Obamacare and the Heroin of Government Dependency

Dan Mitchell, a Cato Institute scholar and the publisher of International Liberty, created his First Theorem of Government in 2013. The theorem goes: “Above all else, the public sector is a racket for the enrichment of insider, cronies, bureaucrats and interest groups.” Well put and from all available evidence, completely accurate.

This month Dan has created his Second Theorem of Government, that: “It is much easier to block the enactment of a new handout than it is to take it away after it’s been created and people get hooked on the heroin of government dependency.” Again, true.

Here Dan shares how his Second Theorem relates the debate over Obamacare, specifically the turmoil of the GOP who are stuck with undoing a new government entitlement.

You break it, you buy it – Government intervention had screwed up the system well before Obamacare was enacted, but people now blame the 2010 law (and the Democrats who voted for it) for everything that goes wrong with healthcare. Republicans fear that all the blame will shift to them if their “Repeal and Replace” legislation is adopted.

Follow the money – What’s partly driving GOP timidity is their desire not to anger many of the interest groups – such as state governments, hospitals, doctors, insurance companies, etc – who benefit from various Obamacare handouts. That’s what is motivating criticism for politicians such as Ohio’s John Kasich and Alaska’s Lisa Murkowski.

Don’t throw the baby out with the bathwater – The “Cadillac Tax” is the one part of Obamacare that’s worth preserving because it will slowly cut back on the distorting tax preferences that lead to over-insurance and third-party payer. For what it’s worth, the GOP plan retains that provision, albeit postponed until 2025.

The switch in time that saved…Obamacare – I’m still upset that Chief Justice John Roberts (aka, the reincarnation of the 1930s version of Justice Roberts) put politics above the Constitution by providing the decisive vote in the Supreme Court decision that upheld Obamacare. If the law had been blocked before the handouts began, we wouldn’t be in the current mess.