The Affordable Care Act.
Healthcare represents an important share of the American economy.
According to the CMS (Centers for Medicare and Medicaid Services), the US
healthcare spending will reach 20% of the gross domestic product by 2025. It is safe to affirm that healthcare policies
have huge impacts on the economy. During the presidency of president Obama, the
patient protection and affordable care act commonly known as Obamacare has been
one for the major point of contention between democrats and republicans. This
year alone, the Obamacare subsidies will cost taxpayers $10 billion dollars more
than the 32.8 is cost in 2016. In fact, the topics fueled the 2016 presidential
debate. President Donald trump; presidential candidate then promised to repeal
it once he gets elected.
Through our Analysis, we will be speculating on the opinion
of the Chicago school of economics about the affordable Care Act.
The Chicago school is associated whit
a brand of economics which adheres to neoclassical economic theory in its
economics analysis and libertarianism in much of its policy work. Defending the
idea that people should be free to make their own choices. It rejects all forms
of government intervention and advocate the laissez-faire. Among the main
leaders of the Chicago school, we can name Milton Friedman, Garry Becker, Franck
Knight and George Stigler.
Friedman Joined the economics faculty of the
University of Chicago in 1946 where he spent most of his career. He defended the ideas that
competitive markets work efficiently to allocate resources and that central
banks are responsible for inflation. In 1951, he was received the Clark Medal:
a prestigious award given by the American Economic Association to American
Economist under forty who are considered to have made a Signiant contribution
to economic thought. In 1967, he became the president of the American
Academy Association. He received other
countless awards: 1976 Nobel Prize and the National Medal of Science
Becker joined the economics faculty of the University of Chicago in 1954. He
taught at Columbia University from 1957 to 1969 and returned to the University
of Chicago in 1970.
widely recognized for his key role in developing the field of human capital,
the paradigm of rational choice is sociology and the application of economics
modeling to key questions in political science.
Milton Friedman and Garry Becker opposed the predominance of Keynesian
economics. Contrarily to Keynes, the Chicago school argued against government
intervention. According Garry Becker, “Chicago economists always had a strong
tradition of a belief in the power of markets”. They believe in the market and
the effectiveness of competition to reach equilibrium.
The Austrians also
believe in a free market, but opposes the approach of the School of Chicago.
It’s no secret that both Milton Friedman and Gary Becker
worked with conservative administrations through Their career. Friedman served
as an advisor for Ronald Regan and Margaret Thatcher. Becker was an adviser to
republican Presidential candidate Robert Dole in 1996. However, it would be too
easy to draw conclusion without digging further into details. To make accurate
speculation of what Becker, Friedman or other leading figures of the Chicago school
opinion would have been about the affordable care Act, we must first examine few
provisions of this policy; the impact of each of them can potentially have on
our economy and lastly, we must compare those impacts with the expectations of
Becker and Friedman.
One provision of the characteristic of the affordable
care act that is source of contention is the individual mandate; the
requirement that most individual must sign up for health insurance or else they
get a fine. Moreover; employers are also required to offer affordable coverage
to their employee except for small employers.
The affordable care act enables the government a
significant role in the economy. In his essay “Why Government is the Problem. *
Essays in Public Policy, no. 39. Stanford, California: Hoover Institution
Press, 1993.” Friedman argued that “The problem in health care is that government
is spending too much on the wrong things. The result has been that government
has become a self-generating monstrosity. Abraham Lincoln talked about a
government of the people, by the people, for the people. What we now have is a
government of the people, by the bureaucrats, including the legislators who
have become bureaucrats, for the bureaucrats.”
The affordable care act also obligates insurance companies