The Great Recession of 2008 exposed the dangers that occur when government distorts markets on an economy-wide scale. Banks seized on government guidance to give out risky, sub-prime loans to borrowers that would never pay them back. Without the tax breaks and comparative advantages provided by the government, these loans would never have been granted.

On Wall Street, these incentives induced credit-default swaps: a clever mechanism that provided insurance to investors if their investments plummeted. With this insurance, and the implied promise of a government bailout, the risk of the investment was erased: no more winners and losers, just privatized profit and socialized loss. Both the government and Wall Street invented ways to reduce risk, yet in reality they were creating a balloon of uncertainty, one that dramatically popped in September 2008.

Instead of learning from this crisis, Washington bureaucrats are busy crafting a new one with even more dire consequences. In the Wall Street Journal, Holman Jenkins described these new artificial incentives as “Washington’s Suicide Mission” where “Washington can save the economy by doing what comes naturally—spending money carelessly, creating massive new entitlements without funding them, dishing out cheap credit to politically favored sectors, telling business people where and how to invest.”

These new provisions, coming out of the Administration and Congress, are now being worked into the healthcare bill. Just as Congress mandated artificially low rates for mortgage lenders, they are now doing the same to insurers in the Senate bill: apply a standard rate to everyone regardless of their health status. With the mandate for all citizens to get health coverage being tweaked recently to lessen the penalties for not complying with this provision, the Senate bill has actually provided a new incentive for people to put off getting insurance until they are seriously ill.

What does this mean? If people have an incentive to put off getting healthcare until they are seriously ill (and ironically when health procedures are the most expensive) the whole argument for universal healthcare and preventative medicine has been erased. While Congress is slowly realizing that forcing citizens to participate in the proposed system is inherently flawed, central planners continue to create new mechanisms to force a new bureaucracy to take hold.

Brace yourselves; it’s going to be a long, wild ride.

Write to tdoheny@afphq.org