Free Markets, Free People
Peter Schweizer points out:
Forget for a minute the religious question and look at who wins big here: Big Pharma. This mandate is not really about condoms or generic versions of “the pill,” which are available free or cheap in lots of places. This is about brand-name birth control drugs and other devices that some consumers swear off because they are too expensive. The Health and Human Services (HHS) mandate requires health-insurance companies provide contraceptive coverage for all “FDA approved contraceptive methods.” It does not insist on generics. And it does not offer any cost containment.
What’s more, the mandate prevents health-insurance companies from having copays or deductibles for the benefit. This is the perfect set up for Big Pharma. Since the drugs will be paid for by a third party (insurance companies, who will pass the cost on to employers and the rest of us), the consumer won’t worry about the price. Expensive brand names will no doubt see demand rise. Ask more health-care analysts why the cost of medical services continues to rise so rapidly and near the top of the list is the fact that a third-party payment system won’t contain costs.
Need Big Pharma on your side in healthcare mandate struggle? Looking for a way to put private health insurance companies out of business (or have them abandon the market)? This is a great way to help that along. I imagine there are other things to mandate for “free” as well, if you can get this one to stick (and have Big Pharma on your side and not screaming about it, after all, you didn’t say they had to give their stuff away for “free”).
By the way, when you finally have your way with the insurance industry and see private insurance companies get out of the healthcare insurance business, you’ll no longer need Big Pharma, will you?
When you finally have a single payer system and that single payer is government, then you will decide what will be paid for drugs and medicines, won’t you? After all, who are they going to sell their stuff too if not the single payer? Innovation and new drugs? Hey, they’re overhyped. And anyway, people who live longer cost health care providers (uh, that would be government) money.
It’s like the red kangaroo Dale talks about. You can see this convergence coming from a mile off, but seemingly we can’t (or won’t) do a thing about it.
Promises, promises, promises. President Obama promised the passage of the Affordable Care Act would lower health care costs across the board, making health care “more affordable”. The entire premise of the massive government intrusion in that market was to lower costs and make insurance more affordable.
A new study says that doing nothing would actually have been slightly less expensive. The irony is this isn’t some opposition think tank which has put up these numbers but the Centers for Medicare and Medicaid Services:
Despite President Obama’s promises to rein in health care costs as part of his reform bill, health spending nationwide is expected to rise more than if the sweeping legislation had never become law.
Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually.
The primary reason, supporters say, is more people will have insurance.
CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.
The federal government is projected to spend 20 percent more on Medicaid, while spending on private health insurance is expected to rise by 9.4 percent.
Anyone – do you know why “private health insurance costs” are expected to rise by 9.4%? Because the privately insured will be tapped to help pay the difference between what an expanded Medicaid base pays and what doctors charge. Or, in other words, they will be the victim of government intrusion and market distortion. And of course government is then going to point to the costs its distortion caused and claim it should help solve the problem it has created. And what will be eventual answer to those increased costs caused by government distortion be? Single-payer, of course.
This study doesn’t address the other real problem – you may expand Medicaid dramatically, but having that insurance doesn’t guarantee seeing a doctor. Other studies have shown that increasing the insurance base doesn’t decrease emergency room use, but instead increases it in the face of a building doctor shortage. And then, of course, there are those doctors who simply won’t take Medicaid (or any more than they now have) because of the low reimbursement rate.
So when the White House’s Nancy-Ann DeParle says:
“The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table,” she said. “We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.”
She’s also leaving out that part of the problem that doesn’t “show up on an accounting table” as well.
Bottom line, we were sold a lemon, a bill of goods, snake oil. All the ACA does is give the government a legal ability to intrude deeper and deeper in a market it really has no business being in at all and to distort that market even further. And that’s precisely what is going to happen. We all know that when government gets in as deep as it will be in this market, nothing ends up “costing less”.
Emergency rooms in “urban and suburban” areas (not rural – the study is limited to urban and suburban) are closing rather rapidly it seems:
Hospital emergency rooms, particularly those serving the urban poor, are closing at an alarming rate even as emergency visits are rising, according to a report published on Tuesday.
