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The Looming Failure of Obamacare. Part 1: Information

February 10, 2011, 3:25 pm

My new column is up at Forbes.com, and it is the first in a three-part series on Obamacare.

In order to protect the core of Obamacare, Congressional Democrats have recently begun to acquiesce to a few incremental changes to the legislation that fix some of the most egregious parts of the plan (e.g. the burdensome 1099 requirements).  The implicit message is that yes, the legislation was rushed and has some flaws, but these flaws can be fixed by targeted tweaks around the edges.

Today I will begin the first of a three-part series explaining several reasons why any health care law that relies on the fundamental assumptions of Obamacare is doomed to fail, even if crafted by the smartest people through the best process.  In this first installment, we will discuss information problems inherent in the law’s top-down approach.  In the second segment, we will cover incentives issues that will breed a myriad of unintended consequences.  In the final part, we will discuss the ever-powerful urge to rent-seeking among certain businesses that will likely turn Obamacare into the largest single corporate welfare program in the history of this country.

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Category: Health Care
  • Sean

    You used a keyboard as an example of choices that people can make but I think this is a poor analogy. First of all, you presume that there is a desire by the president's party for the law to be successful. When many Democrats were angry there was no "Public Option" Harry Reid seemed to try and console the disappointed by saying this law lays the groundwork for it. And if you look at the wishful thinking in the CBO projections, it's pretty clear that the law is meant to accelerate the collapse of the private insurance providers through cost escalation and cost shifting. The real goal here is a single payer system and you have to get rid of the old to make way for the new. A better analogy would have been a railroad and to make it successful you'd turn all roads into toll roads with a large portion of the tolls going to subsidize the rails. As fewer people drive you raise the toll to keep the funding subsidy to the rails going.

  • Smock Puppet

    > even if crafted by the smartest people through the best process.

    What if it's crafted by the biggest, most arrogant dumbasses through the most stupid and incompetent processes possible?

    For short, what if it's Obamacare?

    Obamacare is the ultimate design-by-committee.

    You know "committee", right? The only known form of life with six or more legs and no brain?

  • Ted Rado

    Smock Puppet:

    Amen, brother!! The US Government is demonstrating the most monumental incompetence in the history of man. Everything they touch turns to poopoo: healthcare, energy, housing, enviro, etc. etc. All this at great expense to the long-suffering citizenry.

  • http://www.freemktproject.com Pat

    Great column Warren.

  • jj

    Very clearly written. Sometimes I can't understand what is so hard to get about this -- it seems inarguable.

  • Paul F. Treder

    Your analogy is adequate in that it demonstrates the concept of "shopping" and price comparison, although too few are aware this can be done because they are relying on the 3rd party payor and don't much care. As a health care professional, let me also say that "Obamacare" adds several more layers of regulation to our already overregulated industry, with no provision for extra payment to us tomeet this burden. An incredible amount of money is spent by providers of health care services on personnel who do nothing but make sure we are in compliance with all government rules and regulations. I look forward to your next articles.

  • caseyboy

    Amen Sean, it was never about fixing the healthcare system. If it were a few of the Republican suggestions provided during the dog and pony show with the President and congressional leaders. What was Obama told McCain, "Uh John, I won the election remember". When all the private insurers are driven out of business the people will rise up and demand that the government fix (the system they broke) by taking over all coverage.

    I concur with all comments made above. I'm very interested to see how Warren handles the perverted incentives in the program. If the courts or congress don't turn this baby off we will be up the creek without a paddle.