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HCR and "Economics in One Lesson"

How to think about the consequences of social legislation.

11:58 AM, Mar 24, 2010 • By MATTHEW CONTINETTI
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In his classic Economics in One Lesson, Henry Hazlitt writes:

"The art of economics consists in looking not merely at the immediate but at the larger effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."

The main objective of health care reform is to insure all Americans. The liberals who designed the bill concentrated on its effect on the uninsured. On paper, the reform will lead to many more people with health insurance. But what is written on paper does not always match with reality. In fact, it rarely does. Bryan Caplan:

If preliminary summaries of Obamacare are true, it looks like individual health insurance will soon be a better deal than employer-provided health insurance.  In the individual market, you can now wait until you're really sick to buy insurance: "Heads I win, tails I break even."  Firms won't have that gimme - and it seems more valuable than premiums' tax deductibility.  Admittedly, Obamacare imposes a small penalty on individuals who don't buy insurance, and a moderate penalty on firms that don't provide it.  But it still seems like it will be in the financial self-interest of many firms and their workers to get rid of insurance, and split the (cash savings minus penalties).

Arnold Kling seconds:

As of now, a rational individual would not choose to obtain health insurance, and a rational new business would not offer health insurance. In both cases, that is because the legislation has made it illegal for health insurers to discriminate against people on the basis of health status. So the cost of obtaining health insurance while you are healthy will stay high--in fact, market forces should send it higher--while the cost of remaining uninsured has dropped dramatically.

Is it time to bet that there will be more Americans uninsured two years from now than there are today? Or will the law produce results that are consistent with intentions, regardless of incentives?

I cannot think of any examples of the latter.

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