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Sunday, February 19, 2012

A response to "Why Obamacare is good for America"


The executive director of the Colorado Consumer Health Initiative, my friend Dede de Percin, does her best to sell us on the benefits of Obamacare in the "Perspective" section of today's Denver Post. (See "Why Obamacare is good for America.")

I quote some of her statements, then respond underneath:

"Over the past few decades, America's health care system has been hurtling toward a crisis. Almost one-third of Coloradans — 1.5 million — either have health care coverage that is inadequate or have none at all. The primary reason is skyrocketing costs, which have priced out businesses and individuals alike."

Why the skyrocketing costs? Because of government mandated coverage, government regulation, and the inability to sell insurance across state lines, among other things.

"Decisions about our health care are too personal and important to be left to insurance companies."

But not too personal and important to be left to the United States Congress and state run exchange boards, apparently.

"Obamacare is starting to hold insurance companies accountable, controlling the runaway costs that prevent Coloradans from access to health care. For example, insurers must now justify premium rate hikes."

These rate rikes must be justified to a government board. I hope the inherent downside to government approval of prices is self-evident. Alas, I know it is not. See "The Concise Encyclopedia of Economics" entry on "Price Controls" for an in depth discussion.

"Essential preventive care is now considered a basic benefit for those with insurance and is available without co-pays or other cost-sharing because it keeps people healthier."

Keeping everyone healthier is a great goal. Pretending it can be done for free is a fantasy. The preventative care may not cost the consumer anything directly out of pocket, but the cost exists and it is paid by everyone. It is the ultimate in cost-sharing. Further, when a service has no marginal cost to the consumer, the demand for the service is virtually unlimited. With higher demand, prices necessarily rise for someone if not to the consumer directly. Costs exist. No legislation can abolish them.

"A major cost-containment initiative of Obamacare is the exchange. In 2014, Coloradans will be able to purchase affordable insurance in the Colorado Health Benefits Exchange, a statewide nonprofit organization. Intended to be a competitive, online marketplace similar to Travelocity..."

Wait... Travelocity was formed by government mandate? No? It was done by a private company in the free market? How is that possible? I thought only the government could make this happen. Perhaps not.

And this nonprofit state exchange plans on paying four executives $165,000 a year or more. It is amazing how political appointees always end up doing well in these state created nonprofits. It is pure corporatism. Nonprofit corporatism, but nonetheless corporatism. Some prefer to call it crony-capitalism (which, of course, is not capitalism at all).

"Since decisions about health care are too important to leave to others, the Colorado Consumer Health Initiative and consumer-focused organizations are helping Coloradans make their voices heard by exchange board members."

Wait... health care decisions are too important to leave to others, so the exchange board members will make those decisions? Aren't they "others?" I am afraid I just do not follow that reasoning. (Not an uncommon occurrence for me, I realize).

I know de Percin means well. She wants to help those without health insurance coverage. She wants everyone to get the medical services they need.

But another layer of government bureaucracy will not achieve that admirable goal. Government, indeed, has a role, a very important one: policing fraud and enforcing benefits contractually promised to insureds in exchange for premiums. When government starts doing much beyond that, costs go up and coverage goes down.

1 comment:

  1. In the first quote you have, Percin mentions that healthcare costs are skyrocketing. In the third quote she talks about holding insurance companies accountable for premium increases.

    This is one of the major disconnects in the whole discussion. The high costs of health care aren't due to high profits by insurance companies. Health insurance companies show a profit margin of 3-5%, nobody is complaining that if we could just take 5% off our health care bill that everything would be OK. Health care costs are too expensive to afford by orders of magnitude, not single digit percentage points.

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