Picking Winners and Losers Using Health Care Regulation
Typically, when I discuss how government picks winners and losers in the marketplace, it’s in the context of targeted tax credits in Missouri. The practice of picking and choosing is disadvantageous for overall welfare because it increases the cost of doing business for non-favored groups. This places them at an artificial competitive disadvantage and makes it difficult to compete against groups that enjoy the government’s favor.
According to an editorial in the Wall Street Journal, the government is picking winners and losers
by exempting some companies from regulation, and not others. From the editorial:
One of these effects [of the health care law] is the spectacle of employers going hat-in-hand to the Department of Health and Human Services (HHS) for waivers from some of the law’s more onerous provisions. […]
It’s not hard to connect the dots. The Obama administration is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president’s opponents or from taking any other steps that might upset the White House or its political appointees at HHS.
Providing special exemptions to some is a tacit admission that the cost of providing health care under the new regulations is prohibitively high. From the perspective of overall welfare, it would be better if the the federal government enacted a policy that favored no groups over others.
Contributors to Show-Me Daily have previously discussed the negative consequences of the Patient Protection and Affordable Care Act. In particular, the measure will will ultimately limit health care coverage because it eliminates limited-benefit health insurance plans known as “mini-meds.” Additionally, it will likely increase unemployment, particularly among those with low incomes, because it increases the cost of labor to an employer.