Let Consumers Decide About Obamacare

In The New York Times yesterday:

Gov. Rick Scott and the Republican-dominated Legislature have made it more difficult for Floridians to obtain the cheapest insurance rates under the exchange and to get help from specially trained outreach counselors. Missouri and Ohio, two other states troubled by the Affordable Care Act, have also moved to undercut the law and its insurance exchanges, set to open on Oct. 1. In Georgia, the state insurance commissioner, Ralph T. Hudgens, has said he will do “everything in our power to be an obstructionist.”

What is being obstructed is consumers’ access to information about health insurance options under the ACA.

You could view this as just another skirmish in the war over the Affordable Care Act. But there is an important principle at stake here.

A key argument for free markets is that individuals exercising their preferences in purchasing decisions will induce producers to supply the right kinds and the right amounts of goods. The freedom of individual consumers is important for its own sake. It is also likely to lead to a superior social outcome, because a well-informed individual is the best judge of what will benefit her.

The view that individuals should ordinarily have free choice in purchasing decisions is widely held. On the left, the economist Abba Lerner wrote in 1972 that

This view [the sovereignty of consumers] I find very close to the idea of democracy or freedom — the idea of normally letting each member of society decide what is good for himself, rather than having someone else play a paternal role.

HayekOn the right, F. A. Hayek was one of the first to use the concept of consumer sovereignty. In his 1935 critique of Collectivist Economic Planning, Hayek argued that

[the] free choice of the consumer… and planning from the center are completely incompatible aims.

The Supreme Court has ruled that commercial or marketing speech enjoys protection similar to non-commercial speech. Justice Kennedy wrote the Court’s opinion in Sorrell v. IMS Health Inc (with Alito, Scalia, Roberts, Thomas, and Sotomayor) and argued that

Lawmakers may no more silence unwanted speech by burdening its utterance than by censoring its content.

Commercial speech benefits consumers and deserves protection against regulatory encroachment. Again, from Sorrell:

Fear that speech might persuade provides no lawful basis for quieting it.

Obstructing consumers’ access to information about the ACA is deeply unprincipled. Florida, Missouri, Ohio, and Georgia should not substitute their paternalist and collectivist decisions for the free choices of consumers. Conservatives lost this battle in Congress, the Supreme Court, and the 2012 Presidential election. But they still have legitimate opportunities to defeat the ACA. There will be another election in 2016. And they could allow consumers to vote for or against the ACA right now, using their dollars in the marketplace.

@Bill_Gardner

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