Costs Don’t Go Away With Mandates

In his column today, Politicians in Wonderland, Thomas Sowell explains a very important point:

It costs politicians nothing to mandate more insurance coverage for more people. But that doesn’t mean that the costs vanish into thin air. It simply means that both buyers and sellers of insurance are forced to pay costs that neither of them wants to pay. But, because soaring political rhetoric leaves out such grubby things as costs, it sounds like a great deal.

Costs can vanish into thin air if you let the free market work.  My cell phone company is giving free phones away each year now.  The latest one I got for free is more powerful than anything I’ve ever had before.  Two years ago, a phone like this was only available to those willing to pay significant amounts.  Now, it’s a freebie.  That’s an example of costs vanishing into thin air.  Nobody in the government mandated this.

Mandating insurance companies to cover unprofitable cases doesn’t make those costs go away.  The mandate is really a mandate for the customers like you and I to pay those costs.

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