Urban and suburban areas have lost a quarter of their hospital emergency departments over the last 20 years, according to the study, in The Journal of the American Medical Association. In 1990, there were 2,446 hospitals with emergency departments in nonrural areas. That number dropped to 1,779 in 2009, even as the total number of emergency room visits nationwide increased by roughly 35 percent.
Emergency departments were most likely to have closed if they served large numbers of the poor, were at commercially operated hospitals, were in hospitals with skimpy profit margins or operated in highly competitive markets, the researchers found.
Sit there for a moment and let that all sink in. Got it? All ready to go? Now, let this sink in:
“This suggests market forces play a larger role in the distribution and availability of care” in the United States, Dr. Hsia said, especially emergency care. “We can’t expect the market to allocate critical resources like these in an equitable way.”
Really? That’s precisely what the market is doing here – Dr. Hsia just doesn’t like it’s method of allocation or the outcome, that’s all. So the hidden premise here is we (the collective) should allocate “critical resources” (emergency rooms and health care providers) differently than the market does (subsidize) and we’ll say a “market failure” made us do it, mkay?
That’s exactly the case Dr. Hsia is trying to build although it isn’t said outright. Market failure requires we (collective) pick up the slack (through government) and pay what is necessary (no matter how much it puts us in debt) to ensure “critical resources” (ERs and docs) are allocated “fairly” (as we think they should). This is also known as a form “central planning” which has always worked so well.
So that would mean unprofitable requiring emergency rooms stay open and we (collective) subsidizing them. BTW, anyone else find it ironic that there’s competition among hospitals keeping prices down to the point that some ERs are unprofitable, yet we’re consistently told that health care costs are spiraling out of control?
Anyway, as you recall the vaunted ObamaCare is supposed to take care of all this, right, because then even the poor will have insurance. And once they have insurance, they’ll never darken an ER again – except when they have a real live emergency. Well here’s a clue junior, the poor already have insurance – its called Medicaid. The problem isn’t lack of insurance, it is a lack of doctors. And it isn’t going to get better soon. Massachusetts has already demonstrated the problem:
When the Massachusetts Legislature made health insurance mandatory five years ago, supporters of the first-in-the-nation law hoped it would keep patients out of hospital emergency rooms.
Patients with insurance, the theory went, would have better access to internists, family practitioners, and pediatricians, lessening their reliance on emergency rooms for routine care.
There is more evidence today that it did not turn out that way.
Three-quarters of Massachusetts emergency room physicians who responded to a survey last month said the number of patients in their ERs climbed in the last year.
They cited ‘’physician shortages’’ along with a growing elderly population as the top two reasons why more patients come to ERs.
The law ‘’didn’t create an infrastructure,’’ said Dr. David John, chief of emergency care at Caritas Carney Hospital in Boston. “Doctors offices are full to capacity.’’
That’s right … MA’s single payer system is swamped. You can waive your magic wand and behold everyone has insurance, but you can’t waive your wand and make health care providers appear. And most doctors know that Medicaid is probably the worst paying insurance out there, not to mention the bureaucratic hassle that goes with it, so they limit their number of Medicaid patient – a prudent small business decision. Because after all, doctors are small businessmen and women. They employ staff, make payrolls, etc. So, just like hospitals that do the same thing, they’re concerned with – what’s that nasty word? Oh yeah, profit.
Nope, the market isn’t the problem here. It is doing precisely what markets should do. The outcome just isn’t the preferred one.
Oh, and under the category “never let reality stand in the way of your reality” or perhaps “facts, who needs facts, I have an agenda”, we find this.
And why when government tells you how you must spend your money a certain, the unintended consequences are usually terrible:
Look, this isn’t rocket science, and the business owner in this video explains very well what happens when government dictates how you will spend any profits you make. Take a moment and listen to what he has to say near the end of the vid especially. He talks hard numbers and why, if forced to do what the government dictates, it will cost future jobs.
One of the things I’ve always said throughout this health care debate is health insurance should be something someone buys outside of employment. If Congress would deregulate the industry to the point that buyers were able to shop across state lines for a competitive insurance policy to cover their family and be a part of a huge nation wide pool to boot, prices for insurance would come down.
