Diary

Sebelius Proves Our Point

If previous arguments have not proved that Healthcare Deform needs repeal, the Secretary of Health and Human Services has just provided us with our first object lesson.  The economy is best served when its players are driven to make economic decisions.  It is when we make political considerations paramount we find ourselves going in the wrong direction.  The decisions of what prices and costs will be for goods and services is best made in the marketplace.  That will insure we have the highest value for the lowest possible investment.  When our economy is directed by political considerations, the winners and losers will not be the actors, but the people.

Kathleen Sebelius is fighting mad.  Healthcare Deform, as passed by Congress, is already showing its warts and moles.  When additional costs in the form of more coverage occur, the price must necessarily go up.  Otherwise, there just isn’t even money to pay out those costs.  For most of us this is Econ 101.  But not for our Dictator of Healthcare.  She believes evil corporations are just padding their bottom lines and robbing innocents of their hard-working paychecks.  This premise of the collectivist narrative is her most cherished belief.  Just because more is demanded for coverage, she cannot fathom the price rising. 

Why can’t they just reach into their pot of gold at the end of the rainbow and pay for the higher costs out of that? 

Well, Kathleen, because there is no pot of gold.  There are no leprechauns to catch.  There is no unicorn for the virgins to kiss.  Joining hands and singing John Lennon’s “Imagine” will not pay for a single wheelchair or bottle of penicillin.  Actual people have to pay into the system to cover the extended costs of increased coverage for yoga mats and watercolor painting classes.  Remember that pill Obama wants to give grandma?  That must be paid for as well. 

Sebelius is a political appointee of the president.  Her concerns are not economic.  She doesn’t have to make a profit, cut costs, or consider investors.  She has political considerations.  Politically, increases in the price of insurance is poison.  So, she is threatening insurance companies with economic reprecussions should they increase the price to cover the costs.  Her boss is a politician.  He’s concerned with political implications.  He has no economic decisions to make.  Obama’s decisions are entirely political in scope.  His job is to make his followers happy and to hell with the people against him. 

So, this is our first taste of when the political decision meets the economic reality.  Insurers must now rationalize their product’s prices to politicians.  Economically, they must raise the price, but their masters, politicians, must stop this from happening because it will be embarrassing.  Politicians are going to decide that insurance companies will have to give more coverage for less money.  Insurance companies are going to go broke, because there is no way to compare economic costs with political costs.  The party with the monopoly on force, the politicians, will be able to dictate the terms to the economic players.  This will be disaster.

Because, political decisions are made for political reasons.  Political reasoning, when it meets economic realities, will dictate that the people who support them will get the beef.  Their political opponents will get gruel.  It would be suicide to give their political opponents an equal share because their political allies would rage against this injustice.  The political reasoning will be, ‘they don’t support us, so they shouldn’t partake in the bounty.’  Let them eat crumbs. 

Because, as Lord Acton stated, Power Corrupts, Absolute Power Corrupts Absolutely.  That’s the political reality.

Sebelius was handed a blank slate on which to write the rules.  She is proving that political considerations will always trump economic ones.  So, when it comes to who gets cake and who gets the crumbs, her model is going to be a political decision.  She will make sure the ‘right’ people are served while the ‘wrong’ people are left out in the cold.

If not her, then someone else will certainly use this power.

If we let a politician mete out favors that are finite, there will be winners and losers, economically.  Resources, regardless of the collectivist narrative, are not infinite.  They have limits and so gold-plated healthcare will be provided to their friends, their enemies will only get the remainder.  There will not be much left, and so there will be rationing.  There will be death panels who must decide which group wins and which group loses.  The loser in healthcare will not survive their illness.  The winner in healthcare will get their needs met. 

This is only the first, most stark example of political versus economic considerations.  Many more will follow.  It illustrates just how dangerous the policy of having politicians making economic decisions really is.  If you give them the right, they have to take advantage of it.  They must.  Otherwise, they will no longer be in power and someone else will have that right.  It’s the nature of human politics.  It’s the nature of man.