I have to say this, because I haven’t heard anyone else say it: No matter who or what Obama exempts from Obamacare this year, the same problems will occur next year. Giving people in the individual markets and employees in the group (business) markets a pass until 2014 just means that all the millions of cancellation notices will go out next year. What has been gained other than to take some heat off right now?
The problem with Obamacare is that it can’t work. I’m not saying that it might not work, or that it’ll make things worse. I’m saying that it simply can not work. There are many places in the 2000 page law and the 20,000 pages of regulations that simply make it unworkable. We’re not merely seeing the tip of the iceberg, we’re seeing the snowflake at the tip of the iceberg. The economics of it don’t work, the assumptions about human behavior don’t work… Nothing about it works. It defies reality. It is the five year old who thinks if he jumps high enough he can fly; it’s a decent theory and a really fun theory, but it defies the law of gravity.
The economics don’t work for the individual, the insurance companies, doctors, or the tax payers. Obviously, if people have to buy coverage for things they don’t need (let alone want) they are going to pay more for coverage. Pile on top of that the fact that premiums for people paying out of pocket have to subsidize the policies of others who can’t afford them, and again premiums have to go up. As surely as 2+2=4, people will be paying more (not the promised “$2500 less”) for insurance. The only way they can mitigate that somewhat is to have the policies have high deductibles. At a certain point, for most common illnesses and injuries, a high deductible means that getting sick or injured will break you financially (in contrast with Obama’s big selling point that the great thing about Obamacare policies is that illness and injury won’t break you). The people who can afford the lower deductibles (the “gold plans”) are the exact people who would not be broken by high deductibles, while the people pinching their pennies with bronze and silver plans are the people paying the highest out of pocket costs. What it amounts to is that people are paying through the nose for coverage they don’t want and are getting, in effect, catastrophic policies that leave them vulnerable to financial ruin anyway, which is exactly what happens with the far lower cost catastrophic insurance policies currently available that Obama decries as not really being insurance at all.
For insurance companies, the big selling point of Obamacare was that everyone would be forced to buy insurance, increasing their potential market, including the precious young and healthy who don’t use their insurance so their premiums offset the costs associated with the older and sicker insured. The problem is that the fine for not having insurance is smaller than the premium. Why would someone who is young and healthy pay high Obamacare premiums when the fine (which is practically unenforceable anyway) is less money? This leads to the “insurance death spiral”. The insurance companies must insure the old and sick, and at prices that aren’t adjusted for their age and illness, with no support from vast numbers of young and healthy people. When insurance companies pay out more than they take in, they go bankrupt.
This isn’t even taking into account Obama’s new (an highly questionable) edict that insurance companies can still offer to let people keep their old plans. Think about how enormously ignorant of how business works you to be to stand there and basically say, “Oh… never mind. Even though I commanded you insurance companies to take years to alter your policies and your basic business model to conform to this law, you now have to also offer the same plans that I forced you to abandon (or you look like the bad guy). Am I doing this because it makes sense? No. I’m doing it to save my political ass.” What does this do to the insurance death spiral? The companies still have to insure the old and sick per Obamacare, but now they are being told that, unless they want it to look like they are the cause (rather than Obama and Obamacare being the cause) of people losing the coverage they liked and wanted to keep, they have to still offer policies that are not priced to account for the increased costs of paying for other insured people who are old and sick. Obama’s edict does nothing but put the insurance companies in an even more perilous position. It does this just to cover his own ass for the next year.
It doesn’t work for doctors, who will probably be paid even less, will have their relationship with patients controlled by the government, and who will have to do unbelievable amounts of paperwork in order to comply with the law. So the law ties their hands in patient care, has them paid less, and increases their costs. No wonder so many doctors are figuring out how to retire early. Rather than being a lucrative field, or even being a field in which young people can fulfill a goal of helping people, the medical profession will be far less attractive to young, bright people because they won’t see it as either a way make great money or to help people due to the fact that the government has so much control over the interaction. Pile on that more insured people will increase demand for doctor services, and there will inevitably be a doctor shortage.
Who picks up the tab as this thing crashes and burns? Somebody is going to subsidize these policies. Somebody is going to end up paying off insurance companies to avoid the death spiral (something that absolutely had to be in the conversation that Obama just had with insurance company execs). I’m betting that the cost of Obamacare to the taxpayers is going to be enormous. That it wouldn’t increase the deficit “one dime” was already a lie. Now, with all of this bullshit, the bill is going to be astronomical.
Obama and the Democrats are whirling like dervishes trying to keep people on board with this completely unworkable scheme. I hope that people are not so stupid as to believe that his one year reprieve changes anything. (We won’t even get into the legality of the way he changes a law passed by Congress at his own whim.) It is designed to do one thing: shift blame from him for breaking his promise (for lying like a proverbial rug) to the insurance companies. Anyone in government with any limited amount of awareness knew that the cancellation notices were coming. The administration put out a report predicting how many people would lose their coverage. The Republicans tried to pass a bill in 2010 to stop that from happening and the Democrats killed it (love those party line votes). The one year reprieve given to companies, and (if it actually happens, which will be over the dying body of insurance companies) to individuals is simply a delay in the same damned thing happening next year.
In my opinion, Republicans should not be trying to fix this now. They should simply be telling people the story of how they tried to stop it by repealing the law, and even by trying to make this fix in 2010. They should remind people that the same cancellation notices people are getting now are going to go out again in 12 months, plus cancellation notices to millions more people when companies have to bring their policies into compliance and thousands of companies choose not to pay that enormous expense and instead drop their employees onto the individual exchanges where they too can pay high premiums for policies that provide more coverage than they need with deductibles and co-pays so high that it’s barely like having any insurance at all.
The story of Obamacare is the story of the failure of government to deal with complex problems. It’s beyond the capability of government. You don’t put something as important as health insurance and health care delivery into the hands of the least efficient and effective thing known to man: government bureaucracy headed by politicians.