POV: Have Gun, Will Nudge
by Ayn Rand | March 1962
It's Not the Unions — It's the Labor Laws
by Doug Altner | March 19, 2014
Regulatory Strangulation
by Steve Simpson | March 13, 2014
Obamacare creates a new class of free riders
by Rituparna Basu | January 23, 2014
Obamacare Is Suffocating An Already Sick Health Insurance Patient
by Rituparna Basu | January 22, 2014
The Broken State of American Health Insurance Prior to the Affordable Care Act: A Market Rife with Government Distortion
by Rituparna Basu | January 21, 2014
Obamacare is Really, Really Bad for You, Especially If You're Young
by Rituparna Basu | August 21, 2013
Justice Department should let US Airways & American Airlines merger proceed
by Tom Bowden | August 16, 2013
Why Is Apple Inc. On Trial? For Good Behavior, It Turns Out
by Tom Bowden | June 20, 2013
The Forgotten Man of the Minimum-Wage Debate
by Doug Altner | June 19, 2013
Why Delivering Beer Isn’t Easy
by Doug Altner | June 11, 2013
What Explains GM’s Problems With The UAW?
by Doug Altner | May 20, 2013
What Are The Search Results When You Google ‘Antitrust’?
by Tom Bowden | April 18, 2013
To Protect the Defenseless, We Must Abolish the Minimum Wage
by Don Watkins | March 27, 2013
I’ll Buy My Own Contraception, Thanks
by Rituparna Basu | November 13, 2012
Why The Glass-Steagall Myth Persists
by Yaron Brook | November 12, 2012
Why Ayn Rand’s Absence From Last Thursday’s Debate Benefits Big Government
by Yaron Brook | October 15, 2012
Changing the Debate: How to Move from an Entitlement State to a Free Market
by Don Watkins | July 02, 2012
3 Things Everyone Needs to Know About the Apple Antitrust Case
by Don Watkins | April 10, 2012
What's Really Wrong with Entitlements
by Don Watkins | February 21, 2012
The Entitlement State Is Morally Bankrupt
by Don Watkins | September 13, 2011
How Important Is the Obamacare Litigation?
by Tom Bowden | August 12, 2011
Atlas Shrugged: With America on the Brink, Should You “Go Galt” and Strike?
by Onkar Ghate | April 29, 2011
The Road to Socialized Medicine Is Paved With Pre-existing Conditions (Part 3)
by Yaron Brook | April 06, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions (Part 2)
by Yaron Brook | March 10, 2011
In Defense of Finance
by Yaron Brook | February 15, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions
by Yaron Brook | February 10, 2011
The Avastin Travesty
by Tom Bowden | December 12, 2010
Apple Now Targeted for Success Like Microsoft Was in the 1990s
by Tom Bowden | October 04, 2010
The Un-American Dream
by Don Watkins | August 27, 2010
What About Private Health Emergencies?
by Tom Bowden | April 08, 2010
What’s Really Driving the Toyota Controversy?
by Don Watkins | March 26, 2010
Anti-Smoking Paternalism: A Cancer on American Liberty
by Don Watkins | March 06, 2010
Apple vs. GM: Ayn Rand Knew the Difference. Do You?
by Don Watkins | March 02, 2010
Smash the Labor Monopolies!
by Tom Bowden | September 15, 2009
America’s Unfree Market
by Yaron Brook | May 2009
Atlas Shrugged and the Housing Crisis that Government Built
by Yaron Brook | March 2009
The Green Energy Fantasy
by Keith Lockitch | February 25, 2009
Stop Blaming Capitalism for Government Failures
by Yaron Brook | November 13, 2008
The Resurgence of Big Government
by Yaron Brook | Fall 2008
The Government Did It
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From Flat World To Free World
by Yaron Brook | June 26, 2008
How Government Makes Disasters More Disastrous
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Life And Taxes
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War On Free Political Speech
by Yaron Brook | March 21, 2008
To Stimulate The Economy, Liberate It
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Exploiters vs. Victims in the Grocery Strike
by Elan Journo | January 30, 2004
Prescription Drug Benefits Violate the Rights of Drug Companies
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Drop the Antitrust Case Against Microsoft
by Onkar Ghate | March 17, 2002


