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Thursday, May 03, 2012

Why Obama Care is wrong

Why is it that we are still hearing about the Obama’s health care reform outside of history books?   This legislation will still leave some Americans uninsured and will cost the nation an extra “$823 Billion in debt in just the first 10 years”.  Starting in 2014 tax penalties can be given to those who do not have some form of insurance.  This plan has helped get some Republicans elected to office by running on a “repeal or replace” platform.  “In January 2011 the House voted 245-189 to repeal the health care law”.  In poles across the nation there are more and more Americans who are opposed to this plan.

There are no sources of market failure that have led us to need a plan on such a grand scheme.  Health care packages are available from many employers and are also available in the open market.  Additionally some Americans are covered by current Medicare and Medicaid programs.   Some people do not have coverage due to not being able to afford it right now.  One reason for the high cost of insurance is the demand for services by individuals who do have coverage.   These individuals can also cause the cost of health care to go up thru moral hazard.  Since they are covered, they can afford to be more risky.  Adverse selection can also play a role since only those who are the most risky will attempt to get coverage. 

Subsides could be used to help the poor and those in need to acquire medical insurance.  This could reduce the number of Americans without medical coverage.  Unfortunately this would also drive up the demand for services which would in turn cause the cost of healthcare to rise. 

Another option would be to subsidize the providers of insurance plans to lower their prices on some of their plans.  This could increase the number of covered Americans while reducing the overall health care costs.

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