Hayek on Unforeseen Consequences

February 26th, 2013

This quotation from law, Legislation, and Liberty, seems so apt to describe the Affordable Care Act.

In fact, of course, the chief circumstance which will make certain measures seem unavoidable is usually the result of our past actions and of the opinions which are now held. Most of the ‘necessities’ of policy are of our own creation. I am myself now old enough to have been told more than once by my elders that certain consequences of their policy which I foresaw would never occur, and later, when they did appear, to have been told by younger men that these had been inevitable and quite independent of what in fact was done.

A primary driver of uncompensated care was EMTALA, which required emergency rooms to treat anyone who shows up, whether or not they have insurance. EMTALA offered no funding for this mandate, so it resulted in fee-shifting to those who did have insurance, causing health care costs to rise.

Anyone who understood how EMTALA would affect the market could have foreseen the likely consequences–namely, free-riding and cost-shifting.

So, to solve this “unforeseen” problem, the Affordable Care Act  imposed an individual mandate. Of course, this new policy will have countless foreseeable consequences (higher premiums, higher costs of care, increased bureaucracies  etc.). Supporters of the ACA kept repeating the mantra that these will never occur. I fully expect that some point in the future, supporters of the law will, as Hayek noted, cry that these consequences were “inevitable and quite independent of what in fact was done.”

And so the cycle repeats.