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Government-run auto repair? Absolutley! Modeled after health-care debacle, some would clean up

Opinion Editorial
August 8, 2007

By Brian Schwartz

“Government-run health care, that’s the model for how to monopolize the auto repair industry.”

The men in fedoras looked doubtful.

“Continue,” said the driver through cigar smoke. I had no choice, but, now safely in hiding, I divulge this diabolical plan.

The federal and state governments are intent on monopolizing health care. Emulate their path. First, pass legislation to satiate voting blocks dissatisfied with their auto-repair costs and service. Since such disruptions of free trade inevitably exacerbate existing problems and create new ones, they provide a rationale to push more legislation marketed to “fix” them. Repeating this cycle will insidiously cripple a once-competitive market; voters will demand a complete government take-over, even though government created the crisis in the first place.

Here’s the scheme:
Make employer-paid auto insurance premiums tax-deductible just like health insurance. Consider an employee paying an annual $1,000 premium. His federal, state, and local income taxes exceed 45 percent. With employer-paid premiums, he gets the same coverage while saving $450 on taxes. Such a discount will be popular, and drivers will start demanding legislation to fix problems arising from changing jobs. For you, boss, that means more jobs for your cronies.

Today, auto-insurance premiums are low, while claims are large but rare. Not for long. Why pay car-related expenses out-of-pocket when they can save 45 percent if their insurance covers it? Drivers will demand low-deductible, high-premium policies covering everything from scheduled inspections, oil changes and tire rotations. Insulated from true costs, they will splurge on seemingly “free” services, which will make repair and insurance costs skyrocket.

Consider health care, Godfather. The National Center for Policy Analysis reports that patients pay only 14 percent of costs out-of-pocket. Paraphrasing economist Arnold Kling, this is cost-insulation, not insurance. Between 1992 and 2005, medical-service prices increased by 77 percent while the Consumer Price Index rose only 39 percent. The cost of cosmetic surgery, an uninsured medical procedure, increased only 22 percent despite booming demand. And yet, the RAND Health Insurance Experiment concluded that low deductibles increases consumers’ spending, but not their health.

Increased costs will leave many drivers unable to afford automobile insurance. To “alleviate” this crisis, introduce two new government products: Autocare for older car owners and Autocaid for low-income drivers. This will also draw more customers.

Consider medicine. The USA Today reports that “many workers choose Medicaid over insurance offered by their employers because it is less expensive.” Why wouldn’t they? The National Bureau for Economic Research found that Medicaid increases prescription-drug prices for non-customers by 13 percent. Autocare and Autocaid will surely advance government’s hijacking the auto-repair industry.

On the state level, be sure to have your boys mandate that all insurance policies cover routine maintenance and that all cars are as safe as a Lexus. Sure, costs will explode and thousands will lack transportation, but it satisfies special interest groups, gets votes and jobs for your gang, and allows you to demonize the opposition as “anti-safety.”

Also remember the wonderful combination of “guaranteed issue” and community rating. The first guarantees that a teen driving a muscle car can buy insurance from the scene of his accident! Community rating ensures that he’ll pay the same premium as a soccer mom for her minivan. This will come at a price of course – no more “futile” repairs for those selfish sentimental drivers who want to keep their grandparents’ old car alive.

To see the potential of this, again consider health care. The Council for Affordable Health Insurance estimates that “mandated benefits currently increase the cost of basic health coverage from a little less than 20 percent to more than 50 percent.” Chris Conover of Duke University estimates that health-care industry mandates costs each household $1,500 with dubious benefits and is responsible for one-sixth of the daily uninsured. More customers for the government!

Now that government is paying the piper, you can force “car doctors” to play your tune. Red tape will strangle their exercise of car-healing wisdom and expertise; draining joy from their careers and driving them to other professions. Look at Canada’s allegedly ideal system. According to Dr. Sunil V. Patel, former president of the Canadian Medical Association, “physicians across Canada are in an advanced stage of burnout due to work conditions” which “causes them to retire early or pull away from certain kinds of work or simply leave.” The New York Times reported that Patel “attributed much of the problem to technological shortages and the powerlessness doctors feel when patients complain about long waits for treatment.”

Long waits indeed.

The Fraser Institute found that Canadians wait over 17 weeks for treatment after a general practitioner’s referral. Brian Day, CMA’s current president, says that “dogs can get a hip replacement in under a week,” while “humans can wait two to three years.” Aim high, boss. Aim high.

That’s it, fellas. Tax exceptions, compulsory charities, and crippling rules – new ones pitched as solutions to problems caused by previous ones. Each increases government’s market share at the expense of individual freedom.
Standing on the sidewalk, I saw the unmarked car speed toward the Capitol building.

Brian Schwartz is an optical engineer in Boulder and health care policy researcher at the Independence Institute.

This opinion column originally appeared in the Boulder Daily Camera on February 11, 2007.