Ever since Obamacare became law, I have been counseling states not to establish the law’s health insurance “exchanges,” in part because:

to create an Exchange is to create a taxpayer-funded lobbying group dedicated to fighting repeal. An Exchange’s employees would owe their power and their paychecks to this law. Naturally, they would aid the fight to preserve the law.

California was the first state both to reject my advice and to prove my point.

Officials operating California’s exchange–which the marketing gurus dubbed “Covered California“–recently and deliberately misled the entire nation about the cost of health insurance under Obamacare.

They claimed that health plans offered through Covered California in 2014 will cost the same or less than health insurance costs today. “The rates submitted to Covered California for the 2014 individual market,” they wrote, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

See? No rate shock. California’s top Obamacare bureaucrat, Peter Lee, declared his agency had hit “a home run for consumers.” Awesome!

Unfortunately, anyone who knows anything about health insurance or Obamacare knew instantly that this claim was bogus, for three reasons.

1. Obamacare or no Obamacare, health insurance premiums rise from year to year, and almost always by more than 2 percent. So right off the bat, the fact that Covered California claimed that premiums would generally fall means they’re hiding something. 
2. Obamacare’s requirement that insurers cover all “essential health benefits” will force most people who purchase coverage on the “individual” market (read: directly from health insurance companies) to purchase more coverage than they purchase today. This will increase premiums for most everyone in that market.
3. Obamacare’s community-rating price controls (also known as its “pre-existing conditions” provisions) will increase premiums for some consumers (i.e., the healthy) and reduce premiums for others (i.e., the sick). So it is misleading for Covered California to focus on averages because averages can hide some pretty drastic premium increases and decreases.

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A story in Reuters today offers a good reminder of why the focus of trade negotiators is so often at odds with what really matters when it comes to opening markets at home and abroad.

The proposed U.S.-EU preferential trade agreement (called the Trans Atlantic Trade and Investment Partnership) is being subject to two days of hearings from various groups with an interest in the negotiations. The article implies that most of the witnesses (at least, those who have testified so far) are wary of the deal, on the grounds that various “protections” offered to consumers will be undermined by opening markets to trade and investment:

Since tariffs between the United States and the EU are relatively low, the most difficult part of the upcoming talks will be reducing regulatory and other “behind-the-border” barriers that impede trade in sectors ranging from agriculture to chemicals to autos to finance.

That worries consumer groups such as Public Citizen, which says the United States and the EU have different regulations because the concerns of their citizens are not the same. For example, EU consumers have voiced stronger objections to genetically modified food than their U.S. counterparts.

“Trying to eliminate a big swath of regulatory differences via a trade deal would have a democratic cost because you’re taking away a power from the electorate,” said Ben Beachy, research director at Public Citizen’s Global Trade Watch.

The reason why we have protectionism, when the case for free trade is clear and relatively uncontroversial among economists, is that the powers who gain from closed markets are organised and those, like consumers, who would gain from open markets are diffuse, hard to organise, and have little individual incentive to lobby.

But this article shows us that even those who think of themselves as consumers’ advocates, and are organized ostensibly to argue their case, often agitate against freer trade. Rarely do I hear of a “consumer group” giving support to the lower prices and greater variety that international trade brings; they’re too busy fighting the agreements based on some warped sense of “democracy” or because they want to limit consumers’ choices. It’s no wonder that trade liberalization is such a hard slog.

Speaking of consumer protections, and how they can be abused by more self-interested lobby groups, a reminder to read the paper written by Bill Watson and me on the rise of regulatory protectionism.

Last week, the Senate accepted by unanimous consent an amendment to the pending farm bill that would ban convicted murderers, rapists, and pedophiles from receiving Supplemental Nutrition Assistance Program benefits (a.k.a. food stamps). Introduced by Louisiana Republican David Vitter, the amendment has received condemnation from the left and at least one round of applause on the right. 

My initial reaction was “A few undesirables will lose a taxpayer-financed handout—so what?” But the more I thought about the amendment, the less I cared for it. For starters, the amendment appears to be politically motivated. Vote against it and a Senator can expect to see a negative campaign add from his or her next opponent. That’s probably why the amendment was agreed to by unanimous consent instead of being formally voted on in the Democratic-controlled Senate.   

More importantly, what does it accomplish? In terms of budgetary savings, it probably won’t save taxpayers much money. In addition to doing little to curb the size of government, it does nothing to rein in the federal government’s scope. I believe that it is not a proper role of the federal government to fund and/or administer anti-poverty programs. At most, such concerns should be the domain of state and local governments. Ideally, poverty relief would be completely handled by charities and other private organizations. The Vitter amendment, however, is just another example of the Beltway’s one-size-fits-all mentality. 

So should an individual convicted of a horrible crime who has paid his or her dues to society be denied assistance? Some would say yes, others would say no. The left has a case when they argue that denying assistance to an ex-criminal could have the unintended consequence of incentivizing further criminal activity. But the right also has a case that, hey, that’s our hard-earned money being taken from the government and being handed over to people who made awful choices. 

The diversity of opinion points to a fundamental problem with the government trying to act like a charity: the country gets stuck with whatever the politicians conjure up. Contrary to what youngsters are led to believe in school, our elected officials are not altruistic, enlightened beings. In reality, federal efforts to alleviate poverty will always be undermined by the self-serving nature of politics. And even when approached with the noblest of intentions, bureaucratic sclerosis and the undue influence of special interests will ultimately undermine a program’s effectiveness and efficiency.   

Personally, I would have no problem donating to a charity that helps struggling ex-cons who need to put food on the family table. Perhaps other people wouldn’t feel as comfortable and would instead direct their donations toward charities that only serve, say, hungry women and children who were the victims of violent crime. That’s the beauty of choice, which stands in stark contrast to the ugly, coercive alternative of the political system.