Why Obamacare Failed Come November, the grim trudge across the increasingly barren Obamacare landscape begins anew. Illinois consumers likely face staggering price hikes for individual insurance policies. Some types of plans could cost an average of 43 percent to 55 percent more. Ditto across the country: A first tranche of states approved 2017 rates with similarly cardiac-arrest-inducing premium increases. Many Illinois consumers will find fewer choices because major carriers fled this market. United Healthcare bolted. So did Aetna. Land of Lincoln Health collapsed mid-year, leaving policy holders to scramble for coverage that could cost them plenty. In many places across Illinois and the nation, people will find drastically fewer choices of plans than they did last year. Those insurers fled because they didn't want to lose more money on a government-run market that is so far out of whack — a market they think likely will never be profitable for them. That isn't surprising, as we enumerate below. But by diagnosing Obamacare, all of us can see the mistakes that any repair or replacement can avoid. So let's look at the failings and how they can drive solutions: Obamacare failed because it flunked Economics 101 and Human Nature 101. It straitjacketed insurers into providing overly expensive, soup-to-nuts policies. It wasn't flexible enough so that people could buy as much coverage as they wanted and could afford — not what the government dictated. Many healthy people primarily want catastrophic coverage. Obamacare couldn't lure them in, couldn't persuade them to buy on the chance they'd get sick. Obamacare failed because the penalties for going uncovered are too low when stacked against its skyrocketing premium costs. Next year, the penalty for staying uninsured is $695 per adult, or perhaps 2.5 percent of a family's taxable household income. That's far less than many Americans would pay for coverage. Financial incentive: Skip Obamacare. Obamacare failed because insurance is based on risk pools — that is, the lucky subsidize the unlucky. The unlucky who have big health problems (and big medical bills) reap much greater benefits than those who remain healthy and out of the doctors' office. But Obamacare's rules hamstring insurers. They can't exclude people for pre-existing conditions, and can't charge older customers more than three times as much as the young. Those are good goals, but they skew the market in ways Obamacare didn't figure out how to offset. Result: Young and healthy consumers pay far more in premiums than their claims (probably) would justify in order to subsidize the unexpectedly large influx of older, sicker customers who require expensive care. Too many unlucky people, too few lucky people: That will collapse any insurance scheme. Obamacare failed because it allowed Americans to sign up after they got sick and needed help paying all those medical bills. Insurance should be structured so that, although you don't know if you'll need it, you pay for it anyway, just in case; your alternative is financial doom. But if you can game the system and, for example, buy auto coverage after you crash into your garage, then you have no incentive to buy insurance beforehand. Obamacare failed because it hasn't tamed U.S. medical costs. Health care is about supply and demand: People who get coverage use it, especially if the law mandates free preventive care. Iron law of economics: Nothing is free; someone pays. To pretend otherwise was folly. Those forces combined to spike the costs of care, and thus insurance costs. Obamacare failed because too many carriers simply can't cover expenses, let alone turn a profit, in this rigidly controlled system. Take Blue Cross and Blue Shield of Illinois, the state's dominant Obamacare insurer. Last year, for every dollar the carrier collected, it spent $1.32 buying care and providing services for customers, according to BCBS President Maurice Smith. No wonder BCBS is proposing rate increases from 23 percent to 45 percent for its individual plans. A question looms: Is Obamacare plunging in a so-called insurance death spiral? Is the market so unstable that plans are doomed to get more and more expensive, driving more Americans and more insurers out of the market until ... Obamacare thuds to the pavement? We won't predict that, but neither do we see a mathematical alternative. What's clear is that the solutions to Obamacare are implicit in its failures. A repaired or replaced system has to be more flexible, letting insurers offer a wider range of plans so that consumers, not lawmakers or bureaucrats, dictate what's best for them. That system should protect those who carry continuous coverage, not coddle those who duck in and out of plans when their health needs change. A new system also should scrap the job-killing Obamacare mandates that discourage companies from hiring and discourage workers from adding hours. Instead of gearing subsidies to incomes, let Americans not covered via an employer reap tax credits to help finance their insurance purchases on the open market. And tell us again: Why can't insurers sell policies across state lines? Imagine the pricing competition that would unleash. We can deny the current system's failings, or we can parlay our evolving knowledge into something much better. Put another way: The next president and Congress either reckon with Obamacare's failures or ... wait for the thud. http://www.chicagotribune.com/news/...nsurance-medicine-0911-jm-20160909-story.html
It was, I think, and expendable stepping stone to nationalized medicine which is the real leftist goal. If the leftists retain power they will make sure Obamacare fails hard and impacts every household in America thinking that shock and chaos will get them what they want.
