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Banning “Substandard” Products(Health Plans)
12-05-2013, 09:20 PM #1
Posts:4,526 Threads:1,029 Joined:Jun 2012
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As the White House struggles to rouse itself from its self-induced ObamaCare public relations nightmare, the primary excuse — at least regarding the canceled health insurance portion of the fiasco — has been to claim that the relevant policies were “substandard” and, therefore, harmful to individual consumers. Ergo, the “substandard” plans needed to be abolished from the market so citizens would be liberated from the possibility of purchasing a “substandard” plan, leaving the procurement of a “quality, affordable” health insurance plan (approved by the compassionate American state of course) as the sole option. There are two major problems with this statist argument.

The first problem with the White House’s argument is that it is logically impossible for a third party (the American state in this scenario) to “objectively” declare a scarce resource (the health insurance policy in this scenario), transferred from a seller to a buyer via a legal contract, “substandard.” Why? It is impossible because, as libertarian economists like Carl Menger, Ludwig von Mises and Robert Higgs have indisputably shown, value is subjective or, in lay terms, beauty is in the eye of the beholder. The buyer of a “substandard” health insurance plan demonstrates, by the very act of purchasing the product, that the plan meets or exceeds her subjective minimum quality standard. If the policy had not met or exceeded that standard, she would not have purchased the “substandard” product; instead, she would have purchased an alternative policy that did meet or exceed it. In contrast, when the American state decrees that a particular plan is “substandard,” the state is evaluating the plan based on its own subjective minimum quality standard rather than the consumer’s. These two subjective minimum quality standards are at variance because all subjective standards are different. Aesop’s fable, “The Town Mouse and the Country Mouse,” succinctly illustrates this ancient human truth.

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