The Scandalous Truth About Obamacare Is Laid Bare

Tyler Durden's picture

Authored by Jeffrey Tucker via The Foundation for Economuc Education,

A government program that is ruined by permitting more choice is not sustainable.

It’s not just that Obamacare is financially unsustainable. More seriously, it is intellectually unsustainable, even though this truth has been slow to emerge. This has come to an end with President Trump’s executive order last week.

What does it do? It cuts subsidies to failing providers, yes. It also redefines the meaning of “short term” policies from one year to 90 days. But more importantly–and this is what has the pundit class in total meltdown–it liberalizes the rules for providers to serve health-coverage consumers.

In the words of USA Today: the executive order permits a greater range of choice “by allowing more consumers to buy health insurance through association health plans across state lines.”

The key word here is “allowing” – not forcing, not compelling, not coercing. Allowing.

Why would this be a problem?

Because allowing choice defeats the core feature of Obamacare, which is about forcing risk pools to exist that the market would otherwise never have chosen. If you were to summarize the change in a phrase it is this: it allows more freedom.

The tenor of the critics’ comments on this move is that it is some sort of despotic act.

But let’s be clear: no one is coerced by this executive order. It is exactly the reverse: it removes one source of coercion. It liberalizes, just slightly, the market for insurance carriers.

Here’s a good principle: a government program that is ruined by permitting more choice is not sustainable.

The New York Times predicts:

Employers that remain in the A.C.A. small-group market will offer plans that are more expensive than average, and they will see premiums increase. Only the sickest groups would remain in the A.C.A. regulated risk pool after several enrollment cycles.

Vox puts it this way:

The individuals likely to flee the Obamacare markets for association plans would probably be younger and healthier, leaving behind an older, sicker pool for the remaining ACA market. That has the makings of a death spiral, with ever-increasing premiums and insurers deciding to leave the market altogether.

The Atlantic makes the same point:

Both short-term and associated plans would likely be less costly than the more robust plans sold on Obamacare’s state-based insurance exchanges. But the concern, among critics, is that the plans would cherry-pick the healthiest customers out of the individual market, leaving those with serious health conditions stuck on the Obamacare exchanges. There, prices would rise, because the pool of people on the exchanges would be sicker. Small businesses who keep the more robust plans—perhaps because they have employees with serious health conditions—would also likely face higher costs.

CNBC puts the point about plan duration in the starkest and most ironic terms.

If the administration liberalizes rules about the duration of short-term health plans, and then also makes it easier for people to get hardship exemptions from Obamacare's mandate, it could lead healthy people who don't need comprehensive benefits to sign up in large numbers for short-term coverage.

Can you imagine? Letting people do things that are personally beneficial? Horror!

Once you break all this down, the ugly truth about Obamacare is laid bare. Obamacare didn’t create a market. It destroyed the market. Even the slightest bit of freedom wrecks the whole point.

Under the existing rules, healthy people were being forced (effectively taxed) to pay the premiums for unhealthy people, young people forced to pay for old people, anyone trying to live a healthy lifestyle required to cough up for those who do not.

This is the great hidden truth about Obamacare. It was never a program for improved medical coverage. It was a program for redistributing wealth by force from the healthy to the sick. It did this by forcing nonmarket risk pools, countering the whole logic of insurance in the first place, which is supposed to calibrate premiums, risks, and payouts toward mutual profitability. Obamacare imagined that it would be easy to use coercion to undermine the whole point of insurance. It didn’t work.

And so the Trump executive order introduces a slight bit of liberality and choice. And the critics are screaming that this is a disaster in the making. You can’t allow choice! You can’t allow more freedom! You can’t allow producers and consumers to cobble together their own plans! After all, this defeats the point of Obamacare, which is all about forcing people to do things they otherwise would not do!

This revelation is, as they say, somewhat awkward.

What we should have learned from the failure of Obamacare is that no amount of coercion can substitute for the rationality and productivity of the competitive marketplace.

