Why Obamacare Cannot Succeed

Now that Obamacare has actually been unleashed on the unsuspecting American public, there is mass speculation about whether it will succeed as a program. Each political side presents its arguments with many former supporters caught in the middle. But if you understand how insurance works, it is basic that the program cannot work without even more coercion than is in the law as presently constituted.

Prior to the passing of this massive law, there was a basic pattern how health insurance matters worked in most states, which is where these decisions were made. The state had an insurance commissioner to oversee insurance companies. The state legislatures would establish laws regarding health insurance policies which were far more extensive than for auto or homeowners’ insurance. The legislature would be lobbied by either a special interest group or by a few “suffering” souls, and new mandatory benefits like chiropractors or maternity care would be included in each policy. Basic policies were larded up with so much that affordability became difficult for families or businesses. Choice became limited as rules became dictated and basic catastrophic policies became limited in their availability.

With all that being said, the insurance companies never breached certain taboos which they knew would break the bank and make policies soar beyond any reasonable economic sense. It was not because the insurance companies were just cold, heartless corporate animals. These benefits were not part of policies because the people who operate insurance companies knew through sophisticated mathematical analysis they would have to charge such outlandish fees that the average person would be overwhelmed financially.

In step the Democrats of Washington who had a guiding light – equality. Everyone should bear the burden equally for the minority who cannot instead of addressing those individuals in a different manner.

There are many “benefits” that were mandated by Obamacare, but three were particularly financially unsustainable or corrupting:

1. The lifting of lifetime caps on benefits: The insurance companies never did this because they cannot calculate what their potential outlays would be in the future to be able to estimate what should be properly charged to policy holders. They are shooting at an unknown and moving target. They now have no choice but to jack up premiums to cover the potential costs.

2. Pre-existing conditions: The insurance companies limited their exposure from new policyholders to highly-expensive illnesses because they would have needed to either charge exorbitant rates to limited individuals to cover the risks or massively increased the rates of others not afflicted with the same ailments.

One might ask that since employer-sponsored plans do not exclude people for pre-existing conditions now why this will be such a problem. That is because the insurance companies are able to amortize their costs over the members of the policy.

In this new situation they will just being throwing people into an insurance group without any actuarial analysis. There is a program that does that now – it is called Medicare. That is a large reason expenditures for Medicare are out of control.

3. Equal charges for the two sex – Feminists never liked that insurance companies charged more for health insurance for women than for men. But you did not hear them arguing about auto insurance premiums that were higher for young males than for young females. The reason those rates were higher was because young males drove more and had more accidents. In California, in an attempt at equality, Proposition 103 eliminated different charges for males and females, so young girls were stuck with higher insurance bills to cover their boyfriends’ errant behavior.

In the same manner, insurance companies were not charging women more because the people who operated the companies hated their mothers. It was because women use medical services more frequently than men and therefore incur higher costs. They were charging the people who used the services for what they were using.

All of these new policies as part of Obamacare are wonderful in a make-believe world. But insurance is based on mathematical calculations. Actuaries study pools of policy holders and then calculate based on historical data what the projected outlays will be, then figure overhead and profit above that. That is how they come up with a monthly fee for members of their group.

Obamacare threw that all out the window. They figured on a group of young people obtaining insurance at rates above what their medical care experience would warrant. They have caused people to have significantly increased premiums, most with much higher deductibles. That is all with what for the most part are much smaller pools of providers (doctors and hospitals).

There are some winners, but most people are financial losers. That was never explained to Americans, but now that it is hitting them personally they are revolting. That is why there are so many penalties in the law. This is not sustainable on its own without threats and coercion. You could surmise that the writers of the bill new it would be hated. That is why crafters of the legislation wrote so many penalties into the plan. If the plan is so hotsy totsy people should be running to get it -- not running away?

One of two things will happen. The program will fail on the weight of its outrageously expensive requirements, or it will remain in place but only with the addition of much higher penalties and more threats of actions against those who won’t willingly overpay for their health insurance. We don’t believe the latter will be tolerated by the American people so we are left with the former.

Thank you!!

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The Founders understood human nature, and they warned of the dire consequences if "the People" who, according to Justice Story, are the "only Keepers" of the Constitution should fail in their duty to oversee those whom they elected as their representatives.

