In order to understand what this “law” really is, you must put yourselves into the shoes of one of the folks running a large insurance company.  I could substitute any other member of the corporate health cartel, but I have chosen “insurance company” because I think my explanation will make more sense using them.

First and foremost, as an insurance executive, you are not a libertarian.  You do not subscribe to the “non-aggression” principle.  Not inclined or brave enough to rob individuals directly, you are happy to bribe the legislator one amount in order to receive an even higher amount (substantially higher) from taxpayers.  You are also happy to pay a legislator large sums to create barriers to entry for your future competitors and also to make life difficult (with impossibly expensive rules and regulations) for your current but smaller competitors, rendering these smaller guys more open to your proposals to acquire their businesses….at a discount, of course.

This is your life.  Business is good.  But profits haven’t been maximized.  After several martinis with some of your lobbyists and favorite and loyal lawmakers, you drunkenly and almost facetiously blurt out that business would be even better if the government “mandated the purchase of our insurance!”  A very serious congressman says: “what you are suggesting is really nothing more than what many of our other clients prefer, that their revenue stream be guaranteed by taxpayers, rather than risk the uncertainty of customer preference and the market.”

Not to be outdone, a fellow senator chimes in: “That is only part of how we could help.  After mandating the purchase of insurance and collecting this money primarily from the taxpayers, rather than have you collect it on your own, we could severely curtail the extent to which you are exposed to claims, covering little and placing such price controls on those claims that are paid, that very few physicians would be willing to care for patients with your insurance plan, a plan the people would be nonetheless required to purchase.  This low payment to the doctors would run the rest of them into the arms of our hospital friends who so desperately want control of the doctors.  Once salaried, the physicians will no longer care whether they see patients at all, further shifting the profit curve in your favor.”

A voice from the shadows in the back of the room says in a menacing but audible whisper:
“Why not kill people after they get really sick?  Wouldn’t that serve to further line your pockets?” 

“Surely you are not serious, Henry?”

“If you get away with pushing the people this far, why not take this all the way?  Most of them will be thrilled to have free health insurance, not knowing they have coverage that covers nothing.  The rest will be so demoralized they will likely show  little resistance.  If you are going to try this you should go ‘all in.’”

The mood in the room is now serious and sober. ”One more thing,” says the senator.  “It is imperative that the scientists whose medical research we are funding understand that we will need them to declare much of the care that we intially guarantee the people as unnecessary a short time after the law takes effect.  The practice of medicine must be based on the “evidence” our scientists produce.  Control will then be complete.”

I don’t know if this is what the players in the room said.  I know that this is how it turned out, though.  This is consistent with Rothbard’s notion that the government ultimately finds its purpose interfering in human exchange, as otherwise orderly and mutually beneficial exchange would be the norm.  Any government interference therefore rewards one party disproportionately, invariably benefiting the party paying for the interference.  Hence…..Obamacare.

G. Keith Smith, M.D.