What is being mandated here puts no pressure on insurance companies to be competitive but it does require companies who are presently unable to provide it to do so. That will have an impact in employment. Owners like the one featured here will figure the cost per employee and most likely reduce the employee pool at a point where he thinks he can manage the mandate and still make a profit.
Of course he most likely won’t make the profit he was and so more restaurants won’t be built and more people won’t be hired.
The solution for lower cost health insurance does not lie in more government control or mandates. It is to be found in a real market that allows buyers the leverage they need to force health care insurance providers to field a competitive product. Until that happens, none of the solutions tendered through ObamaCare will increase coverage and decrease cost. It is an absolute impossibility the way that law is structured.
Remember this promise (it begins at about the 1:10 mark):
Harvard Pilgrim Health Care has notified customers that it will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.
Under Medicare Advantage plans, the federal government pays private health insurers to sell customers over 65 years old enhanced policies, many of which offer prescription drug coverage not covered by standard Medicare. But the US Centers for Medicare and Medicaid Services has been seeking to reduce the amount it pays to private insurers for such programs.
Medicare told Harvard Pilgrim to notify customers that its Medicare Advantage program, known as First Seniority Freedom, was being canceled. In a mailing, the insurer was required to list alternative Medicare Advantage plans, including those offered by its competitors.
It will be “slightly more expensive’’ than the Medicare Advantage plans, but competitive with supplemental insurance plans offered by rivals such as Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, Bowman said.
Now I assume anyone who has read this blog for more than a day knows I’m not trying to argue for subsidized health insurance here.
Far from it. What I’m pointing out is the basic dishonesty that was rampant in the President’s promises about health care. An integral part of the plan to "pay for it" involved cutting out Medicare Advantage – an insurance supplemental plan that many seniors had and wanted to keep.
As you hear in the video, the promise wasn’t ambiguous or couched in rhetoric that gave a lot of wiggle room. Obama flat out says "if you like your insurance you can keep it. Nothing changes", or words to that effect.
A pure and unadulterated lie that he still tends to throw out there when trying to hype this white elephant Congress rammed through.
The simple fact – something anyone who took to understand where the Democrats were headed with this turkey – is that there was no way everyone could keep their insurance because the law was written to change the way insurance was delivered. And on the table, from the beginning, were cuts in Medicare that focused on eliminating what? An insurance program called Medicare Advantage.
It is one thing to watch a politician shade the truth a bit. It is quite another to watch one tell a bald faced lie (and I mean “lie” in the truest sense of the word, not how some tend to use it today). This one fits the latter category.
HT: Arley Ward
The GOP’s “Pledge” health care section is, well, screwed up.
For instance, on the one hand they say this:
The American people wanted one thing out of health care reform: lower costs,which President Obama and Democrats in Washington promised, but did not deliver. Instead of expanding the size and scope of government with more debt, higher taxes,and burdensome mandates, Americans are calling for reforms that lower costs for families and small businesses, increase access to affordable, high-quality care and strengthen the doctor-patient relationship. We have a plan to do just that.
First the premise – anyone, do you remember Americans “calling for reforms that lower costs for families and small business?” Yeah, neither do I. I certainly remember a whole raft of politicians making their inept handling of government run insurance systems like Medicare and Medicaid and running up the cost of health care seem like Americans were calling for that.
What, in fact, Americans were calling for was for government to back off and spend less. But now, it appears, even the GOP has swallowed the poison premise. They have bought into the “need” for health care reform and so entitle their section on it “repeal and replace”.
Replace? Where did “replace” come from? Was anyone out in flyover land talking about replacing one bad government program with another? I certainly don’t remember it.
And zero in on the word “mandates” in the cite above. I believe the word “burdensome” is used in front of it and the implication is these “burdensome mandates” will actually increase both government size and scope as well as cost.
So what do the Republicans put forward as a part of their plan?
