Obamacare Report Card: Time to Nullify

As we have seen over the last few weeks, nothing is as easy as government officials would like us to think it will be.

Obama sold healthcare reform as a win-win all around. To listen to his promises, everybody would be insured, and nobody would have to pay for it.  Well not exactly, but the president made some pretty big promises as we worked up to passage of Obamacare.

 – Obamacare would cover most of the uninsured in America.

– Obamacare would lower the cost of health insurance by ~2500 bucks per person.

– If you like your doctor, or your healthcare you will be able to keep either or both.

– Obamacare will LOWER the deficit.

– Obamacare will eliminate the insurance practice of descrimination based upon pre-existing conditions

– Healthcare providers will give away certain healthcare for free upon request

But how could this be?  The insured will have their cost of insurance lowered, the uninsured will get insured, government spending on healthcare will go down, and more healthcare will be available to all?  There is section in the book 1984 where Winston is tortured until he admits the 2+2=5, Obama seems to have thought his incessant presence on the TV in his first couple of years pf his regime was enough torture to make all of America believe this misstatement of fact.

The plain fact is that you cannot add patients, add care for each patient, leave the number of doctors the same, and lower costs. Somebody somewhere has to pay for services rendered.

So, lets look at Obamacare promises one at a time.

Obamacare would cover most of the uninsured in America.

Of course this has yet to be seen, but I strongly suspect that rather than more people being covered by insurance, less people will be. Simple economics dictates people act in their own self interest. Obamacare makes having insurance not in your own self-interest.  The reason for insurance is to protect yourself against a future unexpected event.  Obamacare has protected all America against the future unexpected event by making it illegal to deny coverage based upon a preexisting condition. At the same time, it has made illegal the inexpensive plans that would do exactly that.  The only plans that are allowed under Obamacare are plans that provide coverage for such things as prenatal care for men, child birth for men, and free breast exams for men, and testicular exams for women.  etc…  Obamacare has indeed been described as saying that the only car that is legal to buy is a fully loaded Caddy.  This is a very accurate description. But what about those of us that drive Escorts, Chevelles, and K Cars because we can’t afford, or simply don’t value, a Caddy?

The mandate is supposed to force individuals to sign up for health insurance. But the mandate results in a small (relative to the cost of insurance) fine paid through the tax return at the end of the year. Under the law, the fine amounts to the greater of 1 percent of your annual income or $95. There is also a $47.50 fine per child, up to a family cap of $285. Of course if you normally owe taxes at the end of the year, you would never have to pay until they come get you.

So, with the cost of health insurance running hundreds of dollars per month, and the cost of the fine at a hundred a year, it is a no-brainer. Joe Six-pack is going drop his insurance because his penalty for not having insurance is no longer thousands in unexpected health care costs, rather it is a relatively small fine. He always has the emergency room, and no health insurer can deny him even if he tries to sign up with cancer/MS/Diabetes/etc. Why would you few hundreds of dollars a month (this is wasted money if you are covered because insurance has to take you AFTER you get sick)?

So who will be the pool of insured Americans under Obamacare?  Sick, elderly, disabled, and foolish. There is no reason to carry insurance under Obamacare unless you are chronically ill, recovering from an injury, elderly, or a fool.

Obamacare would lower the cost of health insurance by ~2500 bucks per person.

Insurance companies spread the risk in healthcare prior to Obamacare because they covered UNLIKELY events. But Obamacare forces health insurance companies to cover everyday, LIKELY events. When it is structured this way, it is not insurance at all. It is a prepaid medical plan. With prepaid medical, you cannot expect to pay less than the cost of the underlying healthcare, Medical professionals now know that the person buying the service no longer cares how much it costs, and the payer for these services will bear any cost (it has been after all defined as a human right to get unlimited labor from ones healthcare provider at no cost to the citizen). Most likely, the cost will be raised by taxes and unlimited printing of the dollar to monetize the debt incurred by O-care

So, what drives down costs in the free market? The answer to this is a combination of things. For one, people have a limited amount of money to spend on healthcare, so they economize. They only visit the doctor when it is necessary. This self rationing lowers demand and the price of healthcare. Obamacare lowers the cost of certain healthcare to zero, and this will increase the costs associated with it. It removes the consumer even further from the paying for healthcare than our third party payer system has already done. By making the maximum deductibles lower, and the coverage higher, and certain healthcare utterly free, there are less things that are subject to customer self rationing. This is one reason that the prices for healthcare will be going up. It also rolls every buyer of healthcare into the same flawed 3rd party payer system.

Another thing that drives down costs in a free market is competition. Customers shopping for services choose the lowest cost producer.  Doctors who charge outrageous prices for simple services such as a hospital room going for thousands of dollars a night would get few takers if the consumer had to pay for them, and there were options available to choose from. The hospital across town may get some business because the hospital next door costs too much. Some will argue that when you need the hospital, you don’t have time to shop around. But this is only relates to emergency services. When it comes to planned events such as child birth, or outpatient procedures, it is reasonable to look for a better deal.  Enough business lost to high prices will provide some downward pressure. How has Obamacare effected competition?  Any extra space between the consumer and payer (and Obamacare adds miles of extra space) will tend to increase prices. Why would somebody look at the cost of what they are consuming when it is ultimately free to them?

