Indispensable Economics The HHS mandate and economics

Mar 15, 2012

Anyone who is living has heard of the dispute between the Obama administration and the Catholic Church regarding the Obamacare’s ruling that religious organizations, such as schools and hospitals, must provide contraceptive services, including sterilization and abortifacient pills.

Due to the tremendous outcry, the administration rescinded part of the mandate and said that the religious organizations did not have to provide the services, but their insurers did, and for free, womens’ “health care” being considered a right under the Obamacare plan.

The major problem here is that the Catholic people and institutions will be paying for these “health” services, to which Catholics must have nothing to do, and many of the insurers are the Catholic organizations themselves. For example, in my diocese, the diocese is the insurer, and the Catholic Charities is its insurer.

Why would a politician who wants to be re-elected in November, go charging into a large crowd of Christians, Jews and religious liberty-loving Americans in general with only one horse and lance? Is he politically suicidal? Does he not know that he will be overwhelmed?

There are standard answers to this question such as, Obama is appealing to his base. Even if he loses the fight, no one can say that he did not try to take on the evil, out-of-date, Catholic Church. This will shore up his base, just as the stupid decision to stop the Keystone pipeline will solidify his radical environmental supporters. All this might be true. But an economist sees things from a little more complex view.

I have in the past explained what public choice economics is (see, my article, “The Economics of Politics”). Let us apply Public Choice to the HHS mandate. What explains this action of the President and his Catholic henchwoman, Kathleen Sibelius, which seems to be political suicide.

Remember, all people act in their own interest. That is not generally a bad thing, especially in the private forum because 99% of what we do for ourselves helps the common good. Self-interest is not necessarily selfishness. But in public life it is another story. When a politician acts it also for his own interest in public life, this interest usually contradicts the common good. Politicians protest that they are “public servants” and suddenly receive a halo when working for the government that they did not have in private life. Does that make sense to you? When politicians act (generally speaking) they act because they want something. Threatening to regulate an industry brings forth that something. Threatening to place expensive regulations on, say, the hat industry, brings about a flurry of meetings among the hat industry executives about how to stop the regulations.

The scenario usually ends up where the industry raises money and offers it to the politician’s election campaign funds or PACS, getting a promise to back down on the regulations. It also works in the other direction. A government cartel can be threatened by a politician to have the regulations which protect the cartel from competition removed. This forces the cartel to do the same thing—cough up money for the politician’s war chest to keep the regulations in place. This is well established economic doctrine.

Now let us take the case at bar. We all know that Obama has a Catholic strategy. His idea is to rope in Catholics to his team trying to show that despite the fact that he is a fanatical supporter of birth control and abortion, that there are many prominent Catholics that follow him: Professor Kmiec, Kathleen Sebelius, Notre Dame, Joe Biden, etc. But his problem is that the American Bishops are beginning to develop a backbone and are a bit more outspoken regarding the incompatibility of Catholicism with Obamaism.

Since the original strategy meant to gain Catholic support is floundering, a new strategy to release the Catholic pressure against him is necessary. He now threatens to “regulate” Catholic institutions by making them pay for birth control, sterilization and abortifaciants. The Church has properly dug in its heels about the regulations; there are lawsuits pending, especially about the First Amendment rights of religions; and there even a lot of good videos about the problem from the Catholic viewpoint.

If the Church wins in court, the problem is solved. If it doesn’t, what is the next step: “Mr. President, what will it take for this to go away?” Will the Church be willing to pay the enormous fines? If Obama does not get re-elected in the Fall, again, problem solved, since he has put off implementation of the mandate for a year. If he gets re-elected, then what? According to Public Choice, someone will have to come up with some benefit to him to make him relent.

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