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No Such Thing as a Free Lunch



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Obamacare, even with massive Democratic supermajorities in Congress, would never have passed if Americans thought that they would be forced to give up their current plans.

The reason is simple. To begin with, Americans were overwhelmingly happy with the quality of their health care.

That is reflected in surveys: For example, shortly before the November 2006 election, the Kaiser Family Foundation, in conjunction with USA Today and ABC News, released the results of a survey. It found that 89 percent of Americans who were insured were satisfied with “their own personal medical care.” Ninety-three percent of those who had recently been seriously ill were satisfied with their medical care, as were 95 percent of those who suffered from a chronic illness. Surprisingly, even most of the uninsured were happy with the quality of the health care that they were receiving.

Obamacare came about because people were willing to make slight changes to the health-care system because of concerns over the uninsured. Only 44 percent of the respondents were satisfied with the “overall quality of the American health care system,” but this was out of concern for what they thought was happening to others, not their own health care.

Obama might be able to weather many controversies — from IRS-gate to the NSA’s spying on Americans to the disastrous operation of the Obamacare website — by claiming he knew nothing about what was going on.  But his promise that people would be able to keep their insurance policies and doctors is hitting people on a much more personal level.

The administration is desperately trying to counter by arguing: 1) you might be losing your insurance policy that you liked so much, but you will actually be getting a better (if more expensive) one and 2) the cancellation of existing policies is really the fault of those irresponsible insurance companies.

The president and his defenders don’t want to recognize that those two arguments contradict each other. “Better” policies cost more, and insurance companies have to raise premiums to provide the upgrade. The many new mandates in these “better” policies explicitly ban the old policies, so insurance companies have no other option than to cancel the existing policies.

But there is a more fundamental problem: If consumers really believed that the policy Obama wants them to have was really the best policy, they could have bought it well before the mandates were imposed. The additional coverage cost something, and when people could make the choice themselves, they decided that these benefits weren’t worth it.

Of course, we could require everyone buy Porsches to drive. For almost everyone a Porsche would clearly be a “better” car. But would requiring people to buy Porsches make people better off? Of course not. Not even close.

Take one of the benefits that Obama is not even allowing to go into effect on time: Obamacare limits out-of-pocket health-care costs in insurance policies. But low co-pays make insurance costlier for two reasons: You don’t pay as great a share of your treatment costs so you’ll opt for cheaper treatments, and larger co-pays make people avoid bothering doctors with trivial concerns for just-in-case visits.

Obama might well believe that higher upfront insurance premiums and lower co-pays and lower total out of pocket costs is a wonderful benefit of Obamacare, but everyone who chose a policy apparently felt that was not the case.

Interestingly, since Obama has by fiat delayed this one “benefit” by one year, we can look forward to even higher health-insurance premiums next year.

In Boston on Wednesday, President Obama went on the attack against insurance companies for the cancelled policies. He talked about “bad-apple insurers” who used to issue “substandard plans before the Affordable Care Act,” and lamented that the insurance companies “had free rein every single year to limit the care that you received.” But if the insured were really that abused, why were about 90 percent of Americans happy with their own health care?

Obama told Americans that they could get all sorts of increased health-insurance benefits, for less. Today, with many millions of Americans losing their health insurance and new policies becoming much more expensive, Americans are learning firsthand a basic economic lessons: “There is no such thing as a free lunch.”

— John R. Lott Jr. is the author of the book Dumbing Down the Courts: How Politics Keeps the Smartest Judges off the Bench. He is president of the Crime Prevention Research Center.



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