Dangerous Thoughtlessness: Why I’m Not So Excited About ACA’s Health Care Refund Checks

“This is how the world works. All energy flows according to the whims of the Great Magnet. What a fool I was to defy him.” ~Raoul Duke

Paul Abrams is excited about free money showing up in his mailbox. He told us all about it in this Huffington Post editorial:

I Pledge My Health Insurance Refund to President Obama’s Re-Election. Will You Join Me?

Some of his reasoning seems arbitrary to me. For example:

You see, under our new healthcare insurance system, the insurers have to spend at least 80 percent of the premiums they collect from us on actual healthcare. Before, they would just pocket it, and provide for executive bonuses, yachts, private jets, memberships to country clubs — all of which are wonderful, it is fine for them and others to enjoy them, but not with my healthcare dollars, thank you very much.

Why is it fine for them and others to enjoy these luxuries, but not with his healthcare dollars? What about his health care dollars so different in substance for his standard issue Federal Reserve notes that the government must dictate special rules as to how they may be allocated within businesses? 

As far as I can tell, there is nothing. The health care industry is an industry like any other industry. It works like this: Consumers browse the goods and services that providers offer. Consumers choose between either keeping their money, on one hand, or exchanging their money for the goods and services on offer, on the other hand. What does it matter, then, if, after the exchange, the provider spends the money he receives on a yacht or a private jet, so long as the provider comes through with his end of the bargain? Well, it doesn’t matter—at least not to me.

Why is 80 percent the magic number? I’d love to see the calculus that went into that one. Why stop there? Doesn’t Paul Abrams think that he might get more bang for his health care buck if health care companies were forced to spend at least, say, 87 percent of the premiums they collect from us on actual healthcare? (Large insurers, in fact, are required to keep the percentage up to 85).

I love this petty reassurance that he tosses out at the beginning:

This check will not come from the government, and will not add a penny to the deficit, but it will arrive because of the “patient protection” part of Obamacare.

Just aim the guns and watch the price of health care fall. Isn’t economics fun!

See that? The government isn’t paying for any of this. It’s just aim its guns at the health care executives and forces them, at penalty of law, to cut checks from their private coffers. What could possibly go wrong?

Well, when you tell investors that they may no longer legally enjoy high returns on their health care investments, what do you think they will do? Will they all throw up their hands and say, “Yup. The jig is up. No more yachts for us on Paul Abrams’s health care dollar. I guess we’ll just scoot around in dinghies like everyone else?” I rather doubt it. No. I expect them all to leave the health care industry for other industries that will allow them to continue to buy yachts and private jets. What is to stop them? This will lead to a reduction in the supply of health care services, and consequently a rise in prices. But don’t worry. So long as the government’s arbitrary 80/20 rule is in effect, what could possibly go wrong?

“All energy flows according to the whims of the Great Magnet. We are fools to defy it.” This intervention is only the latest in a century of interventions, all of which have promised greater access to health care. Like all of these previous interventions, it, too, will fail because the people who advocate them falsely believe that they can get something for nothing if they’d only aim the government’s guns at the right people.

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