Obamacare was always designed as a big step towards socialized medicine. No reasonable person could have thought it would work. It penalized mostly republican voters and subsidized mostly democrat voters and Obama's massive invasion of immigrants, so it was great policy from obama's perspective. When it fails totally, the democrats will argue there is no alternative to socialized medicine or some partially socialized system. We are caught in an iron triangle of ever rising health costs, ever increasing numbers of people who can't afford them and increasing resistance to cross subsidies, ie obamacare's sky-high rates for substandard policies for those who can afford them. There are solutions short of socialized medicine, which would be ruinously expensive and force rationing on sick people with all the potential for abuse that entails. The government can't even run the VA system, so you can imagine the disaster that a fully socialized system would be. One obvious solution is to let insurers sell to national risk pools, instead of state by state. Another is to let consumers decide what they need to buy rather than forcing them to buy coverage they don't want or need. Health insurance needs to be separated from employment, which would eliminate many of the problems with things like preexisting conditions.
Having had two trips to the ER in the past two months and overnight stays both times I am grateful to have really good insurance. The ACA did, and does absolutely nothing to address the real problem which everyone knows and acknowledges is the continual explosion in the cost of healthcare. Until that gets addressed in a serious fashion, I don't care what kind of plan they come up with, it will eventually fail.
Not only do I like your post, I really like it! It pinpoints the real defect in Obama, excuse me, "O'Romney care", viz., costs are not addressed in any meaningful way. Why? It's because O'Romney care is a capitalist approach to providing medical care. But, sadly in this case, capitalism only works well when the customer is free to walk. Now tell me, how free are you, you with your broken leg, to walk? This is the reason that all other industrialized nations have already adopted some form of state provided medical care. The least objective observer can't fail to notice that every other industrialized country provides care with substantially better outcomes at far lower cost!!! We are capitalists, and we sing the praises of capitalism. But until we recognize capitalism has its limits, we are a doomed society.
I find it humorous that the republicans are against what they've been pushing in one form or another since Nixon.
