Obama continues to deny that the health insurance mandate which is backed with a penalty to be collected by the IRS is a "tax." He says "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase." Three responses:
- Asking people to take individual responsibility for their health care expenses is not a tax. Asking them to do so via a particular method, in this case the purchase of an insurance policy rather than, say, just paying expenses as they go, is a tax.
- Obama might argue that since people are getting value for the policy they have to buy, there is not net tax but just a (forced) exchange of value. But this is the classic technocratic fault, to assume that the central planner's definition of value is the same as every individuals. But its not. Many folks don't get value from a policy, which is why they don't buy one today
- Even if Obama were right in #2, he would still be wrong given the rules embedded in this bill. Young, healthy people will be forced to subsidize the old and those with pre-existing conditions by the rules imposed on insurance companies. These rules effectively make it impossible to charge full cost to the old and sick, so that the young and the healthy will have to pay more. Because the young and the healthy will not see values in policies at the prices they will be paying (given these transfers), they won't value the policy with is EXACTLY why the law has to force them to buy it. Which is why it is a tax.
Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:
First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it.
Second, this "data" is dynamic: It changes without notice. No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.