Government And Business in Voice for Reason
Government & BusinessRegulations

The Road to Socialized Medicine Is Paved with Pre-existing Conditions

by Yaron Brook and Don Watkins | February 10, 2011 |

Washington’s control of medicine has grown slowly, evolving piecemeal over decades. Even before Obamacare, half of all heath care spending was controlled by the government.

The general pattern of the expansion works like this: advocates point to some group in real or alleged dire need and declare that Washington has a duty to act; Washington eventually does. It started with the poor (Medicaid) and the elderly (Medicare). Then came the uninsured in need of emergency care (Emergency Medical Treatment and Active Labor Act). Then came middle-class parents (S-CHIP).

And Obamacare? It was sold to us, in large part, as the indispensible means of addressing the plight of those with preexisting conditions.

In his recent State of the Union, Obama named as the not-to-be-compromised central achievement of his health care bill that it put an end “to the days when insurance companies could deny someone coverage because of a preexisting condition.” Obamacare does indeed make it illegal for insurance companies to refuse to cover people with preexisting medical conditions or to charge them higher prices.

Far from justifying an expansion of the state’s role in medicine, however, the issue of preexisting conditions illustrates how badly we need to disentangle government from American medicine.

It’s a complex story, but let’s start here: too often people automatically ascribe our health insurance problems (before Obamacare) to the inadequacies of the free market.

But what we have today is not a health insurance market — not really. We have instead the crippled remnants of nearly a century of government intervention in the health insurance industry. These interventions are vast and complex, but for the most part they fall into three categories.

First, there’s our tax code. In a sane world, if you had insurance and got sick, you would simply stay with your current insurer. But today, most of us get our health insurance through our employers, so if we lose our jobs — which is not exactly unheard of today — we are likely to lose our insurance. And once we are ill, a new insurer will obviously want to take our preexisting conditions into account when offering to insure us.

Now, we don’t buy food, diapers, or car insurance through our employers, so why in the world do we buy health insurance this way? It’s not because it’s more efficient for every car dealership and paper towel manufacturer to learn the ins and outs of administering a health insurance plan. It’s because we can buy health insurance through our employer with pre-tax dollars. No such luck if you want to buy your own health insurance package. And it’s not really even insurance anymore, since we use it to pay for almost everything, from a routine blood test to a routine physical — which makes about as much sense as using car insurance to pay for an oil change.

Next, there’s each state’s laundry list of health insurance mandates. We aren’t talking about Obamacare’s individual mandate, which forces us to buy insurance whether we want to or not. These state mandates dictate what coverage must be offered in the insurance packages you and I are permitted to buy. Even if you’re young, don’t want kids, and don’t drink, these mandates can force you to pay top dollar for a package that covers everything from in vitro fertilization to liver transplants to alcohol rehab. One result of these mandates? Many of us are priced out of the market; those already facing higher costs because of preexisting conditions are particularly hard hit.

Finally, there is a category best described as “insurance blindfolds,” a category that includes the preexisting condition rule. Insurance blindfolds tell health insurance companies that they dare not take into account certain risk factors when setting insurance rates. The effect of such laws is not to erase the existence of these verboten risks, but to force low-risk patients to shoulder substantially higher premiums.

These are just some of the highlights. So, since there already exist enormous government interventions in health insurance, we can’t simply assume that our problems are caused by the free market and that government is the cure. The market is far from free and the cause of our health insurance problems could be government policy itself.

But to think about this question fully and seriously, we need an idea of what a genuinely free market in health insurance might look like. We’ll take up that issue in our next column.

About The Authors

Yaron Brook

Chairman of the Board, Ayn Rand Institute

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute