This is from today’s New York Times:
“Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.”
With the ink barely dry on ObamaCare, Democrats in Congress are scrambling to keep their masterpiece from unraveling. As I have pointed out repeatedly, there is nothing in the ObamaCare plan that helps reduce the cost of delivering health care. It is all about controlling what doctors, medical service providers, and insurance companies are paid. All the underlying pressures on health costs (tort reform, 3rd party payer, etc.) are still in place.
“We Have to Pass the Bill to Know What’s In It”
Nancy Pelosi’s stunning but famous words are coming into play. Let’s see what has the senators panicked.
- To hoodwink the American people that this abomination is cost effective, ObamaCare warms up by hitting us with four years of taxes before the expensive benefits come into play.
- Every American will be required to purchase health insurance or pay a penalty. That penalty will initially be $95 per adult in 2014, rising to $695 per adult in 2016 and $2,085 for a family. This money will be collected by the IRS, not by insurance companies
- Americans cannot be denied coverage for an existing condition
So here’s the scenario. If you compare the cost of the penalty of $2,085 for a family vs. the cost of insurance for a family of $10,000, coupled with the inability of insurance companies to deny coverage for pre-existing conditions, healthy people will start dropping insurance coverage left and right. Why not? On the way to the hospital, you can call an insurance company and say you want to be covered for the pains in your chest and you cannot be denied. So insurance companies will only have sick people as clients. With only sick people that they constantly have to pay claims on, their only course of action if they want to stay in business is to raise premiums on all those sick people. If they start doing it now, they may be able to raise them less than if they wait until 2016.
So the insurance companies are acting rationally to this mess the Democrats dragged across the finish line and now they are shocked, SHOCKED, that they should do this.
Grace-Marie Turner, president of the Galen Institute, a research center that advocates free-market health policies, said the Democrats’ proposal was unlikely to succeed in lowering insurance costs.
“Capping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up,” Mrs. Turner said.
The Democratic fix is to have a new bureaucracy that will provide a check on unjustified premiums. I think you can look at this in one of two ways, both plausible. The Democrats were stupid enough to believe, as they typically do, that Americans don’t act rationally to their government policies. It’s also why they don’t understand that when they raise taxes they never collect as much money as they thought, and when taxes are cut they can’t believe how much money flows into the Treasury due to economic growth. The second scenario is this new commission will cap premiums to the point of driving private insurance companies out of business and then the Democrats will say, “Geez, we didn’t want to do this, but I guess we have to put in place a public option that, by the way, will be the only option.”
Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said: “Health insurance companies’ profits for one year equal about two days of health care spending in the United States. So even if we were to take away all the profits of the so-called greedy insurance companies, that would still leave 363 days a year when health care costs are expanding at a rate our country cannot afford.”
Now that I think about it, it is probably the second scenario that is more likely, that is, force the public option. Your government is about to swallow up another big chunk of the economy if we don’t turn them out in November.
