Free Markets, Free People

Daily Archives: April 19, 2010


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


It’s not just Obama

One of the things I’ve been saying for months is the Tea Party is not just a reaction to Obama and his agenda (although both he and his agenda have just continued to add to a decline in public trust and satisfaction in government). The Pew Research Center for the People and the Press published a chart that makes that point well:

The present slide, in both trust in government and satisfaction with the nation began in about 2003 – one would guess about the time of the invasion of Iraq. Note that at that time trust in government was at an all time high. But the erosion of that trust and satisfaction in the nation, began a pretty steep slide at that point. Note too that satisfaction with the nation (i.e. the nation headed in the right direction) took a brief turn upward with the election of Barack Obama but then swiftly turned south again. Presently both indicators at near all time lows.

Note as well that the last time the indicators were in the same area was 1994 when Democrats were power and after a precipitous decline from the Bush I administration that continued through the first two years of the Clinton administration.  Also consider that when the trust numbers again began to rise after ’94, the GOP was attempting to pass the Contract with America (aimed at some of the present Tea Party goals) and were ending “welfare as we know it”.

Some would argue that the political stars are aligning precisely as they did in ’94 which saw a resounding GOP victory. The situation, via the graph, certainly seems similar. But is it really? A couple of key paragraphs may disabuse one of that notion:

The public’s hostility toward government seems likely to be an important election issue favoring the Republicans this fall. However, the Democrats can take some solace in the fact that neither party can be confident that they have the advantage among such a disillusioned electorate. Favorable ratings for both major parties, as well as for Congress, have reached record lows while opposition to congressional incumbents, already approaching an all-time high, continues to climb.

The Tea Party movement, which has a small but fervent anti-government constituency, could be a wild card in this election. On one hand, its sympathizers are highly energized and inclined to vote Republican this fall. On the other, many Republicans and Republican-leaning independents say the Tea Party represents their point of view better than does the GOP.

This indicates the dissatisfaction isn’t necessarily partisan. That is the dissatisfaction with the state of the nation and the decline in public trust haven’t been driven exclusively by Obama and his agenda. As you can see, both indicators were in rapid decline well before Obama was a glint on the political horizon. What has happened is a over the past 10 or so years, the political culture within the country has begun to shift. More and more awareness of the impact, intrusion and cost of government has reached a broader audience. Our technology and connectedness has indeed had a political impact. And the numbers you see on the chart are partially a result of that.

So while Obama is the man in the hot seat at the moment, he isn’t the only reason for this general feeling of distrust and dissatisfaction. This has been brewing for some time – years in fact. It just reached a critical point – a “turn out in the streets” point – when TARP, bailouts, takeovers and trillion dollar deficits came so fast and furious that it could no longer be ignored or glossed over. Government is out of control, the Tea Party is simply a manifestation of the general dissatisfaction with government. Neither party is immune from the voters ire this November because they recognize both got the nation in this position. The only advantage the GOP holds is they are marginally recognized as the fiscally conservative/small government party (why, after the Bush years, is anyone ‘s guess). That’s why they hold a lead in most Congressional polling. But I wouldn’t call it a solid lead at this point. The Pew study makes it clear that many out there see the TP as what the GOP isn’t – truly committed to fiscal conservacy and small government. In other words, a significant portion of potential GOP voters don’t trust the GOP anymore than they do the Democrats although the GOP should be the party of choice for them (if one is to believe the principles they espouse).

The point – if the GOP wants to take and hold the reigns of power at a national level, they had better not only talk the talk (something they’re very good at) but also, once given the opportunity, walk the walk (something they are very poor at doing and the reason -although they don’t seem to understand it – they continue to get bounced out of power).

Why?

Rather than an activist government to deal with the nation’s top problems, the public now wants government reformed and growing numbers want its power curtailed. With the exception of greater regulation of major financial institutions, there is less of an appetite for government solutions to the nation’s problems – including more government control over the economy – than there was when Barack Obama first took office.

Figure it out boys and girls – here’s the ticket. Accept it, internalize it, run on it and then do it. If they don’t then the cycle you see above in the chart will only repeat.

~McQ