Even if the executive order successfully liberalizes the sector just a bit, we have a very long way to go. The entire medical marketplace needs massive liberalization. It needs government to play even less of a role, from insurance to prescriptions to all choice, over what is permitted to be called health care and who administers it.

Freedom or coercion: these are the two paths. The first works; the second doesn’t.

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nmewn's picture

Force the "young & healthy" who don't need it into it by creating..."a law".

Yeah!

That seems completely fair! ;-)

NotApplicable's picture

So, the second choice it is then!

MozartIII's picture

Get the government out of our bodies. Open market, let the people choose their care. Who and what they want, not by some bureaucrat that is being bought out by Insurance companies, to fatten their teet's.

bonin006's picture

I switched to Liberty Healthshare last December. Cost went from $700 per month with $6000 deductible to $200 per month with $500 deductible with max $1,000,000 per incident. I am 60 years old. That is what it costs to insure people that take care of their bodies. I haven't cost them a dime yet. It sure beats having to pay for yourself plus the 500 Lb slobs that need a motorized cart to move down the isles at Walmart to pick up their soda and potato chips.

They don't cover pre-existing conditions (actually, they will AFTER 2 years), don't take smokers or other bad risks. They use the ethical/religious exemption from Obamacare, but they are the most liberal as far as you not needing to be a religious fundamentalist (fanatic?) to be accepted.

sk0r9y0s's picture

What "open market"? 

..sign up thru your employer?..choose from 3 bad plans from the same  crooked/corrupt carrier

 

..the open market that's riddled with big health bureaucracy?

Sudden Debt's picture

why not just raise taxes? Nobody's protesting about that so why not?

Anybody with a job is a rich person for a socialist no matter how much he makes...

Lonesome Crow's picture

A Black Mountain Side of Good Times Bad Times leaves many Dazed and Confused. How Many More Times is there this Communication Breakdown? I Can't Quit You Baby but You Shook Me! So, Babe I'm Gonna Leave You because Your Time is Gonna Come.

SubjectivObject's picture

NYT .... Atlantic .... VOX ... CNBC

WTFGAF?

nmewn's picture

Ya know, I was just commenting to Mrs.N, it would be like shooting over a baited field in Gainesville tomorrow ;-) 

Ex-Oligarch's picture

They are all horribly worried about the premium hikes and incipient death spirals that might result from Trump's executive actions.

Apparently none of them noticed the premium hikes and incipient death spirals during the past few years of Obama's term.

Cardinal Fang's picture

Because Choice is the opposite of Single Payer.

Choice is one less vehicle for wealth redistribution...

Can't have that...

dasein211's picture

Healthcare shouldn’t be a for profit driven market. Health is a matter of national security. When the next plague hits, those with better functioning healthcare systems will fare way better. The reason- the plague won’t give a shit about your race or social class. Neither will the flu. Or the next resistant bacterial strain or TB. By letting people get sick because : they’re fat and they deserve it, they’re homeless and they deserve it, they’re leeches and they deserve it leaves everyone vulnerable. It’s not something we can really debate. Science gives two fucks about anyone’s opinions. Making it a for profit system that drives class warfare is about as stupid a plan as any. Do you consider the military “socialized”? No. It’s a matter of national defense and security. Everyone puts in(taxes) and is safer come war or natural disaster. Healthcare is the same. You’re not “socializing” it because it’s a national safety and defense issue. Get passed this obsession with left and right and think for 2 goddamn seconds.

Cardinal Fang's picture

Ah, ok. So healthcare without a profit motive is what?

Medicaid? Medicare? VA Care?

I am not a medical professional, but my wife (now passed) was an RRT. I don't really want to explain to you what that means, but she worked critical care in a major metropolitan medical center.

I can tell you that she was not going to work for free. Or at cost.

She worked her ass off, saved people's lives every shift she worked, she was a highly regarded professional.

She wasn't going to go to work for free.

Healthcare is about the people who deliver it, not some shithead bureaucrat politician and until you commie fucks understand that, you should shut the fuck up about it.

When you wake up in an ER somewhere, who's face do you want to see?

