Acton Institute Powerblog

Obamacare: The Economics Just Don’t Add Up

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Tomorrow is the big day for Obamacare, despite the fact that even the Obama Administration admits it’s “glitchy.” The president is cheerleading the program, reminding us that he’s been right all along:

Reforming health care will help the economy over the long-term,” by curing health-care costs and free individuals to start small companies, he said.

Through his speech, Obama ridiculed critics of his plan, which imposes far-reaching federal requirements on one-sixth of the nation’s economy.

He also cited Sept. 25 data about the price of insurance on Obamacare exchanges to slam his critics.

Opponents “said the rates would come in real high, and everyone’s premiums would be sky high, and it turns out, lo and behold, actually the prices came in lower than we expected, lower than I predicted,” he claimed.

Except…maybe not. James Pethokoukis at National Review Online raises concerns over Obamacare’s economics. Pethokoukis is ready to accept the fact that Obamacare might not get off the ground smoothly, there will be delays and malfunctions. But it goes deeper than that:

[W]hat about the malfunctioning economic theory at the heart of Obamacare, the one that relies on bureaucratic schemes rather than market forces to lower costs, create value, and generate innovation? A new analysis from the Clayton Christensen Institute outlines the way many aspects of Obamacare discourage the sort of disruptive innovation that makes previously pricey and complicated products more accessible to more people. For instance, the highly regulated exchanges “essentially put a floor on the low end of coverage, thus limiting opportunities for entrants to provide different types of coverage and methods of care delivery.”

Obamacare’s operating system might be fixable; its faulty economic logic surely isn’t.

Read “Obamacare: Wrong in practice, wrong in theory” at National Review Online.

Elise Hilton Communications Specialist at Acton Institute. M.A. in World Religions.

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