It’s remarkable that in the whole brouhaha about Joe Wilson
shouting “You lie!” at President Obama’s assertion that illegal
immigrant won’t be covered by Obamacare, no one has pursued the
question, “Who’s right?”
So here’s the answer. Yes, illegal immigrants will be covered for
Obamacare. Or rather, “Illegal immigrants may be legally
ineligible for Obamacare, but they’ll get covered anyway.”
How do we know this? Because it will be in the interest of all
the players — doctors, hospitals, any other care provider,
social workers, immigration lawyers, plus the immigrants
themselves — to get them into the system. The only people
opposed will be some bean-counting bureaucrat in Washington or
some crazed Republican who worries about the future of the
country. These interests will be distant and abstract and will
count for little. All the institutional momentum will say, “Give
them coverage.” It will be like water flowing downhill.
Here’s an example of how it will work. Ten years ago my nephew,
who grew up in Holland, moved to New York City with his pregnant
French wife. He was an American citizen, she was not. Neither had
ever lived in this country. They didn’t know Medicaid from the
medicine cabinet, but the first time they visited the
gynecologist, he signed them up for New York’s generous Medicaid
benefits. My nephew had a good education but didn’t yet have a
job and was still getting money from his parents. No matter, he
was eligible. Medicaid paid the entire costs of the delivery.
Within a few months he had a job and a year later he was making
so much money that they decided to move to New Jersey to get away
from New York City taxes. It was a perfect exploitation of New
York City’s welfare system. My nephew is a strong conservative
and libertarian and became quite embarrassed about it years later
when he understood what had happened, but I told him not to feel
bad. The system was designed to be exploited. The doctors and
hospitals were eager to have him on Medicaid because they
wanted to be paid themselves. They didn’t want to have to
worry about whether he would find a job or whether his parents
would continue to pick up the bills. Medicaid is what economists
call a “common pool.”
Common pool resources are the dread of all economists but the
delight of everyone else, since everyone figures they can take
out more than they put in. Back at the dawn of the Environmental
Era, Garrett Hardin defined environmental degradation as a
common-pool problem. In a famous 1968 essay, “The Tragedy of the
Commons,” Hardin used the chronically overgrazed Medieval sheep
commons as a model for the exploitation of commonly held
resources like air and water. “Private property, or something
formally like it,” Hardin wrote, was the solution to
environmental problems. (This was before environmentalists
themselves began exploiting the common-pool resources of the
American landscape by littering it with ugly windmills and solar
collectors.)
The same logic works with health insurance. If coverage is
provided by private insurers who have an interest in their own
survival, they will maintain control of the system and
exploitation will be limited. But if the federal government
aggregates everybody into one big common pool, then everybody
will think healthcare is “free” and nobody will have any stake in
monitoring the system. The government itself will simply borrow
or print money in order to win the favor of voters by maintaining
the illusion that the system is sustainable. The tragedy of the
commons becomes inevitable.
Obamacare and all socialized medicine schemes are an effort to
turn health spending into one gigantic common pool. The rule of
thumb about common pools is the bigger the pool, the harder it is
to monitor and the easier it is for everyone to take all they can
get while contributing as little as they can. As Frederic Bastiat
put it in the 19th century, “Government is the mythical entity
whereby everyone tries to live off the efforts of everyone else.”
This is what has happened with Social Security. When it was
invented in 1936, Social Security as a way of allowing people to
retire at age 65 at a time when the average American lived until
66. Today the average American lives to 79 but people can start
collecting at age 59 and may go on collecting for thirty years.
Hardly anyone puts in as much as they take out. That is why the
system is on course to run out of money in 2037, leaving unfunded
liabilities of $10 trillion. Medicare is in even worse shape,
projected to go into the red in 2017 with unfunded liabilities of
$40 trillion, more than three times today’s gross domestic
product. Already Social Security and Medicare absorb one-third of
federal revenues. By 2040 they may swallow everything.
The bizarre thing is that Obama and the gang think they can solve
these problems by creating a bigger pool! Democrats
continuously cite the impending Medicare implosion as “the reason
we need healthcare reform.”
But all Obamacare will assure is that all the individual players
— doctors, patients, hospitals, major corporations eager to dump
their health benefits onto the federal government, social workers
on a mission to help the poor, immigration lawyers dispensing
justice — will all be working to game the system, including
getting illegal immigrants on the rolls. After all, doesn’t
making the hospitals treat uninsured illegal immigrants just add
to their costs? Wouldn’t it be cheaper to include them as well?
Just to anticipate a bit, “If we can provide full medical to
terrorists in Guantanamo, why can’t we provide it to hard-working
illegal immigrants.”
During the New York City financial crises, a woman wrote a letter
to the Daily News defending the city. “God bless New
York City,” she wrote. “I grew up in New York City and the City
provided us with everything. It gave us housing, it gave us
welfare, it gave us unemployment insurance, it gave me a free
education at City College. People say New York is too generous
but all I can say is ‘God Bless New York City.’” The woman lived
in Teaneck, New Jersey.
That’s the way common pools work. Take all you can and then get
out before it comes time to make your contribution. Only this
time the stakes will be even higher. If Medicare has created a
chasm the size of Grand Canyon in the federal budget, Obamacare
promises to be a meteor crater as wide and as deep as the United
States of America.
