Welcome to post office health care

America’s health-care system has problems — all traceable to government intervention — but it could be worse. And if the so-called reform emerging in Congress is enacted, it will be worse.

The nub of the plan is that everyone must have health insurance and that all but the smallest employers should provide it. If someone doesn’t have coverage, he’ll be penalized. Low-income people would be subsidized. Government would determine what’s covered, which would set off a lobbying frenzy by providers of “indispensable†services and products. (This goes on in the states.) So people will have coverage they might not want. Insurers could not deny coverage or charge higher premiums to people already ill.

The mandate to insure everyone and charge the same price regardless of health means that some will be forced to subsidize others. People of whatever income level whose insurance premiums would have been lower without the mandate will have to spend more because risk-based premiums will be illegal. That is not insurance; it’s welfare.

Moreover, if government forces everyone to buy insurance while promising to keep health-care costs down, it will have an incentive to compel insurance companies to hold premiums artificially low. Since premiums will be set lower than the market would set them, insurance companies may choose not to write medical policies. What will the government do then? Order them to stay in business? Subsidize them?

    u    u    u

Probably neither — because a key feature that President Obama and Sen. Edward Kennedy favor is a government insurance plan to compete with private companies. (There is opposition in Congress to this.) Obama says the “public option†would keep private companies “honest.â€

People who distrust free markets love to imagine scenarios in which powerful companies engage in “predatory†competition to drive their rivals into bankruptcy. Yet such people have no objection to a government competitor in health insurance. Since any government program will be able to call on the taxpayers for financial support, it will be able to compete unfairly against private firms and perhaps drive them out of business.

President Obama insists that people will be free to keep their current insurance plans. But what if the companies leave the market after the subsidized government program predatorily cuts its premium to a below-market level?

The politicians’ promises about choice are worthless.

With the government in control and trying to contain costs through price controls, the likely outcome will be shortages and rationing — which means greater government power and less freedom for the rest of us. A growing list of services won’t be covered. Waiting lists will grow. Such things happen in single-payer countries and with Medicare.

    u    u    u

Under the emerging plan, the government would also create insurance exchanges. The New York Times reports, “The new entities would also act as financial intermediaries, receiving subsidy payments from the government and sending the money to insurance companies. The insurance exchanges would also redistribute money among health insurance plans, from those with a large share of healthy subscribers to those with large numbers of sick people.â€

If that isn’t a recipe for favoritism, corruption and special-interest jockeying, there’s no such thing.

Obama promises that the new system, which he estimates will cost $1.5 trillion over a decade, won’t increase the already large deficit because he is going to save money by mandating database technology and $200 billion to $300 billion in Medicare and Medicaid cuts. Fat chance. The potential savings from electronic records are grossly exaggerated, studies have shown, and the promises to cut billions from medical programs for the elderly and low-income people are hard to take seriously. Wait until the lobbies get ahold of those proposals.

The upshot is that the likely reform will impose high real costs on most Americans, while ushering in rationing and regimentation. The plan does nothing to address what really keeps health care expensive: government domination of medicine. Tax policy encourages third-party payment for most Americans while government pays for much of the rest through Medicare and Medicaid, giving us an absurd system in which people use insurance for routine services and medical care appears virtually free. Thus government inflates demand, while licensing and other interventions suppress supply. That must end.

Either we free the people and the market, or say hello to Post Office health care.

Sheldon Richman is senior fellow at The Future of Freedom Foundation (fff.org).

Latest News

A scenic 32-mile loop through Litchfield County

Whenever I need to get a quick but scenic bicycle ride but don’t have time to organize a group ride that involves driving to a meeting point, I just turn right out of my driveway. That begins a 32-mile loop through some of the prettiest scenery in northern Litchfield County.

I ride south on Undermountain Road (Route 41 South) into Salisbury and turn right on Main Street (Route 44 West). If I’m meeting friends, we gather at the parking area on the west side of Salisbury Town Hall where parking is never a problem.

Keep ReadingShow less
Biking Ancramdale to Copake

This is a lovely ride that loops from Ancramdale north to Copake and back. At just over 23 miles and about 1,300 feet of elevation gain, it’s a perfect route for intermediate recreational riders and takes about two hours to complete. It’s entirely on quiet roads with little traffic, winding through rolling hills, open countryside, picturesque farms and several lakes.

Along the way, you’ll pass a couple of farmstands that are worth a quick visit. There is only one hill that might be described as steep, but it is quite short — probably less than a quarter-mile.

Keep ReadingShow less
Taking on Tanglewood

Aerial view of The Shed at Tanglewood in Lenox, Mass.

Provided

Now is the perfect time to plan ahead for symphonic music this summer at Tanglewood in Lenox, Massachusetts. Here are a few highlights from the classical programming.

Saturday, July 5: Shed Opening Night at 8 p.m. Andris Nelsons conducts the Boston Symphony Orchestra as Daniil Trifonov plays piano in an All-Rachmaninoff program. The Piano Concerto No. 3 was completed in 1909 and was written specifically to be debuted in the composer’s American tour, at another time of unrest and upheaval in Russia. Trifonev is well-equipped to take on what is considered among the most technically difficult piano pieces. This program also includes Symphonic Dances, a work encapsulating many ideas and much nostalgia.

Keep ReadingShow less
James H. Fox

SHARON — James H. Fox, resident of Sharon, passed away on May 30, 2025, at Vassar Brothers Hospital.

Born in New York, New York, to Herbert Fox and Margaret Moser, James grew up in Hastings-on-Hudson, New York. He spent his summers in Gaylordsville, Connecticut, where he developed a deep connection to the community.

Keep ReadingShow less