Problems with Insurance Exchanges More than a “Glitch”

In the Friday, September 20th, edition of The Wall Street Journal, a front page story entitled “Pricing Glitch In Health Rollout” described how, with just two weeks remaining before the scheduled debut of the state health insurance exchanges mandated by ObamaCare, problems persist with the exchanges’ software in its attempt to determine the exact price that should be paid by citizens for health insurance.

Despite the persistent characterization of the problem as a “glitch” and efforts by those close to the project to describe it as a challenge of software programming, the fact remains that its inability to determine proper prices in the market for insurance goes well beyond computers to the realm of economics. It is the classic problem of centrally planned markets that disregard the profound efficiency of capitalism in clearing markets by allowing the forces of supply and demand to function uninhibited.

The unfortunate reality of such programs is that no matter what glitches are resolved, the market distortions of government controls will remain. Whatever the glitch-free computer program ultimately says is the proper price that you or I should pay for health insurance, there is no possible way that it could accurately reflect the price that would be achieved through pure supply and demand, free of ObamaCare regulations or the market-distorting, price-inflating power of subsidy programs like Medicare, Medicaid, and tax-incentivized group policies.

Ultimately, a market is too complex an arrangement of factors, with far too many unpredictable variables, to ever be efficiently planned—whether by a dictator and central committee overseeing a whole economy (as throughout the history of socialism) or by a computer program trying to calculate the price of health insurance (as with ObamaCare’s exchanges). The principles, both economic and moral, that advise against one must, of necessity, forbid the other.

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