“The only thing we’re going to try to do is lower costs so that those cost savings are passed onto you. And we estimate we can cut the average family’s premium by about $2,500 per year.” – Barack Obama, October 2008
Eventually the “affordable” portion of the “Affordable Care Act” kicks in, right?
“It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.” – Thomas Sowell
The must-issue regulation built into ObamaCare increases costs for the insurers, who cannot draw all of the needed revenues from the high-risk pool, thanks to mandates on rates. That means those costs have to get spread out to everyone in the pool. This is nothing more than Risk Pool 101, a course that Congress flunked repeatedly in the ObamaCare debate because that wasn’t the point of the exercise to begin with.
As I have said before, to put it very simply, look up Adverse Selection and you’ll know why this was doomed to failure.
Insurance companies try to minimize the problem that only the people with big risks will buy their product, which is the problem of adverse selection, by trying to measure risk and to adjust prices they charge for this risk. Thus, life insurance companies require medical examinations and will refuse policies to people who have terminal illnesses, and automobile insurance companies charge much more to people with a conviction for drunk driving.
Or a Person who never had insurance get’s a terminal disease and gets insurance to pay for it and it costs A LOT to the insurer then dies shortly thereafter.
If the insurer had known they’d have adversely selected to not insurer this too a high a risk person but if they can’t do that then You and I get higher premiums to pay for it!!
Ta da! 🙂
Moral Hazard: In insurance markets, moral hazard occurs when the behavior of the insured party changes in a way that raises costs for the insurer, since the insured party no longer bears the full costs of that behavior. Because individuals no longer bear the cost of medical services, they have an added incentive to ask for pricier and more elaborate medical service—which would otherwise not be necessary. In these instances, individuals have an incentive to over consume, simply because they no longer bear the full cost of medical services.
And does this all not sound like ObamaCare to you??
But ObamaCare was a political decision not an economic decision so that’s why the economics are bass-ackwards AGAIN.
Obama and The Democrats are masters of this. Pass a Political bill that sounds like economics but is purely an ideologically based bill meant to benefit THEM politically and nothing else.
In the meantime you, the moron ,I-don’t-wanna-know voter gets it in the shorts but you’re happy to be given yet another government approved enema!!
Case In Point….
Health spending skyrocketed during previous economic slumps — it saw double digit increases during the deep, prolonged 1981-82 downturn, for example.
Plus, the spending trend had been falling for years before the last recession, dropping from 7% in 2004 to 4.7% in 2008. In any case, even after the recession ended in mid-2009, spending growth still slowed.
Insurance premiums showed the same trend. According to the Kaiser Family Foundation, annual family premium increases fell from 9% in 2005 to 5.4% in 2007, and to 3% in 2010.
The health care market, it turns out, was already figuring out how to control costs long before ObamaCare. Witness the explosive growth in Health Savings Accounts.
These plans — which combine high-deductible insurance policies with a tax-free health spending account that rolls over at the end of the year — went from virtually nonexistent in 2005 to become the second most popular plan offered by employers, the Kaiser study found.
These plans hold down health spending by giving consumers a more direct financial stake in their own health care decisions.
The problem is that ObamaCare declares war on this cost control effort by capping deductibles at $2,000 and making it harder to offer health savings accounts. And ObamaCare’s ever increasing list of benefit mandates will drive up costs just as they have at the state level.
The “guaranteed issue” rule will force premiums still higher, which even ObamaCare fans now admit, and its huge subsidies will drive up taxpayer costs.
The result: Annual spending increases will shoot up to 7.4% in 2014, when ObamaCare fully kicks in, and will remain at or above 6% for the foreseeable future.
Insurance premiums are already spiking, up 9.5% in 2011 and 4.5% last year. And as we pointed out in this space yesterday, double-digit premium increases are now popping up all over the place.
Doctors take an oath to “first do no harm.” Too bad Obama didn’t adhere to that when he forced ObamaCare down the country’s throat.
But it’s the HOLY GRAIL of Authoritarian Liberalism!!
Getting to choose who lives and who dies. Getting to choose how you live. It was irresistible. They’d been slobber over the idea for 80 years.
Now they can decide when you are no longer of any use to the State. They can have the Food Police out there deciding that what you’re eating isn’t “healthy” enough for the State’s purposes. And they get to have the IRS to kick down your tax door if you don’t pony up!!
What’s not to like, if you’re a petty dictator and consider yourself so far above mortals in “enlightenment” and “compassion”??
After all, if you disapprove you must be and evil, mean, poor-hating “granny-off-the-cliff” arsehole! 🙂