As the White House struggles to rouse itself from its self-induced ObamaCare public relations nightmare, the primary excuse — at least regarding the canceled health insurance portion of the fiasco — has been to claim that the relevant policies were “substandard” and, therefore, harmful to individual consumers. Ergo, the “substandard” plans needed to be abolished from the market so citizens would be liberated from the possibility of purchasing a “substandard” plan, leaving the procurement of a “quality, affordable” health insurance plan (approved by the compassionate American state of course) as the sole option. There are two major problems with this statist argument.

The first problem with the White House’s argument is that it is logically impossible for a third party (the American state in this scenario) to “objectively” declare a scarce resource (the health insurance policy in this scenario), transferred from a seller to a buyer via a legal contract, “substandard.” Why? It is impossible because, as libertarian economists like Carl Menger, Ludwig von Mises and Robert Higgs have indisputably shown, value is subjective or, in lay terms, beauty is in the eye of the beholder. The buyer of a “substandard” health insurance plan demonstrates, by the very act of purchasing the product, that the plan meets or exceeds her subjective minimum quality standard. If the policy had not met or exceeded that standard, she would not have purchased the “substandard” product; instead, she would have purchased an alternative policy that did meet or exceed it. In contrast, when the American state decrees that a particular plan is “substandard,” the state is evaluating the plan based on its own subjective minimum quality standard rather than the consumer’s. These two subjective minimum quality standards are at variance because all subjective standards are different. Aesop’s fable, “The Town Mouse and the Country Mouse,” succinctly illustrates this ancient human truth.

The second problem with the White House’s argument is that it does not accurately specify who deems the canceled health insurance policies “substandard.”. A fundamental mistake of the typical non-libertarian consumer, based on the comments from President Obama himself or his surrogates, is to assume that the American state is the only organization that appraises the canceled insurance polices as “substandard.” The truth, however, is that the insurance companies themselves also perceive the relevant policies as “substandard.” The reasons the American state and the insurance companies divine the policies to be “substandard” are different, however. The American state judges the plans to be “substandard” because the American state wields less healthcare power than it otherwise would when it has not yet comprehensively micromanaged the health insurance market. The insurance companies, by contrast, judge the plans to be “substandard” because they earn less profit than they otherwise would when market competition necessitates that they offer inexpensive plans that have not been banned from the market. To solve this manufactured “crisis,” the insurance companies and the American state colluded — evidenced, among many things, by a December 2008 “reform” proposal by America’s Health Insurance Plans (AHIP), the national trade organization for insurance companies, which is nearly identical to ObamaCare — to create a corporatist system (an alliance of corporations and the state, also known as fascism) from which the state gains increased power by thoroughly micromanaging the health insurance market (by banning some products and mandating others) and the insurance companies gain greater profits because less-expensive, lesser-quality healthcare plans are banned from the marketplace.

In summary, White House protestations that the recently canceled healthcare insurance policies were “substandard” and, therefore, should have been abolished are unintelligible. The assertions are unintelligible not only because it is not logically possible for the American state to “objectively” declare that a product is “substandard” based on a subjective minimum quality standard, but also because the American state has conspired with insurance companies to increase state power (via micromanagement of the health insurance market) and corporate power (health insurance corporate profits soar due to state mandates to purchase ridiculously expensive health insurance plans). The just solution to these genuine problems — unaffordable health insurance and excessive state and corporate power — is abolition of the state, not ObamaCare.