Mark These Words of Richard A. Epstein:
The stunning failure of the ObamaCare launch has two
dimensions. The first is the appalling breakdown of HealthCare.gov in
processing routine applications.
The second - and far more ominous development - is that
private insurers have now dropped their insureds in the individual healthcare
market in droves effective January 1, 2014.
That problem has no technical fix.
The nightmare scenario is that people will be dumped from
insurance they like and need before they are able to procure substitute
protection.
In 2009, President Obama often repeated this soothing
assurance: “No matter how we reform healthcare, we will keep this promise . . .
If you like your healthcare plan, you will be able to keep your healthcare
plan. Period. No one will take it away. No matter what.” That across-the-board
assurance demonstrated to the American public Obama's respect for their private
choices.
* HAD THE WORDS BEEN TRUE, THAT IS!
The President positioned the plan as providing coverage
to the uninsured without disrupting medical coverage for everyone else.
* HE LIED.
It was, alas, a false promise.
* A LIE.
From day one, the Affordable Care Act used its own narrow
definition of a healthcare plan so that the tiniest modification of any
coverage, coinsurance, or copay provision, for example, removed the promised
grandfathering protection. It took no immense foresight to predict that Obama’s
ambitious reworking had to crater.
By 2013 the rhetoric had changed entirely. No longer were
consumers able to exercise intelligent choices in healthcare plans. Now, a
newly paternalist president insisted in Faneuil Hall in Boston that those
people who were forced out of their current coverage could get a "better"
plan from the exchanges... once they were up and running.
(*SMIRK*)
[F]ar from confessing error, ObamaCare defenders use
threadbare rationales to reassure the anxious that time will heal all wounds.
Take a close look at two arguments that appeared in the New York Times
editorial page on Sunday November 3, dealing with paternalism and catastrophic
risk respectively.
1) The Paternalism Defense --
Taking paternalism to a new high in its editorial
“Insurance Policies Not Worth Keeping,” the Times reported as if it had made
its own actuarial assessment of the business choices of people who were content
with the plans they had.
In its attempt to soften ObamaCare's current failure, the
editorial opined, “insurers are not allowed to abandon enrollees.”
* DO THESE PEOPLE SPEND THEIR DAYS SMOKING CRACK AND
THEIR NIGHTS DROPPING ACID...???
Not so[!] No insurance company is obliged to take its
chances with those plans that meet the exacting standards of the ACA. If it
wants, it can withdraw from the market, or offer high cost policies through the
exchange.
* WHICH IS WHAT'S HAPPENING IN FAR TOO MANY CASES - JUST
A PEOPLE LIKE ME TOLD YOU IT WOULD BE!
Still worse, those plans that do remain in service are
not obligated to assure patients that they can see their own doctors. Indeed
UnitedHealthcare in New York cited the ACA as a reason to terminate many
doctors from its system, whose patients now have to scramble to form new
doctor-patient relationships within the new restricted coverage provisions.
* FOLKS... YA CAN'T MAKE THIS $HIT UP! THIS IS THE
REALITY!
Worse still, many in-plan physicians are likely to opt
out of the program because its compensation levels are not high enough to lure
them in.
(*NOD*)
The Times argues that all this dislocation is worth
bearing once people remember how “terrible” many of the soon-to-be-abandoned
policies were, chiefly because of their high deductibles and skimpy coverage.
But the Times mistakes the disease for the cure. The difficulty with ObamaCare
is that its rich and comprehensive plans are beyond what many informed people
want to buy.
* ONE MORE TIME...
The difficulty with ObamaCare is that its rich and
comprehensive plans are beyond what many informed people want to buy.
In ordinary budgets, healthcare competes with other
imperatives, and the grand pronouncements of "the right plan" [via
Obama and ObamaCare supporters] are made without reference to the sacrifices
needed in other domains to buy these fancy coverages.
* "...ARE MADE WITHOUT REFERENCE..."
TERRIFYING. ABSOLUTELY TERRIFYING.
The Times lauds the fact that all new policies will have
to supply minimum "essential benefits," noting that many of these — like
mental health, substance abuse, and maternal care — are not covered by many
policies. The Times also notes that catastrophic care is built into the plan,
but never explains why Obamacare allows that protection to be purchased only
when it is bundled with other insurance features that people don’t want to buy
at all. The Times cannot grasp that limited coverage is an attractive feature
for people who know what they want and how much they can afford to pay for it.
* AGAIN...
The Times cannot grasp that limited coverage is an
attractive feature for people who know what they want and how much they can
afford to pay for it.
Then there are the massive cross subsidies from young to
old built into the plan.
No rational young person will take coverage that costs
more than it is worth, especially if they have the option of immediately
joining the healthcare plan of their choice at standard rates after learning
that they unfortunately have some sort of health problem.
* DUH!
