Consider the Ravaging Effects of Price Controls…Please!

Posted by Tina

The Affordable Care Act was created, as Nancy Pelosi has now famously indicated, to make healthcare “affordable”. To achieve that goal she and her cronies fashioned legislation based on a system designed to control prices. They gave the HHS Secretary extreme powers to manage the cost of healthcare through control of insurance and treatments. The problem with this approach to healthcare is that ultimately it cannot work. It will lead to higher prices and shortages of services. Evidence that this is true can be seen throughout history and in various countries but there is a more immediate example going on right now in Venezuela:

In September 2013 the Guardian wrestled with a mystery. “‘No one can explain why a rich country has no food’ Toilet paper, rice and coffee have long been missing from stores, as Venezuelan president blames CIA plot for chronic shortages.”

Actually, an economist named Brad Schiller tried to explain it in March of the same year. He said the shortages were the result of Hugo Chavez’s war against the Law of Supply and Demand. Writing in the Los Angeles Times Schiller wrote: “two years before his death, Hugo Chavez tried to repeal the law of supply and demand … Chavez despised the law because he believed it robbed the poor and unjustly profited producers.”

In its place, he persuaded the Venezuelan legislature to enact the 2011 Law on Fair Costs and Prices, a price-setting mechanism to ensure greater social justice. A newly created National Superintendency of Fair Costs and Prices was empowered to establish fair prices at both the wholesale and retail levels. More than 500,000 price edicts have been issued. Companies that violate these price controls are subject to fines, seizures and expropriation.

The “Law on Fair Costs and Prices” in Venezuela is the full market equivalent to Nancy’s Affordable Care Act (Obamacare). Control of this one area is simply a starting point for radicals who believe they know what you need and what it should cost. Evetually other areas of our economy will need their management.

The dirty secret about this takeover of our healthcare industry is that what they call affordable will have hidden costs. Nothing is free and nothing can be forced into becoming affordable. The cost will rise and be shifted. It will be absorbed by those who are taxed more. It will be paid by those with higher premiums and deductibles. It will be paid by future generations as the ACA adds to our debt. It will be paid by every American in the form of shortages and long wait times for treatments. The cost will be paid by those healthcare support businesses as cost control measures trickle down to affect their businesses. And perhaps most noteworthy, the cost will be paid by doctors and hospitals that are forced to accept less for the services they provide even as the laws controls threaten to put them out of business.

The ravaging effects of price controls, of central planning and big government management over our personal lives, won’t all be immediately seen. Instead, we will witness a gradual crumbling. That makes it very difficult to persuade people of the folly in accepting Obamacare. How easy it’s been to sell this devastating law! All it took was creating a few “free” services, making promises that turned out to be false, and floating the twin insane notions that everyone will be covered and costs will come down. None of these selling points is honest!

If you want a clear picture of the future under this law take a look at what is happening in Venezuela where cost control has been the central feature of economic policy. See also here and here.

The fate of the people in Venezuela is in our future in America if we don’t overturn this law and remove radicals like Nancy Pelosi, Harry Reid, and Barack Obama from positions of authority and leadership in America.