We're all undoubtedly familiar with the government's now-expired "Cash for Clunkers" program, technically called "CARS" (probably named by the creative geniuses who brought you the "USA PATRIOT Act").  While it seems that the program was the one stimulus package that actually did some good (over 700,000 cars were sold), its overall economic impact is debatable.  Approximately 60% of buyers during the program's operation were planning to buy a new car this year anyway.  In essence then the Government handed out checks to roughly 420,000 people for doing something they would have done anyway.  Additionally, the jobs created by the program will likely not last, since the demand levels are not sustainable without the government credits.

Economic recovery aside, CARS gave us a good glimpse of how the government operates a new program.  I found this particularly helpful at time when people are furiously debating a government-run health plan.  The merits of such a system in its own right can be discussed at a later time.  For now let's look at how the government might operate such a system, using CARS as an analogue.

A major issue with government health care is the cost.  The President and his spend-happy friends in Congress, apparently paying little heed to those who borrowed too much in the pre-recession days and subsequently lost their homes, are slated to run up a deficit of $9,000,000,000,000 over the next 10 years (pause for a second and let all those zeros sink in).  For the first time in recent memory, the public is taking note of these deficits and doesn't like the idea of our tax dollars going straight to China and other lenders.  The cost of the government-run health care plan will be critical to its passage, and the main factor in determining its cost will be how many people actually sign up.  Estimates have been varied, and some more optimistic than others.  One thing is certain about the government's projection of how many people will take part in the plan: it will be wrong.  CARS was supposed to last into October on $1 billion.  This money was exhausted in a few weeks, and, despite tripling the budget for the program, it still ended before September.  Now imagine the ramifications for health care if at first the government has to triple the projected budget and still cannot sustain the program as originally intended.  Cuts will have to come from somewhere, and denying coverage is going to be the likely means to this end.

Another lesson learned is how inefficient the government is.  President Obama took some flak for comparing the would-be government plan to the Post Office, an organization known for poor service and coming, hand out, to Congress to save it from drowning in a sea of red ink.  Compared to CARS, however, the Post Office is a well oiled machine.  In part because of the grossly inaccurate estimates of how many people would seek the Clunkers rebate, the staff running the program was quickly overwhelmed and their computer systems crashed.  More troubling, though, is that Congress appointed the NTSB to run the program.  The NTSB has absolutely no experience operating a system such as this, and its lack of expertise clearly showed.  Many dealers in the program also complained about the confusing paperwork and guidance associated with seeking the rebates, and about how long it took to get the actual money back (many dealers are still waiting to receive their checks).  Again, while inconvenient for people in the CARS program, these deficiencies would be disastrous for health care.  Imagine if Congress appointed an understaffed, inexperienced agency to run a program overseeing the health care of literally millions of people.  Imagine further that these people were denied coverage because they misread a single clause in an overwhelmingly long list of rules that only an admin lawyer could decipher, and that they had to wait in a months-long backlog to get the coverage they needed?  Not a pretty picture.

Lastly, CARS demonstrates that, Left or Right, reform or status quo, lobbyists dictate much of what Congress does.  Many economists argue that CARS was a poor decision in terms of stimulating the economy because it singles out only one industry and only benefits those with the means to buy a car, whereas blanket tax cuts benefit all industries and can help even the most unfortunate members of our society in this current climate.  Why did Congress then decide to favor auto makers above all others?  Three letters: U-A-W.  The UAW and other unions are always stalwart supporters of Democratic candidates, and with Card-Check floundering, it is likely that the Democrats in Congress felt the pressure from the Union bosses to make sure that their constituents did not go unassisted.  Though Pelosi and other proponents of the government plan have tried to demonize the insurance industry and claimed that those who oppose the plan are in the industry's pocket, the fact is that the big insurers are the ones who stand to benefit most from the current reform packages, and have donated heavily to Democratic candidates in order to see these plans succeed.  Government mandates that everyone carry insurance means millions of new customers for the insurers, and the health care "exchange," as well as requirements to cover preexisting conditions and price caps will be cost prohibitive for smaller insurers, forcing them out while the select few largest insurers will sweep up those displaced when these smaller companies fold.

The legacy of CARS shows that the government's heavy-handed way of running things is rarely practical, efficient, or cheap.  Given the program's failings, it can be little wonder that so many vehemently oppose the government's intrusion in the health care market.