Free Markets, Free People

The New York Times finally figures out why ObamaCare won’t work. The example? New York.

This info, of course, has been available for years, but those dauntless and investigative reporters within the New York Times organization have just recently stumbled upon an example which, if revealed earlier, might have derailed the ObamaCare train.  Might.  I mean, that assumes every shady technical device known to politicians wouldn’t have been used to ram it through – but who knows, it might have been enough to dampen the vote in the House had it been chronicled.

What in the world am I talking about?  Why the health care system in New York state – the one the flagship NYT suffers under.  The health care insurance system that’s been in place for years – decades even.

New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.

The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

You remember the outrage when an insurance company in California tried to raise its premiums 30+%?  It cited “adverse selection death spiral” as the reason – it is covering sicker people who are much costlier while the healthier are leaving the plan due to the cost.  Massachusetts is undergoing the very same phenomenon. the four non-profit insurance providers have requested rather large premium increases (and been denied them) for the very same reason as the California company And now we discover, New York – which, as the article points out  has been a “working laboratory for the core provisions of the federal health care law” for years – is and has been playing out the precise outcome many who opposed this bill foretold.

And somehow, until now, that never managed to find its way into the pages of the Times.  As an aside, I have to say that since it has turned to advocacy journalism, it is a pale shadow of its former self and that’s one of the reasons it is headed toward ruin.

Anyway, apparently the politicians in DC learned from the New York debacle.  Thus the individual mandate and the fine on employers for not covering their employees.  Otherwise, as New York has proven:

“You have a mandate that’s accessible in theory, but not in practice, because it’s too expensive,” said Mark P. Scherzer, a consumer lawyer and counsel to New Yorkers for Accessible Health Coverage, an advocacy group. “What you get left clinging to the life raft is the population that tends to have pretty high health needs.”

And the Democrats don’t want the insurance companies to be able to charge the sick what is necessary to cover them.  Instead they want to force healthier Americans to subsidize the expense through coercive mandates and fines.

Amazing – and yet there are those among us who will look you in the eye, and with a straight face tell you this is exactly what the founders of the country envisioned when they wrote the Constitution.

~McQ

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11 Responses to The New York Times finally figures out why ObamaCare won’t work. The example? New York.

  • This same problem occurs now in each and every state in regard to auto insurance.
    I seem to remember some really bad solutions in New Jersey (where I don’t live).

  • New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences.

    Note the use of the word “unplanned”.  Whether intentionally or not, the NYT is admitting that the consequences certainly weren’t unexpected, because many people on the right warned that this sort of thing would happen.  As for being unplanned, I suggest that the obvious question is why the plan’s supporters didn’t consider the likely outcome of their scheme.  Were they too stupid to think about what might (would) happen?  Or were they so focused on short-term political gain that they didn’t bother to think about the consequences at all?  Or did they think that the relative economic good times we enjoyed for much of the last decade would go on forever and there would always be plenty of money to fund anything and everything they wanted to do?

    Note also the word “laboratory”.  This suggests an experiment that provides useful data to guide future actions.  That clearly didn’t happen with ObamaCare.  When states across the country and the federal government are facing huge deficits as they try to fund mandates / promises including health care, one would think that the LAST thing to be thought of is more of the same.  At the very least, one would think that people planning a new health care bill would look at places where the scheme they have in mind has already been tried and ask, “How’d that work out?”  Again, that clearly didn’t happen.

    New motto for the Tea Parties:

    TANSTAAFL

    There Ain’t No Such Thing As A Free Lunch*

    —–

    (*) H/T Robert Heinlein

    • Were they too stupid to think about what might (would) happen?  Or were they so focused on short-term political gain that they didn’t bother to think about the consequences at all?  Or did they think that the relative economic good times we enjoyed for much of the last decade would go on forever and there would always be plenty of money to fund anything and everything they wanted to do?
       
      All of the above. (especially the stupid part) These people really do think that eeevil capitalists are so flush with cash that they can afford any sort of left wing economy killing garbage, and if they go bankrupt, well they are just being greedy.

      • “It just doesn’t seem fair.” is a major problem.  The best way to deal with the issue of pre-existing conditions is to pay a subsidy for those people. Its probably cheaper and would keep incentives for healthy folks to keep their healthcare.
        Oh, and this post is great as it provides and excellent talking point: some of the insurers raising their rates are NON-PROFIT. That means, its not greed at all.
         

  • “And the Democrats don’t want the insurance companies to be able to charge the sick what is necessary to cover them.”
     
    Not to be too nit picky but that is what insurance is fundamentally about.  Getting those who turned out to be luckier to share the burned with those who are not.  That’s how insurance works.
     
    The dems want to abandon that model of shared risk.  They want coverage after the fact which is the opposite of what insurance is about.
     
    Because of the corruption of how the system works, the ‘healthier people’ probably didn’t just drop out because of the burden, but because they could get back in when needed with a pre-existing condition.  So why pay when there’s no risk no to pay.

    • To a point that’s correct. But when you control prices, that isn’t what is happens. And what government – in NY and MA – are trying to do is control prices. So the insurance companies eventually go out of business because they’re not able to adjust premiums to match payouts because premiums are controlled by government – even if they mandate coverage (as in MA).

      • Well that comes as the next step as the system implodes.
         
        The other way they are trying to prevent the system from imploding is to require everyone to have coverage.  That forces people to pay into the system.
         
        But if that really worked and you didn’t expect people to still not be insured, you wouldn’t need the pre-existing condition requirement.  So I assume they expect a large category of people to not pay into the system via purchasing insurance but then use it.   A next step for the system they want to move to.
         
        I suspect people that will be moved over to be covered include:
        Black Marker labor (illegal aliens)
        Expanded Medicaid
        Medicare
         
        Effectively I suspect that the medical insurance system will be used to fund coverage for people who will never pay into it much like social security.  And that they are conscious of that fact.