that The Affordable Care Act will help make insurance more affordable for families and businesses across the country".

The act seems to have only changed whose name appears on the check. Instead of Joe employee paying for his own healthcare it is now Joe employer paying not only for Joe’s but all of his coworkers. This essentially serves as an intrusive wage increase not all that dissimilar from a minimum wage. The government in an effort to provide healthcare to all, just made it more expensive to hire workers and at a time when employment is at an all time high this could not have come at a worse moment.

Employers are now cutting back on existing workers and also hiring less workers because they simply cannot afford it. Since healthcare plans have gone up by nearly $400 per worker that reduces not only the number of workers they can employ but also the amount of hours existing employees can work.

It is not only interference with the relationship of employee and employer that has driven up the cost of healthcare either. As the act increases the amount of provision it will give for prescription drug plans such as medicare the ability to function with government financial support. I find this puzzling because I have always seen price as something that is prohibitive by nature. If the main reason of pricing a medicine at $10 exists so that the market will clear and that only x amount of people will purchase it, then won’t additional money necessitate a rise in price so that the price can remain prohibitive in nature?

Really all a government does by subsidizing anything is provide increase the money supply. This of course leads to inflation which does nothing to change the real price of the good but increases the nominal price paid by the consumer. The government has done nothing to increase the amount of product being produced or provisioned a more efficient means by which to produce the product at a cheaper price so really all they could hope to do is change how many pieces of paper are handed over in order for the average consumer to purchase the good.

It is a natural part of life that the most high tech drugs are often paid for by the people of society that are considered “rich or elite” this is just because it is these types of people that can afford a product at a high price that is charged for a drug that took millions to develop. What is wrong with allowing drug prices to stay high for a few years while the rich folks pay for them and being content to take part in the payoff when the price is at a level that can be more easily afforded? 

Since the government can really only be characterized by the use force, everything they are doing with this act involves forcing people to interact with each other in a certain way. While one could say that government is assisting its citizens with acting in an efficient way, seldom is this actually the case. Since the primary means of government intervention is subsidy or mandate, it seems to me that these practices are merely a means to make people feel like their being taken care of, while rampant inflation and cost increases occur in the background.

All of the mandates on how care is rendered constrains economic liberty, and hinders the market from working properly. Instead of telling me who should pay for my healthcare and how it should be payed for, shouldn’t the government focus on enforcing legal contracts that are established by me, my provider and my insurance company so that I can seek out what combination offers me the most competitive combination of price and quality?

The governments role in healthcare should be protecting the free market, allowing new methods and technologies to arise so that the price can come down through competition.

Read more:

No comments: