The Health-Care Reform Act: Que Paso?
By Robert Higgs • Tuesday March 23, 2010 7:00 PM PDT • 16 Comments
What has this gargantuan statute wrought? To this question, there can be only one answer: Nobody knows.
I am being quite serious: no single human being knows ― no one can know ― what provisions the statute’s more than 2,000 pages contain. Even if someone had the power to read and remember everything in this massive legislative enactment, he would still harbor a multitude of uncertainties about: how the courts will interpret the law’s general provisions; how the various administrative agencies will flesh out the statute with new regulations; the precise way in which each provision will be implemented; how, when, and in what amounts funds will be made available for carrying out the law’s many stipulated actions; how much resistance the law will meet, both in the courts and among the public, and how these conflicts will be resolved; and countless other matters of critical importance to those directly and indirectly affected by the massive statute ― which is to say, virtually everybody in the United States and a considerable number of people elsewhere, as well.
Already, however, we can say a few things with certainty. One is that this statute, like any other of comparable size, amounts to a Christmas tree for politically favored interests. For months, maybe for years, people will be discovering little provisions tucked into the bill, each of which provides some sort of privilege, protection, subsidy, or other benefit to a particular firm, industry, profession, or other beneficiary. Anyone who has ever toiled through the pages of statutes of comparable length and complexity, as I have for a number of defense authorization and appropriation acts, knows that each such law comprises a host of special-interest provisions. If you would care to see some appalling examples laid bare, read chapters 7 and 8 of my book Depression, War, and Cold War or, if you cannot gain access to this book, see the original version of chapter 7, which was published in the Cato Journal in 1988.
We also know that this statute will not be the end of the story of health-care politics in this country. It is, for the current phase, only the end of the beginning. The ink will scarcely be dry in the revised U.S. Code when political factions will undertake to alter or to overturn the provisions just enacted. Thus, within the act’s great expanse, hundreds of little sub-conflicts will rage, as competing interests struggle for control of the state’s coercive power in their area of contention. Politics, in general, is an endless struggle, and the politics of the federal government’s health-care intervention is no exception. Stay tuned.
Finally, because health-care-related economic activity is such a huge part of the overall economy, what happens in this sector will have significant consequences for the operation of other sectors. For example, when Obamacare turns out to be much more costly than the government has claimed it will be, the government’s demand for loanable funds will be greatly increased, with far-reaching effects on interest rates, investment spending, economic growth, and even the U.S. Treasury’s creditworthiness. It is not inconceivable that the burden of supporting this health-care monstrosity will prove to be the (load of) straw that breaks the back of the government camel in the credit markets, where the U.S. Treasury has long been able to borrow the greatest amounts at the lowest rates of interest because its bonds were considered virtually riskless. Indeed, that status as the lowest-risk borrower seems already to be approaching the breaking point, even before the new health-care legislation has taken effect. Implementation of this law can only worsen the Treasury’s plight.
Tags: Budget and Tax Policy, Business, Economics, Government subsidies, Healthcare, Insurance, Law, Nationalization, Politics, Regulation, The State 
No doubt about it. Mark Twain, author of Fables of Man, would have made (more) hay out of it.
richard | Mar 24, 2010 | Reply
“Implementation of this law can only worsen the Treasury’s plight.”
Not necessarily. It depends on whether this action requires the transfer of natural property (production) to a new group of entitled, or if it is a shifting of existing entitlements from one entitled group to another. I.e., this may all be a matter of transferring entitlement from a soon to be retiring generation of boomers to a new group of politically active millenials. Specifically, downsizing Medicare/Social Security benefits, downsizing property values, downsizing investment returns, etc., in favor of healthcare benefits for the younger generation.
Randy | Mar 24, 2010 | Reply
Knowing the “rules” (or the law) doesn’t imply that you know the implications of the rules.
This is a huge problem which is just ignored.
A simple example is Conway’s Game of Life.
The rules are trivial, however they imply the existence of gliders, blinkers and much much more.
Politics completely ignores this aspect of making rules...
George | Mar 24, 2010 | Reply
The vast, permanent bureaucracy writing and implementing the CFRs for it have to be assumed to be almost entirely leftist apparatchiks, leading where else but to a one-party fascist state. Conyers let the cat out of the bag when he mentioned “control the people.” Since the Democrats have just done away with the Constitution, I often get the impression the feckless Republicans and “conservative” commentators on Fox News are more enablers than opposition, who have neutered the real opposition into a state of inaction. What kind of men are the Republicans when the grass roots organizing has to be taken up by housewives around the country?
Dan | Mar 25, 2010 | Reply
Three things ARE certain:
a) We will be less free,
b) We will have less access to quality medical care, and
c) We will be poorer.
Doug | Mar 25, 2010 | Reply
I agree with Dr Higgs. The Treasury will bear the brunt of this spending fiasco. I am Canadian (Quebec) and have seen the damage that is done by socialized medicine. We have federal laws that guarantee free health care to all but the provinces are responsible for distributing and paying for this. Our province has a huge deficit, that it owes to the federal government, mostly because of health-care spending. It is thus bound and controlled by the feds. BTW, there are private clinics popping up all over the place with the effect that the only people going to hospital or regular clinics are the poor and lower middle class. They are being rationed with wait times. Anyone with money or insurance goes either to the States or to a private clinic.
Cathy | Mar 25, 2010 | Reply
What one might conclude about these potential wealth transfers from some who were “promised” a benefit to those who are now “promised” a benefit is that it’s government by caprice, and that can’t be good for property rights/production/future growth.
Too, if your point (that this bill is a transfer of transfers) is correct, and I have little doubt that, in part, that’s true; we are about to increase subsidy to the troubling trend of bastardy in this country. Another possible (probable) hit to future treasury receipts.
The dynamics of “regime uncertainty” are manifold and none positive. The “European Miracle” is poorly understood by those who accept the faith-based notion of “American Exceptionalism”. We might just be exceptionalizing ourselves into the long foreshadowed soft-despotism of democracy.
That’s why the Professor remains prudently agnostic about particulars, while accepting some general assumptions about the history of unintended consequences wrought by massive written ambiguities called legislation.
John | Mar 25, 2010 | Reply
The only thing we are entitled to, Randy, is a constitutional government and what we have instead is an EPIC FAILURE.
Matt | Mar 25, 2010 | Reply
The Black Market is to the “Legal” Economy as Defending your Rights is to Paying a Shakedown Man.
A common misconception is that the Underground Economy or “Black Market” is a market for stolen goods. More often than not, this is not the case. Usually exchanges of certain goods and services that have been deemed “illegal” by the most powerful gang in the area, the State, must be done behind closed doors. In some cases otherwise legal transactions are kept from the prying eyes of the taxman in order for the participants to not have to pay the tribute the thieves demand.
The government demands a cut of all market transactions. It further distorts the market by “regulating” it to such a degree that the world is dramatically altered from what it otherwise would be.
In a world where people are free to only deal with others voluntarily, exchanging with one another all of their values as they see fit, man will flourish beyond anyone’s expectations. Spread the word—the Black Market is Society qua Human Interaction.
http://www.cafepress.com/themarketisfree
wak8b | Mar 25, 2010 | Reply
Golly gosh, George. What a great analogy.
Novista | Mar 27, 2010 | Reply