Thursday, November 8, 2012

ObamaCare Winners?

In the 11/7/2012 Forbes, Bruce Japsen picks his, "Five Obamacare Winners In Second Presidential Term".

His list includes:
1. The health insurance industry.
2. The hospital industry.
3. The retail pharmacy chains.
4. The generic drug industry.
5. The health care workforce.
(Read the full text of "Five Obamacare Winners In Second Presidential Term" for more details.)

In the short-to-medium term he may be right, in the sense that government laws now tilt the playing field in their favor.  For example, insurance companies will likely reap a temporary windfall as more people purchase insurance policies (often with the help of government subsidies).

But insurers will also be under increasing pressure to cover more "mandatory" services, while limited in how much they can charge.  Over time, they'll likely become the equivalent of heavily regulated utilities, "private" in name only.

Similarly, as initial government cost controls fail, we'll see continued ratcheting down of reimbursements to doctors/hospitals for their services, and increasingly restricted patient access to more expensive medications and services deemed "unnecessary" or insufficiently "cost effective" by the government.  Drug companies and health service workers will feel the pinch.

The economic future of all five "winners" will be in the hands of bureaucrats committed to cutting costs, rather than patients and service providers seeking to exchange values in a free market on mutually beneficial terms.  

Right now, both consumers and Apple are enormous winners when they can make voluntary exchanges in our still relatively free market for smartphones.  But both would lose if the government required everyone to own a smartphone, but specified what features it must have, what price consumers must pay, and was committed to lowering the "global phone spending" amount each year.

Although it may take a few years, Japsen's "winners" will ultimately end up losers.