I am glad that Obama released his plan this morning, when I was driving. Since I was in the car for several hours, I did not feel compelled to try to churn out a quick review. Instead, the rest of the world did it for me.
Put aside all the other criticisms, one thing becomes clear: The plan does nothing to control health care costs, and everything to increase those costs.
There are no market mechanisms to encourage consumers to price shop or to introduce price competition into the health care industry.
To the contrary, the plan continues the trend towards divorcing consumers from price decisions as to services and products; there also is no incentive to decrease demand because a large percentage of the population will receive government subsidies.
Yet because of the new insurance price control mechanism, the private insurance system will not be allowed to recoup the costs of such coverage.
This is a balloon which must burst, and it will several years down the road.
The result of the burst will be a collapse of the private insurance sector, and a government unable to pick up the pieces without severely rationed care (even if coverage remains expansive in theory, the care will not be available).
Obama’s plan (and so too the House and Senate versions) is the worst of all worlds. It is a replica of the housing bubble, thrill for the first few years, and then the bill becomes due without any way to pay for it.
Update: The David Brooks calls Obama’s plan a “fiscal time bomb”:
This bill may be deficit-neutral on paper. But it has just become a fiscal time bomb. The revenue will never come.
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