Obamacare and the Poor

The Cato blog had this short piece the other day saying that Obamacare will actually hurt the poor. The basic argument is that Obamacare will cause the collapse of the insurance system, leaving everyone without coverage.

This argument is wrong if we consider a poor person with no insurance and a medical emergency. He will always gain from being able to buy into insurance at that point. Even if the value of medical insurance is significantly lower than it is today, accepting the most negative libertarian prognosis of Obamacare, it will always be better than no insurance. Even if you believe the medical insurance market will collapse entirely, as it might, the argument is irrelevant. There will either be a government-run universal insurance, or the current insurance market will be resurrected, but the relevant topic of free entry regardless of existing conditions will be moot.

Obamacare will hurt the entire society by lowering the quality and availability of medical care. Poor people will be hurt by Obamacare because it will make it more affordable to be poor, and less affordable to be self-sufficient. In the aggregate long-term view, almost everyone will be hurt. In the immediate and specific application of Obamacare, the poor will be helped.

Proponents of welfare focus only on specifics and ignore the larger implications of their policies. They do not consider how welfare may lead more people to be poor. They are not interested in the cosmic questions of why things are the way they are. Instead they only ask, given someone is poor, will he benefit from welfare in the immediate term, and the answer is always yes. Opponents of government-run welfare recognize that many people would not have been poor in the first place had there not been a generous safety net, and that helping someone in the short term will often keep them poor in the long term.

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