Thursday, September 26, 2013

Dean Baker Weighs in on Obamacare: Baker’s Rent Seekers are the Good, All Other Rent Seekers are the Bad

Rent seeking proposition #1

“In just one week the main part of Obamacare will begin to kick in. This is the state level exchanges that will allow the uninsured to be covered. Beginning on October 1, people will be able to sign up to get insurance in their state regardless of their health.

Most people signing up on the exchanges will qualify for subsidies based on their income and family size. This means that the cost of insurance will be less than the advertised price.”

“Many of these people will now find insurance to be affordable with the subsidies on the exchanges even if they do not work. Some critics of Obamacare have argued that it will undermine incentives to work. In the case of older workers in poor health they are right, and this will be good.”

Rent seeking proposition #2

“The drug companies and medical equipment suppliers both end up as winners under Obamacare. They will be able to secure even greater profits from their government-provided patent monopolies since the ACA does little to rein in costs.

As a result, we will still be paying close to twice as much for drugs and medical devices as people in other wealthy countries. This is a guaranteed recipe for bad health care since the enormous profits provided by these patent monopolies give drug companies an incentive to push their drugs even when they may be harmful.

And we will still be paying twice as much for our doctors as people in other wealthy countries. These failures on cost controls will add hundreds of billions of dollars to the cost of health care each year.” - Obamacare: It's Better Than You Think, Dean Baker, Huffington Post, 09/23/2013

Link to the entire article appears below:

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