A friend of mine recently purchased a new flat screen TV, getting a no-interest loan for three years to finance it. He remarked in amazement at this wonder, noting he got a lower interest deal than the U.S. Government gets on its borrowing.
The deal he got was the result of a free market system, in which the electronics store offered a special deal—effectively paying for part of his TV—to entice him to buy. Because he could shop elsewhere, and more importantly, that he had the option of walking away and not getting a new television, the store reduced his payments. Competition resulted in lower prices.
However, if the government imposed a mandate that everyone own a TV, and those that don’t would have to pay a tax, my friend would lose his negotiating leverage. In fact, he would certainly see a price increase. This is a result of a shift in the demand of new TVs, as even those who never watch television would be forced to buy products.
Of course, TV manufacturers would love such a mandate, as they could sell far more TVs even at higher prices. They’d like it even more if taxpayers subsidized the purchase of television sets.
Unfortunately that is exactly what is happening with health insurance. Costs will go up, as will the taxes to help subsidize health insurance companies. Yet some still marvel at the fact that giant insurance corporations and other big businesses in health care lobbied for the so-called “Affordable Care Act”.