Ensure Access for Patients with Pre-Existing Conditions
Health care should be accessible for all,regardless of pre-existing conditions or past illnesses. We will expand state high-risk pools, reinsurance programs and reduce the cost of coverage. We will make it illegal for an insurance company to deny coverage to someone with prior coverage on the basis of a pre-existing condition, eliminate annual and lifetime spending caps, and prevent insurers from dropping your coverage just because you get sick. We will incentivize states to develop innovative programs that lower premiums and reduce the number of uninsured Americans.
Is that a fact?
Back to the premise they’ve bought into – if “Americans” were calling for health care reform that “lowered costs”, can anyone tell me how this does that?
Who is going to pay for these “mandates” on insurance companies? Why everyone is. This is a universal mandate which will require everyone with an insurance policy to kick in and fund health care costs with no spending caps.
It will drive them up!
This isn’t “access to health care”, this is an unlimited license to spend other people’s money via a legal mandate on insurance companies that would essentially require them to do so.
They supposedly spent a long time putting this together and “listening” to “Americans”. Sounds more like they sat in a few of Obama’s campaign stops and town halls to me.
Did you know there’s a home in Mississippi that has flooded 34 times in 32 years? And each time it has flooded, the federal government, through FEMA’s Federal Flood Insurance Program, has paid the owner’s claim. The house, worth $69,900, has cost the government $663,000 in flood damage claims. That’s almost ten times the home’s worth and averages over $20,000 a year.
If insanity is doing the same thing over and over again and expecting different results, that aptly describes this federal program. It essentially incentivizes home owners to remain in flood prone areas by bailing them out each time they are flooded. And, as you might imagine, that’s finally caught up with the program, as USA Today reports:
FEMA’s National Flood Insurance Program is the nation’s main flood insurer, created by law in 1968 as private companies stopped covering flood damage. The program insures 5.6 million properties nationwide and aims to be self-sustaining by paying claims from premiums it collects.
Instead it’s running deeply in the red. A major reason, a USA TODAY review finds, is that the program has paid people to rebuild over and over in the nation’s worst flood zones while also discounting insurance rates by up to $1 billion a year for flood-prone properties.
Along with the huge losses from Hurricane Katrina, the generous benefits have forced the program to seek an unprecedented $19 billion taxpayer bailout.
As one critic succinctly points out, “if this were a private insurer, it would be bankrupt”. In fact, it with those business practices, it would have been bankrupt years, if not decades ago. And now, hat in hand, it goes to the taxpayer for a bailout. $19 billion dollars worth of bailout.
As a government program, federal flood insurance covers anyone. It’s similar to state-run programs that insure homeowners and drivers who cannot get private coverage. Policies cannot be canceled, and individual premiums cannot be raised based on claims payments.
"It is not run as a business," [FEMA Administrator Craig ]Fugate said.
Congress’ Government Accountability Office said in April that the program is "by design, not actuarially sound" because it has no cash reserves to pay for catastrophes such as Katrina and sets rates that "do not reflect actual flood risk."
Raising insurance rates or limiting coverage is hard. "The board of directors of this program is Congress," Fugate said. "They are very responsive to individuals who are being adversely affected."
Or said another way, Congress has been “captured” by influential constituents who see no problem using their influence to burden taxpayers to subsidize the way of life they prefer – no risk building in areas prone to natural disasters. It isn’t “regulatory capture” per se, but it could certainly be called “constituent capture”. It is certainly rent seeking. Whatever the name preferred, it is an abuse of the taxpayer’s money.
It appears the plan is to continue doing business as usual – providing cheap insurance to builders and homeowners who continue to build or rebuild in flood prone areas. No fault risk taking subsidized by the federal government via taxes. So when you see stories like this, you know who to blame:
In Fairhope, Ala., the owner of a $153,000 house has received $2.3 million in claims. A $116,000 Houston home has received $1.6 million. The payments are for damage to homes and what’s inside.
After all, the view’s beautiful, coverage cheap and can’t be canceled and the risk minimal in terms of dollar loss, so what incentive is there to relocate to an area less prone to flooding as long as the taxpayer is on the hook to subsidize that lifestyle and they keep paying?
Apparently the fear of increased premiums in reaction to the new Health Care Reform law recently passed by Congress is prompting Senate Democrats to propose a bill that would
give the federal government the power to regulate health insurance premiums.
