In a recent column on Lewrockwell.com, Peter Schiff explains why the current health bill will have devastating unintended consequences. He explains:

“The bill’s centerpiece is a clause prohibiting insurers from denying coverage based on a pre-existing medical condition. However noble and marketable an idea, this proscription removes the very basis upon which any insurance model operates profitably…the health care bill removes the need for healthy individuals to carry insurance. Knowing that they could always find coverage if it were eventually needed, people would simply forgo paying expensive premiums while they are healthy, and then sign on when they need it. But insurance companies cannot survive if all of their policyholders are filing claims!”

The administration isn’t stupid, however. They did recognize this perverse incentive, but as Peter Schiff elaborates, the government’s solution won’t help:

“Correctly anticipating this incentive, the Senate bill imposes an annual fine which gradually escalates to $750 for those who fail to buy coverage. So what? I would gladly pay $750 in order to avoid the $8,000 per year I pay now for personal health insurance.”

The incentive to freeload could very possibly bring the whole system to its knees. And then what? Well, a logical guess would be that the government will come riding in to the “rescue.” So is this just an end-around to sneak in a single-payer system? Barack Obama has, after all, admitted he would prefer a single-payer system:

And unfortunately, as Peter Schiff notes, the health care bill does little to address the real problems with American healthcare:

“The real tragedy is that the current bill does nothing to restrain the forces that are propelling healthcare costs into the stratosphere, namely: regulatory bans of insurance competition, the out-of-control medical malpractice industry, federal programs and subsidies, and a tax code that favors a third-party payment system – which alienates the patient from the cost of his care.”

What’s disheartening is the American health care system desperately needs reform, but first we’d have to stop the wrong reforms being proposed before actually fixing the system. It’s a long road ahead.