One last thing lowering the cost of medical services in a free market is the profit motive. High profits in a field encourage more people to enter the field. I know most doctors will claim that they got into medicine for purely humanitarian reasons, but I bet somewhere in the back of their minds the very high earning potential played a roll. High profits and wages drive more people into a field this in turn increases supply, and eventually lowers prices. The same goes for technology. Manufacturers know that medical devices are very profitable, so more of them are produced, and the prices eventually drop.

How has Obamacare effected profit? The government has lowered the amount of money made in the insurance field, and forced doctors to give away certain services free of charge.  To be fair it has also added hundreds of paying customers, so the profit motive will probably survive for doctors, but not so much for insurance companies.

How has Obamacare attempted to replace these free market forces that lower costs in a non-violent way? Government forced rationing. Eventually, the government board responsible for determining how effective healthcare treatments are will also be tasked with determining who is worth treating. These decisions have always (as the President rightly pointed out when this objection was raised) been made, but in the past, they were made by an entity you had a consensual fiduciary agreement with, and you could challenge them in a court of law. I don’t know about the rest of you, but I feel alot better denying services to myself to save money having the government do it for me.  Also, when the government does it, it is tantamount to denying us life without due process (arguably a violation of the 5th amendment.)

Another method of holding down costs by the Obama administration is to force healthcare providers to give away preventative care. This approach is extremely questionable, for instance, these  articles  show that those savings are small at best, and possibly negative.  And the magic bullet, that Obama is planning on is young healthy people acting outside their own self interest and signing up for insurance to pay for the healthcare of the old and sick (even though, they have no risk by being uninsured of being sick and unable to obtain care in the future.)

If you like your doctor, or your healthcare you will be able to keep either or both.

This was clearly just a lie. News reports show that as far back as 2009, the Obama administration received projections that 40-65 percent of insured people would lose their coverage under his new law, and the insurance available to these people under Obamacare would be more expensive.The reason should be obvious: Obamacare makes the kind of insurance those people had illegal. Every plan was made illegal that fulfilled the mission of insurance (pooling risk of unlikely events.)  As I mentioned earlier in the article, the plans were not cancelled by Obamacare, and if the insurance carrier is still allowed to offer it, you may be able to keep it, but in most cases this is not true. The ACA has made Insurance obsolete.

Obamacare will LOWER the deficit.

This was another lie. The CBO priced 10 years worth of taxes to pay for six years worth of benefits. Because of the way it was enacted, and the projections that they used, they were able to make this appear to be less expensive than it was. Not much more to say about this, but it will only get more expensive as time goes by. You cannot make something free, and expect people to economize the use of it. People will use more medical care, because it is free, and fewer people will enter medicine because the writing is on the wall, doctors wages will be rationed soon. Fewer people will buy insurance because it is redundant to paying taxes.

Obamacare will eliminate discrimination based on preexisting conditions

I have to give this one to Obamacare, it has made this practice history. But at what cost? The insurance model of cost sharing will be destroyed by the fact that risk is illegal to price.

Healthcare providers will give away certain healthcare for free upon request

This is another one I have to give to Obamacare, but don’t celebrate yet. There is no requirement that these services be offered, simply a requirement that if they are offered, they have to be free. It is possible that service providers may still simply refuse to offer these services if the price gets too high.

Intangible costs

The biggest price of healthcare reform is going to be your freedom. There is a concept in authority: responsibility implies authority implies accountability.  If you give the government the responsibility to provide healthcare, then you give them authority over all inputs to healthcare. Name one activity you engage in on a daily monthly yearly or infrequently basis that has no impact on the cost of your care. Next time you want to go canoeing, you may have to get a license from the government to cover the expense associated with injuries resulting from your trip down the river, In the book 1984, every citizen had mandatory monitored daily calisthenics (surely this will bend the cost curve right?)  No action that we take is cost neutral to our health. In a free market, we pay for the cost or reap the benefits (incentivizing healthy choices) in a socialized or nationalized system, there is no such incentive unless it is provided by brute government force.

It was interesting watching as the one major party attempting to delay the implementation of Obamacare for one year, and the other party attempted to make them out to be the devil only to turn around and suggest exactly the same thing as soon as the one party capitulated. Political theater is entertaining, but the reality is the two parties have had their chance to repeal this monstrosity. Republicans were keen to repeal it when they knew it would not get past the Senate, but they caved when it counted. The “conservative” Supreme Court had a shot at it, and claimed the law fine a tax. We have signed petitions, and sent people to DC, we have made pretty speeches, and we have marched. isn’t it time to try something different?

Obamacare is like DC, Unconstitutional, unworkable, and unaffordable.  Time to simply nullify Obamacare.

Click HERE for four steps to get it done.