Some shithead with a clip board or a fully qualified practitioner?

sk0r9y0s's picture

Our soldiers don't work for free either. The workers in socialized markets get their cash from taxes (single payer) which get spent and circulate inside the country.

 

I'll take the fully qualified practitioner.

Would you take the fully qualified soldier..or the shithead private contractor for security?

Implied Violins's picture

Great rant, and empathize with your loss.

Only quibble: *whether* one wakes in an ER is directly related to the presence of a qualified pro...or not. Otherwise, spot-on.

BarkingCat's picture

 If I'm going to be forced to pay for your health care, then I deserve the right to tell you what to eat, what not to eat, to force you to get off your fat ass and walk 2 hours each day and quit watching TV. You do not get to smoke cigarettes nor drink alcohol. Until I can control your behavior that sucks the cost of healthcare you can simply fuck off and die.

Boris Gudonov's picture

"When the next plague hits, those with better functioning healthcare systems will fare way better."

And government-run health care systems will fare "way better"?  Thanks for the laugh!


economessed's picture

I'm not going to downvote you, despite the fact that I completely disagree with your opening sentence.  I want an open market-driven system that has a profit incentive in order to stoke innovation, cost reduction, and other competitive forces.  We clearly DON'T have that today.  We get charged more for fewer services or poorer outcomes. 

While it is convenient to blame non-value-added insurance companies for the huge growth in costs, we seem to be forgetting that they aren't "patient zero" in this equation.  The pharma companies, the major health care systems, heck, even the for-profit colleges have contributed to the problem by sparking a little wage inflation for RN's carrying excessive debt out of school.

Why is it that a doctor in India or Thailand (who got his/her medical degree in the US and did their internship here as well) can charge 70% less for a successful knee replacement than a doctor in Indiana?  Why do we continue to allow US drug manufacturers to charge 3x more for a drug in the US than they do in Mexico? 

We need to level the playing field and restore good old American competition to an industry that has been given a feathered nest by the Republicrats and Democrins each year for the past 30 years.  Unfortunately, I think the system will transition from its current crisis state to outright collapse.  Washington doesn't fix problems, they only create them. 

Stay healthy, my friend.

bonin006's picture

The problem is not being for profit per say, but it is the government picking winners to be ridiculously profitable, as happens when drug companies can own a patent on a drug that was initially developed at a university with taxpayer funding, and all the drug company did was fill a couple semitrailers full of manipulated test results that the FDA  might get around to looking at if enough people drop dead.

Even worse is the FDA allowing companies to patent naturally occurring drugs that have been used for, in some cases hundreds of years.

And then there is the AMA which forces would be doctors to go through sleep deprived hell working 100 plus hours a week, claiming that has anything to do with the requirements of being a doctor, to ensure there is a shortage to keep the pay up.

SmokeyBlonde's picture

So ... just who, exactly, is going to actually administer "health care"? Beaurocrats paid by government, like the DMV?  Or Doctors with a personal incentive to keep you alive, if for no other reason than dead men pay no bills?

bonin006's picture

I had to check that out. It looks like a TD mistake, it is spelled correctly on the source website.

WhackoWarner's picture

This whole Obamacare debate is getting so tedious when looking from other countries who have had national health care plans for decades.

 

nmewn's picture

Ask me if I give a shit how you do it over there.

Ghostmaker's picture

They do it over there by taxing all who work at 48% then claim they are giving out free health care.

Anteater's picture

When Trump's Congress eliminates capital gains and estate taxes,

the stock markets will head to the moon, while the US economy

will head to the bankrupcy tribunals. That's what's really at stake.

O'Care and Fire & Fury, Iran and NFL are just 'shiney distractions'.

New American Royalty of Plutocrats is breaching, about to be born.

 

"If you want a vision of the future, imagine a $500 Manolo

Blahnik 5" stilletto heel stamping on a human face - forever." 


Ajax-1's picture

Unfortunately, tax reform is dead on arrival.

