As the Washington Post noted recently, Virginia has cut the hours of many state employees in order to avoid having to provide them with health insurance. Since the law requires employers to provide insurance to all “full-time” workers, and defines “full-time” to mean 30 or more hours a week, Virginia capped it’s part-time employees’ hours at 29 hours per week. And it isn’t just Virginia. Several other states and private employers are implementing or considering similar measures.
For Kevin Pace, an adjunct music professor who teaches at a Virginia state college, that has meant an immediate $8,000 pay cut. So now, not only will he not have employer-sponsored health insurance, but he’ll have less money with which to purchase it himself. And of course, if he doesn’t purchase health insurance himself, he’ll be subject to an IRS-imposed “penalty”—or in the words of the U.S. Supreme Court—a “tax.”
Does this come as a surprise, that a measure designed to make it easier for people to obtain health insurance, is in fact hurting the very people it was intended to help? Is it possible that the “Affordable Care Act” is in fact making people less able to afford healthcare?
Nobel-prize winning economist Friedrich Hayek certainly would not be surprised at this revelation. And indeed, he could be credited with predicting such a result. In The Road to Serfdom, Hayek warned of how certain political ideas, (including central-planning, wealth redistribution and socialism), though promoted by people of the best intentions, inevitably lead towards impoverishment and slavery. He writes, for example, “Is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?”
Here, while President Obama and Congress may have had only the best of intentions in mind—i.e. a desire to see all Americans have access to better healthcare—their attempt to legislate that result has wrought hardship and suffering on the intended beneficiaries. This outcome, according to Hayek and others, exemplifies the problem with central-planning and wealth-redistribution. The result is never “fair,” and often leads to unanticipated problems—because one central authority can never know or use all of the information required to “make the system work.” It is a great fallacy to believe that a coercive, top-down approach will produce better results than competitive, decentralized markets. This is just the latest example.