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Obama-care-chart A persistent assertion from those hoping for the passage of ObamaCare is that government competition in the insurance market will lower costs.

Not much is said about how this will come about, or why the massive Medicare and Medicaid programs haven’t already provided the cost lowering competition that ObamaCare will. The details of how government participation will increase competition remain vague, except to point out the obvious fact that if Uncle Sam is selling insurance it would represent one more outfit doing so. But there are already hundreds, if not thousands, of companies selling insurance. Presumably one more wouldn’t effect competition all that much.

Unless, of course, that one competitor had some special advantage. As it happens, the U.S. government does have an advantage. A couple of advantages, really. First, Uncle Sam doesn’t have to compete in the usual way. If the government is losing money on a venture, it can charge the losses off to taxpayers who may not even be involved. The second advantage is that government can simply force people to become customers whether they want to be or not.

The government is a special competitor with armed agents and prisons instead of a customer service department. When the government offers us protection, it is generally against what government itself will do to us if we don’t obey. Traffic tickets, permits, licenses, inspections, and regulations of all kinds are excellent examples. Given this general business model, and the government’s dismal record in running commercial ventures, the notion that the model will carry over well into the field of medical care seems naively optimistic to this writer.

Government is incapable of lowering the real cost of anything, because government doesn’t produce anything. What it gives to one it must take from another. The cost of brokering the transfer is a net drag on the whole system. It is impossible for government to reduce the cost of a voluntary exchange except to eliminate the costs it imposes. While involuntary exchanges must include the cost of the coercion.

Under the current proposal we will have the option not to buy insurance, but if you don’t you will be penalized with a tax that will be enough to buy the insurance anyway. Eventually pretty much everyone will participate just because it is the smarter of two bad options. The scheme is more likely to drive private insurance out of business than to reduce prices across the board.

Aside from reducing taxes, government can only reduce costs in two ways. Either by being more efficient than the private sector or by shifting costs from a larger group of victims to smaller group of beneficiaries. Cost shifting is how Medicare works now, and why costs for everyone else are exploding.

Anyone who thinks government will improve efficiency needs only to watch a postman and a UPS guy work for 15 minutes, or contemplate a $1000 toilet seat. The suggestion that government competition will force private companies to lay off useless paper pushers to compete with the lean, mean government medical care machine is something that only a congressman could believe.

So we’re back to cost shifting. The problem there will be that with universal coverage there is no victim group to fleece. Once everybody opts in, there’s no one left to loot,  and we are back to counting on government efficiency. The Rapture is a better bet.

No matter what their stated goals, government programs are designed to reward political supporters and punish opponents, increase dependency on government, and expand the power and influence of politicians. Obama Care will do that exceptionally well. If you think politicians give a hoot in hell about your well being I’ve got a deal on a pre-construction condo I think you’d like.

I don’t want to leave you with the idea that the situation is hopeless, however. Far from it. As the government has done so much to increase medical costs, the government can do much to decrease them, by simply doing less.

The first step would be tort reform. A simple ‘loser pays’ rule on liability suits would eliminate law suit extortion, where the outfit being sued pays off the complaint simply because the cost of defending against even a weak case is more than the payoff. The cost of medical malpractice insurance would plummet while patients who have suffered damage would still have access to the courts.

Next we could allow insurance companies to compete across state lines. The proponents of Obama Care claim to be keen for competition but are all in favor of limiting it among private insurance companies. Competition does reduce prices. Let’s have some.

The government could also increase competition by deregulating the products insurance companies are allowed to sell. The last time I bought insurance my policy included coverage for pregnancy, abortion, addiction counseling, psychiatry, and sex change procedures.

My wife’s becoming pregnant would rival the Loaves and Fishes for miracles, I’m not addicted to anything that can’t be had in a supermarket, I’m comfortably maladjusted, and wholly content with my gender. But when I asked my agent if I could save a few bucks by leaving those valuable coverages out of my policy, I found they were required by law.

We could also make health insurance tax deductible for individuals like it is for businesses. That would immediately reduce the cost of insurance by 15% to 35% for thousands of taxpaying, insurance buying families.

Let’s try some real competition before we bet our future on the hope for something that can never be, government efficiency. 

Obama Care Death and Taxes