Boris Gudonov's picture

"When Trump's Congress eliminates capital gains and estate taxes,

the stock markets will head to the moon, while the US economy

will head to the bankrupcy tribunals. "

 

yeah because the real problem in America is that taxes just aren't high enough.  Just think how rich we'd be if we were all taxed at 100 percent!

Boris Gudonov's picture

If your friends jumped off a bridge, would you go in after them?

 

Appeal to Popularity is an example of a logical fallacy. A logical fallacy is using false logic to try to make a claim or argument. Appeal to popularity is making an argument that something is the right or correct thing to do because a lot of people agree with doing it. This type of fallacy is also called bandwagon.

 

Anteater's picture

You forgot the appeal to the 'Benefits of Liberty to Ourselves and

our Posterity', which is obviously another logical fallacy, as there

is no 'Liberty' ... unless you want to go live in a hobo tent camp.

All other industrial countries have both subsidized healthcare and

pensions for elderly. The USA has We Don't Care and Dog Kibble.

Boris Gudonov's picture

"which is obviously another logical fallacy"

Obvious to no-one but yourself.  There is no such thing.  You made that up.  And it's wrong.

nmewn's picture

So lemme see if I got this straight.

You want us to give .gov the authority over our "health care" and over our retirement even though they've already proven they can't balance a fucking checkbook with the money they've already extracted or even take care of the few veterans in "their health care system" who they actually promised to take care of when they enlisted? 

Is THAT what you're really think or do you work at the .gov VA or the Social Security Administration?

sk0r9y0s's picture

If ALL my friends jumped off a bridge...there might be something to it. Have you heard of bungee cords of parachutes Boris?

 

Don't be so absolutist.

attila404's picture

I do not want ANYTHING managed by the gubimint. Fuck you and fuck your socialist national health care.

attila404's picture

I do not want ANYTHING managed by the gubimint. Fuck you and fuck your socialist national health care.

2Blondboys's picture

Most single pay systems have a parallel private market system. As single pay systems are forced to cut reimbursements, they depend more heavily on that private market system to pay the bills. Anytime there is a budget, there will be limitations on spending which in healthcare means rationing.

SmokeyBlonde's picture

I'm sure you're not racist enough to reference White European societies pre-2010, are you?

Take a look at Madagascar as example of what's coming ... YUGE percentage of pneumonic vs other Plagues, so good luck with your SJW bullshit as you're drowning in you're own phlegm ...

 

 

attila404's picture

Anything enforced at a barell of a gun is bad. Why did they have to mandate it if it wsa such a great deal,huh? I'm so glad that cucksucker is not president and nor is the bitch. Say what u want about Trump but I'll take him any day even if he shoots somebody on 5th avenue. I-do-not-care.

1 Alabama's picture

i was saying this from day one about odumbocare, "if it was so good, why did you have to put a gun to ours heads to make it work for you?"

sk0r9y0s's picture

The more healthy people that are in a market for insurance...the more stable that market will be.

 

That's how insurance works

Pernicious Gold Phallusy's picture

If Obamacare is so great why did Congress exempt themselves and their families from participation?

KimAsa's picture

Because it didn't cover demonic possession and exorcism therapy.

Anteater's picture

They get chipped on their first day on the job with taser chips.

The Usual Suspects have the taser chip controllers, ha,ha,ha.

Haven't you ever seen Nancy Pelosi go shock zombie before?

Trump doesn't need the chip. He's already a trained poodle.

Big Twinkie's picture

Are you real or just some nascent AI technology cut loose on the internet?  Back to the drawing board with you!

SmokeyBlonde's picture

Too stupid for AI ... definitely libtard/che guevara wanna-be...

Normalcy Bias's picture

If Congress Cunts and their demon spawn families had to eat the very same Dog Food they foist on Americans after being bribed and/or compromised, this country wouldn't be nearly as fucked up as it is now.

Big Twinkie's picture

Congress is just a perfumed class of rubber stamps.

Pernicious Gold Phallusy's picture

If single-payer government-run health care is so great why didn't McCain choose it for his brain tumor? He could have gone to the VA. He chose Mayo Clinic instead. Why?