Idaho's Weekly Journal of Local & National Commentary Week 2815


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by Free Market Duck


Complexity is Bad for your Health

Editorial WSJ

(Apr 09, 2012)

Washington, DC -- The Supreme Court has long had the role of declaring what the law is. That's becoming a harder and harder task thanks to the White House and Congress concocting laws so complex that no one knows their meaning before, during or after they're passed.

In an era when people expect transparency and abhor complexity, three days of skeptical Supreme Court hearings on the president's health law showcased a complex law collapsing under its own weight. Information is supposed to flow freely, but consumers of health care operate in the dark, including without any understanding of how the law is supposed to work. And they are not alone.

Consider how Justices Antonin Scalia and Stephen Breyer—one Reagan appointee and one Clinton appointee—tag-teamed to declare the law unreadable. "What happened to the Eighth Amendment?" Justice Scalia asked during the oral argument, referring to prohibition of cruel and unusual punishment. "You really want us to go through these 2,700 pages? And do you really expect the court to do that? Or do you expect us to give this function to our law clerks?"

Justice Breyer made a similar point: "I haven't read every word of that, I promise. . . . There is the mandate in the community, this is Titles I and II, the mandate, the community, pre-existing condition, OK? . . . There is biosimilarity, there is breast-feeding, there is promoting nurses and doctors to serve underserved areas, there is the Class Act, etc. . . . So what do you propose we do other than spend a year reading all this?"

The justices focused on the complexity of the law to debate what happens if they find some parts unconstitutional, such as the individual mandate that forces people to buy insurance. Can the rest of it stay, or must it all fall, and the political branches start on health-care reform from scratch? And how could the court practically pick and choose, given the law's great length and complexity?

This shouldn't surprise even supporters of the law. Before the bill was passed in 2010, then-House Speaker Nancy Pelosi said, "We have to pass the bill so that you can find out what's in it," and Rep. John Conyers complained, "What good is reading the bill if it's a thousand pages and you don't have two days and two lawyers to find out what it means?"

Having his legislation treated as farce may help explain President Obama's attack on the courts at a news conference last week. He claimed it would be an "unprecedented, extraordinary step" for the Supreme Court to declare a law unconstitutional.

This was such a bizarre statement that a federal appeals court, in a separate challenge to ObamaCare, ordered the Justice Department to submit a letter ("at least three pages single spaced, no less") on whether the Obama administration really thinks it's unprecedented for courts to overturn legislation. Attorney General Eric Holder wrote to assure that the administration was not challenging the 1803 decision in Marbury v. Madison. That was the case in which the justices said "it is emphatically the province and duty of the judicial department to say what the law is," thus establishing judicial review under which hundreds of laws have been invalidated, often for overreaching by the political branches of government.

Perhaps ObamaCare will be remembered as the breaking point for top-down planning. There is not enough information available for the government to micromanage a system as complex as health care, which represents more than 15% of the economy. Austrian economist Friedrich Hayek wrote some 50 years ago about the "pretence of knowledge," meaning the conceit that planners could know enough about complex markets to dictate how they operate. He warned against "the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess."

True enough, ObamaCare was built on an unworkable foundation. The original sin in health care goes back to the wage and price controls in effect during World War II. The federal government let employers avoid wage controls by adding health insurance as an untaxed benefit for employees. Employer-provided insurance has since insulated most Americans from the cost of care. The predictable result is endless demand for increasingly inefficient services.

When was the last time you saw prices posted in a doctor's office or hospital? Yet price is the key means through which information is transmitted, at least in functioning markets. [Note by FM Duck:  In fact, this is the basis for Hayek's Nobel Prize:  The Subjective Theory of Prices in a Free Market in which he showed that the concept of "prices" is (1) a subjective anticipation of a future service expected to be received by each party in any exchange, (2) each trader's expectation is prioritized and thus subjectively unequal, not equal as economists had previously supposed, and (3) if the government supersedes this free market pricing mechanism, no true market prices reflecting supply and demand can come about for businessmen to calculate and forecast profits and losses, and thus the very pricing mechanism that is necessary for a market to function is always destroyed under governmental intervention, and this action -- not good or bad intentions -- is what ultimately always leads to the failure of government planned economies such as socialism, fascism, and communism.] There are many ways to make sure that the poor and seriously ill get medical care, including direct subsidies that don't undermine the price mechanism. But the complexity of accomplishing this goal in a hyperregulated health-care industry overwhelmed the system.

If the justices do send ObamaCare back to be rethought, politicians should address the problem with more humility. We'll know health care is on the road to recovery when basic information such as clear rules and transparent prices are again part of the system.  – FM Duck

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