States v. Markets in Health Care Bill

We continue to define national issues only as political ones, where the spendthrift vanguard meets the tight-fisted old guard, where the charitable spirit meets boot-strapping independence.  By focusing on liberal v. conservative, we are not seeing the real fight.

The National Health Care Bill
More than two armies were in the field.  They're all visible, but somehow we keep forgetting this has been a melee, with various feudal bands all going for the same patch of ground at once. See picture below: many flags, confusion. That's what this was. All the alliances were temporary.

I can assure you this is not a Democratic victory.
Yes, there was a Democrat president. Yes, there was a Democratic  Congress. Yes, no Republican voted for this bill but the Democrats carried the day.

This was a victory for various market actors.
Once again, some political faction (this time the Dems) has fought the war and traded the favors and gained the reputation, for good or ill. They didn't gain anything. The market actors did though.

Who Won

Small Players

1. Small business owners will be able to achieve cheaper pricing for health insurance and ensure their employees all have coverage without breaking the bank. This is a good. A lot of them vote Republican.

2. It's a victory for the working poor, who will be able to get health insurance. This is also a good.

3. It's a victory for the not-working poor, who now know what they can get for free or minimal cost. Democrats. They were mostly getting it anyway.

4. It may even be a victory for the illegal alien, who will be treated for free or minimal cost, depending on how many green cards have to show up in the E.R. They can't vote. But see small business above.

Big Business

5. It's a victory for the pharmaceutical companies and their stockholders and employees (except sales and R & D). Their competition will become less acute. The companies will ally and form joint ventures for R & D and share the wealth. This will cut their costs. There will also be less choices for consumers, from the rich on down to the poor. In general, conservative-minded people are going to benefit here, especially those involved in investment markets.

6. It's a victory for the health care conglomerates and their stockholders. Some employees will be let go when consolidation of the cartel occurs (a defeat).

7. Health-care manufacturers will be able to plan their production of everything from gauze to complicated machinery. They'll have a boom in some products and cut production in others.

**8. It's primarily a victory for the insurance companies. High-risk individuals or communities will go in a pool, and the burden will be shared. They will finally get EVERYONE as a customer, and can start regulating us in full.

As for pharmaceuticals and large health-care conglomerates, standardization allows the present actors to work out a cartel arrangement. They're already a cartel, but the insurance supplier just became more impenetrable. These are traditionally conservative.

The management of these various cartels will undergo some consolidation. There will be fewer actors in that market. Watch your portfolio if you have one. You could do well in the changes.

Win Here, Lose There

9. Under-served areas will have subsidized or lower costs in placement of health-care facilities. This is a victory for rural areas which frequently have nothing (and vote Republican). Urban hospitals and medium-sized areas will be overburdened. Urban areas lose.

10. The middle class will not lose their savings over severe health care issues. They will be the most aggravated, but as a class it keeps them from sinking into the lower class in the face of catastrophic disease. To this, add increased tax burdens.

11. Baby boomers get the federal government to subsidize their health care needs as they approach age. This is a victory for them and a burden on the subsequent generations.

Who Lost
12. It looks like a defeat for the Democrats. The cartels got what they wanted, and can now go back to funding Republicans in elections. The Republicans will not be able to abolish managed health care, but they're more likely to leave it alone once it is established. In my view, traditionally Republican "big business" was hand in glove with the Democratic party on this one. But big business is not loyal to the Dems. It's a temporary alliance.

13. It's a defeat for innovators outside the cartels. That includes most professionals, such as doctors and researchers.
14. It's a defeat for any medical consumer who does not respond to standard treatment, or who needs prolonged treatment.

15. It's a defeat for advertisers and those who depend on advertising revenue (the media, for instance). Reduced competition may lead to less advertising.

Conclusion
It's a mixed bag for us as market actors (suppliers, laborers, consumers. investors) and it is a defeat for us as taxpayers.

The health care bill underlines how governments bumble around restricting markets-- only to free the market actors from all kinds of costs. Standardization is viewed as a good in almost any market over time.

In this case, the federal government is agreeing to take on the costs and burdens of compliance with standardization, while realizing few if any of the benefits. The more convoluted the law, the more burdens the state takes on. It's going to work fine in a burgeoning economy (over time). The years of its inception, and the years when our economy weakens, it's going to sink us like a stone.

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