Actually that's quite accurate. Obama care, and especially as passed, is modeled after a plan proposed by the Heritage Foundation and the closely related Massachusetts plan adopted when Romney was governor of Massachusetts. It seems obvious that the Obama Administration adopted a plan very similar to the Heritage Foundation Plan with the hope of getting some Republicans on board. The Administration, however, proposed an innovation that was anathema to republicans in general, a handful of influential democrats, and of course the Insurance industry whose cooperation was going to be needed to get anything passed. That was the "Public Option!" Once the plan was shorn of it's public option, a necessity if anything was to pass both the House and the Senate, it was clear that even then no Republican was willing to break rank. A united front of democrats would be needed to pass the ACA, because there would be not a single republican vote. Montana Senator Max Baucus, a democrat!, was running interference for the insurance industry in the Senate and the ACA was going nowhere without Baucus on Board. Baucus, however, refused to sing Kumbaya with his democrat colleagues so long as the public option remained in the Bill. With the Public Option gone, the ACA was looking much more like the Heritage Foundation Plan; yet even then the Senate republican battle lines held behind their Leader, Mitch McConnell, who had famously said the republicans' job was to ruin Barrack Obama at all costs. One of those costs would turn out to be affordable access to medical care for 350 million Americans. Without a public option there was no hope of holding medical costs in check, especially as long as McCarran-Ferguson remained the law of the land. Even had McCarran-Ferguson been repealed, however, and only a few progressive democrats broached that subject, it is still doubtful that the plan could hold costs in check without the "Public Option". The latter was an essential feature if the bargaining power of the Federal government was to be brought to bear on the pharmaceutical industry, and the insurance industry forced to compete with a government run plan. We have seen already, however, how Congress, again mainly republicans, was able to shut down Medicare's efforts to bring Big Pharma to heel, and how Big Pharma has tried to use regulatory capture, only partly successfully, to shut off individual importing of prescription drugs. (FDA policy is irrational but clear. There has been, however, only half-hearted and ineffective federal attempts to shut down importing; meanwhile the A.G. offices in several States have issued recommendations on reliable Canadian internet pharmacies.) The pharmaceutical industry has dealt with this problem by restricting the amounts of drugs shipped to Canada; insurance companies have been forced to keep their co-pays competitive with the cost of the imported equivalent. Canadian, internet pharmacies have responded by acting as middle men for off-shore suppliers in the UK and Western Europe. The primary result is a delay in filling prescriptions via Canada of about 10 days. It is truly ironic in the extreme that the political party that makes the most noise extolling the virtues of "free enterprise" is leading the effort to shut down competition in insurance and pharmaceuticals! That same party, with help from a few of their democrat brethren, have succeeded magnificently in wrecking the ACA. Their job was made easier than it might have been. Even if left intact as originally proposed, it is doubtful the ACA would have been successful in achieving its goal of bringing affordable medical care to every American. In the case of the ACA, however, all the republicans had to do to assure failure was to see to it that a couple key ingredients were left out. __________________ A key mistake that the Obama Administration made, and I'll never understand why, is to not use employer mandates as a bargaining chip. Employer linked healthcare is a terrible idea from the git go. As a strategy, they should have proposed a plan with mandates and then "reluctantly" agreed to take them out of the Bill in exchange for republican concessions.
once again... Piezoe rewrites history. Obama selected Baucus - he wasnt running interference he was hand picked by Obama. Obama Pelosi and Reid were never going to screw their Insurance company / wall street paymasters with the public option. The democrats had complete control. The created what they wanted without a single Republican vote. The aim and the goals of Obama Pelosi and Reid were achieved - no single payer and eliminate competition. have you ever watched this... you keep making up history to suit your bias. http://www.pbs.org/wgbh/frontline/film/obamasdeal/
One primary reason that insurance companies are bailing from Obamacare and the program is floundering -- is the elimination of "risk corridor" payments by Congress. "Risk corridors" were a guaranteed payments from the federal government to cover any Obamacare losses. The insurance lobby demanded this provision be put in place when Obamacare was established so the insurance companies would never take a loss (Keep in mind the insurance industry wrote Obamacare). However in 2014 Congress disagreed and refused to fund bailing out insurance companies for their Obamacare losses. (http://www.politifact.com/florida/s...says-he-prevented-25-billion-obamacare-bailo/) If risk corridor payments still existed, your tax dollars would be bailing out insurance companies to the tune of 25 Billion dollars in 2016 (on average the insurance companies in each state had $500 million in losses that would be covered). Compare this to the original Obamacare estimate that risk corridor payments would never exceed $1.4 Billion worst case. Some insurance companies are suing the government (so far very unsuccessfully) to get their risk corridor payments. (http://www.breitbart.com/big-govern...sues-223m-congress-blocks-obamacare-bailouts/) This is the real reason why Obamacare is failing as insurance companies bail out of the program now that the federal government will not cover their losses.
thanks... I did not realize that how big the payments would have been. I remember Rubio being on that issue and warming about the size the payments could balloon too. I think he was speaking 10 billion and lefties said never.