If they don’t turn to market solutions, it’s hard to imagine how anyone, no matter their party affiliation, is going to “fix” problems with Obamacare. The reason the problems — which were wholly predicted by opponents – exist is because planners ignored or attempted to short-circuit the market.
That is why the outcome of Obamacare was so predictable – no one has ever been successful in overcoming the market. The market is an inexorable force, and it’s a no brainer to forecast the failure of anyone who thinks they can circumvent it.
That remains true if the Republicans attempt to continue the effort simply by scattering the “peas.” (You know, what every child tries when told to eat their peas. They just scatter them around on the plate hoping it will appear that they ate some.)
What everyone is hoping for is a magic wand to make costs go away. They want someone to make it feasible to “get something for nothing.” That just isn’t going to happen. The most they can do is hide the reality and dupe those who seldom think.
So, for example, if the Republicans think they can solve the cost of subsidies by reducing “tax credits” to employers who provide health insurance, and direct the increased taxes to fund the subsidies, it won’t work. It is simply window dressing that will probably fool everyone, except for the employers, for some short period of time. It will reduce employment leaving those unemployed with no insurance, and increase the cost of doing business. It will not touch the reasons for escalating premium costs which are tied to the escalating cost of health care. These are inherent economic realities, reflecting what is always the consequences of government interference in markets, and the very real nature of human beings.
Markets are after all about human beings, and human beings use more stuff that costs less (or nothing), than stuff that costs more. So when they don’t have to pay for stuff, they use more of it, and when it seems “free” they use lots of it. That truth kicks in another natural market law, the rule of supply and demand — the more the demand the higher the cost.
But there is actually some magic available. Competition. Competition has a magic-like impact on markets. And, it doesn’t matter what kind of service or product is involved. Couple that, with holding each consumer responsible for that which they use, and amazing things would happen in the availability and cost of medical care. And, that fact is just as predictable as was the failure of Obamacare.
It was recently emphasized to me that the medical industry is not a free market. Amen. It was stated, however, as though it is an unalterable situation. It absolutely is not. There are two things that stand in the way, however – those who are now being protected from competition, and those who have a total lack of confidence in markets, despite the staggering evidence, historically or currently, about how effective markets are in making stuff available in abundance at ridiculously cheap prices.
It is no accident that costs are out of control in those market endeavors that are most controlled and protected from competition by government - -health care, education, postal service – while amazing and miraculous technologies, like computers which are hugely in competition, are so cheap that anyone can afford them.
There are generations of people who have been convinced that markets don’t work despite the empirical evidence, before their very nose, in the delivery of hundreds of other products and services. In fact, medical care has been so long directed by government that few people today really remember a time when it was a relatively free market. Or even, the time when few people had health insurance. Health care prices were very reasonable, indeed.
I remember a moment , in my home, after my grandmother’s funeral, with her seven grown children standing around the table, tallying up her hospital and doctor bills (Prior to her death she had spent a couple weeks in the hospital.) They came up with a total and divided it by seven – and each one them – teachers, railroad workers and farmers that they were — wrote a check for their share, right then and there.
It was probably a blow to their family budgets, as all unexpected expenses are, but the point is, it was doable – as it totally would never be today.
Arguments abound about why that is impossible today, but the debate never recognizes that nothing could be more impossible than the status quo of a command and control market.

Market Update

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