One of the problems with massive, complicated government regulations is that they create a lot of room for regulator discretion, and therefore a lot of room for unequal treatment of different players in the market. Many opponents of Obamacare argued before the legislation was enacted that it would do just that throughout the healthcare sector—would empower the federal government to pick favorites rather than allowing for simple uniform rules that enable the kind of competition and consumer choice that can actually help control costs.
We can already see this happening in practice, even long before most of Obamacare’s most significant rules and regulations go into effect. The Department of Health and Human Services announced yesterday that 30 corporations (including McDonald’s, Jack in the Box, and a New York teachers’ union) would receive exemptions from a rule that would have required them to raise the minimum annual benefit in their employee insurance plans.
The exemptions themselves are good news, since the rule would have forced these companies to drop their employee coverage, leaving almost a million workers without the insurance they had before Obamacare. But it means that these companies now need permission from the administration to offer their employees a benefit they have offered for years. And of course, many other companies—those without the lobbying operation of a company the size of McDonald’s, or without the access to liberal policymakers that a NY teachers’ union has—can’t get the same permission, and so can’t compete on a level playing field, or offer coverage that might entice the best qualified people to work for them. This kind of government by whim, and not by law, is the essence of the regulatory state. We are about to see a whole lot more of it—unless the health-care law enacted in March is repealed.