Wednesday, October 02, 2013

Magical Thinking for Affordable Care

The Affordable Care Act is the law of the land.  The online insurance exchanges are activating - sort of, with glitches here and there.  The government shutdown means quite a few GS-rated IT pros will not be available to fix those glitches.  Consumers are finding out just how much they'll be subsidized or how much extra they'll have to pay to subsidize someone else.  Christmas is coming early for some folks while others are drafted to play Santa Claus.  The IRS helpfully lets us know how much more we'll pay for noncompliance. 

The wonder of our time is that Americans wonder about the origins of goods and services.  Several generations of creeping entitlement programs have conditioned Americans to think of transfer payments as a birthright.  I am certain that many Americans believe Social Security and Medicare are paid from a magical black box.  That box just got a lot bigger in the minds of everyone signing up for ACA-guaranteed health insurance.  Television comedians doing street interviews reveal that Americans don't even know this law's official name.

I used to mention the unfunded liabilities of our nation's middle class entitlements on this blog.  I did not expect many Americans to pay attention but I had to salve my own conscience and put facts on the record.  I won't do that for ACA so much because I don't expect it to survive a hyperinflationary economy.  The law's subsidies may be useful to our political class during the onset of hyperinflation.  ACA payouts to a newly destitute working class can increase rapidly along with whatever emergency bond buying program the Federal Reserve activates.  That transmission mechanism won't last long given the complex nature of this law's payment plans.  The rapidly hyperinflating payouts will encounter many delays in the ACA's claims activation process, rendering them unable to keep up with hyperinflating health care prices.  Other transmission mechanisms, specifically SNAP/EBT cards and home mortgage modifications, are much more effective channels for hyperinflation because the government can feed payments directly to banks.  

Americans holding ACA exchange health insurance during hyperinflation will wish for magical payouts.  The payouts will arrive in diminished form, too small and too late to be of much use in paying rising bills.  Frustration with the whole enchilada will only end when hyperinflation ends.