As we have allowed the so-called "progressive" regressives to systematically censor the Founders' ideas from our textbooks and public discourse over the past several decades, generations have grown up without understanding of their role as "watchmen on the walls of liberty."

Perhaps the blatant overreach of the current Administration, along with Reid, Pelosi and the other Democrat hierarchy with their coercive and abusive ACA have captured the attention of enough Americans that there will be a rediscovery of the Founders' wisdom and understanding of the nature of liberty and the means to preserve it.

Our best weapon is contained in our Declaration of Independence and the Constitution which leaves all the power in "the People's" hands. Read them, amplify upon their principles and ideas by accessing the Founders' writings and speeches.

For a quick review of those principles and the nation's first 50 years under its Constitution, consult John Quincy Adams' "Jubilee" Address here, or a recent reprint of a 1987 Bicentennial collection of the Founders' principles, here.

James Madison stated: "Although all men are born free, slavery has been the general lot of the human race. Ignorant—they have been cheated; asleep—they have been surprised; divided—the yoke has been forced upon them. But what is the lesson? ... the people ought to be enlightened, to be awakened, to be united, that after establishing a government, they should watch over it ... It is universally admitted that a well-instructed people alone can be permanently free." - James Madison

And, speaking of Justice Story:

"If these Commentaries shall but inspire in the rising generation a more ardent love of their country, an unquenchable thirst for liberty, and a profound reverence for the constitution and the Union, then they will have accomplished all, that their author ought to desire. Let the American youth never forget, that they possess a noble inheritance, bought by the toils, and sufferings, and blood of their ancestors; and capable, if wisely improved, and faithfully guarded, of transmitting to their latest posterity all the substantial blessings of life, the peaceful enjoyment of liberty, property, religion, and independence. The structure has been erected by architects of consummate skill and fidelity; its foundations are solid; its compartments are beautiful, as well as useful; its arrangements are full of wisdom and order; and its defences are impregnable from without. It has been reared for immortality, if the work of man may justly aspire to such a title. It may, nevertheless, perish in an hour by the folly, or corruption, or negligence of its only keepers, THE PEOPLE. Republics are created by the virtue, public spirit, and intelligence of the citizens. They fall, when the wise are banished from the public councils, because they dare to be honest, and the profligate are rewarded, because they flatter the people, in order to betray them." - Justice Joseph Story, Final Paragraph of "Commentaries on the Constitution"

Note: Underlining added for emphasis

I'm not in favor of Obamacare but do like to point some things out for people who might be in a pinch and have no other option.

"extensive premium subsidies mean nothing when deductibles are 4-6k for low income people"

For most people with a silver plan getting premium subsidies, "cost-sharing" subsidies are available to lower deductibles and copays.

"Medicaid would take some time to show that your annual income meets the requirement."

Expanded Medicaid enrollment in my state is effective immediately. Don't even have to wait for the 1st of the month. "Stated income" is used for the initial qualification but they do follow up with verification!

A fundamental difficulty with health insurance as compared to other forms is that it is expected that insurers for cars, homes, etc. all have fixed worst-case obligations. If someone crashes their car in a fashion which would cost $15,000 to fix, but the car was only worth $2,000 before the accident and the damaged wreck is worth $500 as salvage, the insurance company won't be out $15,000, but only a tenth of that. Requiring car insurance companies in such situations to pay the $15,000 repair bills would make insurance vastly more expensive.

That having been said, health insurance has sufficiently poorly defined casualty events (e.g. if someone switches carriers, the new carrier will often be on the hook for on-going expenses stemming from conditions that developed while the old policy was in effect) that the way lifetime limits are implemented doesn't necessarily make a lot of sense.

“Health insurance and the medical industry have been going to hell for 30 years and anyone reading this who is more than 50 years old knows this to be absolutely true.”
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I suspect that the first step on that road to hell was the passage of Medicare in 1965. I can still recall reading a report shortly after the beginnings of medicare saying that a person who went into the hospital would have a medicare copay larger than the entire bill had been before medicare.

I recall a time when you could walk into a doctor’s office, sign in without an appointment and they would “work you in”, you could usually see the doctor within an hour or two and pay five dollars for the visit. I seldom needed to see a doctor then but when I did I literally paid with pocket change. Medical care, like nearly everything else works far better without government interference. It has been said that government is only good at two things, waging war and inflating the currency. These days it only seems to be good at the latter.

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