The result will be the familiar adverse selection “death
spiral” in which only sick people join the plan for prices that offer them a
net subsidy that has to be paid for by someone else. But just whom would that
be?
2) The Problem of Catastrophic Risk --
This key sticking point is not addressed in Nicholas
Kristof’s indignant column, “This is Why We Need ObamaCare.”
Kristof focuses his account on the tragic condition of
47-year old Richard Streeter, now afflicted with advanced colon cancer.
Streeter lost his employer coverage in 2008, after which he could not find
“affordable” coverage. He decided to go bare at great risk and lost that bet.
* AGAIN...
He decided to go bare at great risk and lost that bet.
Kristof uses Streeter’s story to denounce the entire
American healthcare system for the "inferior care" that it gives not
only to the old but also to the young and needy. But there’s another side of
this issue that Kristof fails to mention. The Wall Street Journal carries a
moving story by Edie Littlefield Sundby, who has fought stage-4 gallbladder
cancer for four years only to discover that her “affordable lifesaving medical
insurance policy has been canceled effective December 31, 2013.” No need to
guess why. She is now adrift without substitute help from California’s
exchange. What Kristof has to explain from his own moral perspective is why ObamaCare
should shatter the lives of those with coverage when that drastic move is
unnecessary to protect people like Streeter.
Besides, why did Streeter’s employer drop his coverage
anyway? One strong possibility is that the pervasive state mandates that were
precursors to the ObamaCare program helped reduce employer-based healthcare by
about 10 percent or 15 million people. Under these mandates, no one is under a
duty to sell healthcare coverage, but if any coverage is sold it must contain
certain minimum provisions. Put bluntly, prior to ObamaCare, many people lost
insurance on essential matters because the state mandates set high minimum
standards. ObamaCare repeats that same mistake.
* ONE MORE TIME...
Prior to ObamaCare, many people lost insurance on
essential matters because the state mandates set high minimum standards.
ObamaCare repeats that same mistake!
Streeter turned down offered coverage because he deemed
it unaffordable. In retrospect, three points are clear. First, he made a
serious mistake in going without coverage. Second, it is highly likely that the
insurance company offered him a good deal, given his known risk factors. Third,
there was no market failure in that case.
(This last point requires some elaboration beyond
competing anecdotes.)
The reason markets work is that voluntary exchanges
produce mutual gains. No market therefore will generate the implicit subsidy
that people desperately seek. That outcome is not a failure of insurance. Thus,
suppose Streeter has, because of his pre-existing condition, a 20% chance of
developing a condition in one year that will cost $1,000,000 dollars to treat.
Ignoring administrative costs and interest rate issues...
* AND PROFITS! TOTALLY IGNORING PROFITS!
...the right insurance premium is $200,000.
Indeed, if it were certain that Streeter were to get
cancer at that time, technically no insurance could be sold. All that Streeter
could do is make a prepayment of that expense.
* GOT IT...?
So when people are saying that insurance should be
affordable, what they are asking for is a subsidy from others.
But ... from whom?
Under ObamaCare, it looks as though Streeter will get
coverage paid for by future plan members. But these future losers will steer
clear of that plan until they need coverage. And if the plan bankrupts, the
subsidy must come from general revenues, at the cost of high tax payments
across the board. That problem does not arise with Sundby who bought her
insurance at market rates.
Is it, even in Kristof’s "decent society,"
appropriate to pay one million dollars in public funds to extend Streeter’s
life for days or weeks in the face of competing public needs of poverty and
malnutrition across the land? Should we spend public healthcare dollars on the
very young who can lead more productive lives for years, or on the very old or
sick, who can’t? So long as resources are scarce, there is an obligation to
spend them wisely.
ObamaCare is not the cure for Streeter’s sad situation.
The best way to deal with the risk of catastrophe is for people to buy their
coverage early, when they are young, so that premiums are low. In any
well-functioning market, they can acquire a renewable policy with guaranteed
rates. At that point, does it become morally reprehensible to deny additional
coverage to those individuals who passed on this possibility? No. Sadly, the
abysmal performance of the American healthcare system lies not in the market
economy that Kristof deplores, but in the elaborate network of regulation that
shrinks the domain of voluntary choices and leaves consumers with fewer choices
than they would have had if the government had just stood by.
(*NOD*)
Indeed, this last point exposes the fatal conceit of the
hard-core ObamaCare defenders...
Their efforts started with the dangerous and uninformed
decision to make deals with the insurance companies.
[Instead,] what the ObamaCare planners should have done
was to find ways to knock down any and all barriers to entry that prevented
low-cost competitors from entering the market.
(*NOD*)
That means letting healthcare insurers cross state lines;
it means letting for-profit businesses enter into businesses supplying walk-in
care at affordable prices. None of that was done, so the current legislation
piles outsized benefit packages on top an unworkable delivery care system.
Alas, so long as moralists at the Times have their way,
the structural rot will only deepen. The broken websites are a sideshow.
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