(Feb. 23, 2010)—President Obama’s nationalized mandatory health-insurance proposal (released yesterday, 2/22) puts American families and small-business owners under the control of Big Brother regarding health-insurance coverage decisions.

• The proposal requires Americans to buy federally dictated health-insurance coverage or pay fines (which likely will increase over time, just as Medicare payroll taxes are being increased under this proposal).
• Americans will be coerced (through tax incentives) into politicized health-insurance exchanges.
• Remember the promise that if you like your existing coverage you can keep it?  That promise will expire in just 8 years (in 2018) when “grandfathered” plans will be required to cover medical preventive services with no cost-sharing.

The high implicit tax rates, from Michael Cannon at Cato on how insurance subsidies would discourage people from earning more:

… over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned.  In some cases, it would rise as little as 10 cents for each additional dollar earned.

For more on this, see the study: Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums.

Lastly, the death spiral. Writes Cannon:

by requiring insurers to cover all applicants without regard to illness, each of these health plans would remove any penalty on waiting until you are sick to purchase coverage.  Therefore — even after accounting for all relevant taxes, subsidies, and penalties — these plans would create large financial incentives for healthy people to drop out of the market, which would cause premiums to rise for those who remain.  That would in turn encourage more healthy people to drop out, which would cause premiums to rise further, and so on.

Remember, you can tell your Congressman or Senator what you think of these ideas.

Keith Hennessey has a summary and analysis of possible political strategies behind it:

Somebody in the Administration put a lot of work into this proposal.  It is extremely detailed, and it reads like a best effort to find a fair middle ground between two warring legislative bodies.

Cato Institute scholars have responded:

Michael Cannon on the headline at President Obama’s health reform site:

Mr. Orwell, call your office.

Alan Reynolds:

The President’s health care reform proposal is introduced by five bullet points, all of which are misleading at best.

The bullet points supposedly show that the proposal “puts American families and small business owners in control of their own health care.”

In reality, the proposal would put the federal government in control of health insurance (which is not at all the same as health care).

Read Reynolds’ point-by-point rebuttal to Obama’s health care plan.

Obama, CEO of America, Inc. So writes Roger Pilon at Politico:

Just where does President Obama think Congress finds the power to authorize the HHS secretary “to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators”?  …

No doubt Obama, a former lecturer in constitutional law, believes that the power of Congress to regulate interstate commerce suffices to allow it to set private heath insurance premiums.  After all, once delegated to him, that same power allowed him, he believes, to take over auto companies, to fire corporate executives, to set their salaries, and to do, well, pretty much what he wanted in so many other areas.  That’s the modern executive state — the president as CEO of America, Inc.  The irony, however, is that the commerce power was given to Congress for precisely the opposite reason — to ensure economic liberty, not to restrict it.

Don Boudreaux, Cafe Hayek on price controls:

What cool adventures await us if Mr. Obama succeeds in giving Uncle Sam power to control insurance rates?  Reduced coverage?  Hidden fees aimed at skirting government regulations?  Surly service?  More trouble and delays collecting on our policies?

And guess who wrote the following in 1994?

…History clarifies that choice: Previous government efforts to regulate prices in peacetime have invariably failed. Moreover, government attempts to control prices in the health care sector would undermine concurrent efforts to restructure the marketplace…

The idea of controlling costs by government fiat is seductively simple. But it rests on a conceit as persistent as it is damaging: that government bureaucracies can allocate resources more wisely and efficiently than millions of consumers and providers pursuing their interests in the marketplace.

It was David Kendall Progressive Policy Institute.  Thanks to Michael Cannon for posting this quote – see Cannon’s post about Obama’s plan for a longer quote and more critique:Obama’s ‘Best’ Idea? Rationing Care via Clinton-esque Price Controls.

(Thanks to John Stossel for pointing our Boudreaux’s post.)