Of course, you never saw this coming, right?
It appears our overlords simply do not trust those greedy insurance companies to not raise their premiums in reaction to the new law. Or as Sen Tom Harkin explains it:
“Rate review authority is needed to protect consumers from insurance companies’ jacking up premiums simply because they can. Protections must be in place to ensure that companies do not take advantage of current market conditions before health reform fundamentally changes the way they do business in 2014.”
You have to laugh (or throw up a little) at the economic naiveté and pure hypocrisy contained in that statement. Naive because it totally discounts the market and opts for central (and populist) top-down control (and we know how well that works) and hypocritical because the federal government is presently raising taxes before 2014 to “pay” for the health care monstrosity they’ve foisted upon us.
Care for a little more sanctimonious drivel intended to justify this power grab? Diane Feinstein:
“Water and power are essential for life,” Mrs. Feinstein said. “So they are heavily regulated, and rate increases must be approved. Health insurance is also vital for life. It too should be strictly regulated so that people can afford this basic need.”
Really? Is that why it has to be “strictly regulated”? Or is it because if the market actually begins to react properly to the artificial pressure brought by the legislation Democrats passed it will be shown up for the fiscal black hole and legislative piece of garbage it is?
Sen. Lamar Alexander brings a little context to the debate:
“Health insurance companies’ profits for one year equal about two days of health care spending in the United States. So even if we were to take away all the profits of the so-called greedy insurance companies, that would still leave 363 days a year when health care costs are expanding at a rate our country cannot afford.”
Let’s also remember that the 4 major health insurance companies in Massachusetts – all non-profit organizations – requested over 200 premium increases and were denied all but a few. Was it greed that drove them to request those increases?
Grace-Marie Turner, president of the Galen Institute, a research center that advocates free-market health policies, said the Democrats’ proposal was unlikely to succeed in lowering insurance costs.
“Capping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up,” Mrs. Turner said.
Instead, it gives single-payer types (like Harkin and Feinstein) a way to hurry along the failure of the private health insurance market and eventually, by fiat, usher in government health care.
Mr. Harkin praised a bill introduced by Senator Dianne Feinstein, Democrat of California, that would give the secretary of health and human services the power to review premiums and block “any rate increase found to be unreasonable.” Under the bill, the federal government could regulate rates in states where state officials did not have “sufficient authority and capability” to do so.
Arbitrary, capricious and, if passed, eventually deadly. Just hide and watch.
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.
Not necessarily the danger to the politician – they’re seizing upon something which stirs up the public and trying to cash in on it politically. But such “cashing in” usually leads to bad law. And bad law leads to unintended consequences and usually more government intrusion.
President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said Sunday.
This “new power” to “block” (i.e control) “excessive” (who gets to define “excessive”?) rate increases is a perfect example of the point.
By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats’ health overhaul as a way to protect Americans from profiteering insurers.
In reaction to a single insurer in a single state raising the premium because of the loss of subscribers and revenue due to the recession, Obama has seized upon that as a populist reason to call for more government control. The subscribers Anthem needs to balance out those they’re paying for are gone. California has been very hard hit by the recession and Anthem is attempting to survive to continue to pay for those subscribers whose treatments it now covers.
Of course that’s seen as “profiteering” by a government which has managed to run up trillions of dollars in future deficits in the medical care program it runs.
Instead of trotting out a suggestion for more control – in this case cost controls (and we all know how well those work – see Venezuela. See Zimbabwe) – the answer should be competition. Clearly if consumers had a choice they’d leave Anthem and hook up with another insurer less likely to raise their fees. That possibility would limit most insurers from proposing hikes which would run off those they need to support the pool. And, if Anthem had the opportunity to broaden its base of subscribers by selling across state lines, it most likely wouldn’t have to raise fees or, at least, not 39%.
Consumers don’t have that choice. Insurers are restricted from selling across state lines. Why? Because bad law says so. This is a situation which can pretty easily be remedied and it can be done with less government. Repeal the laws keeping subscribers from buying from whomever they’d like in the US. We do it with every other type of insurance product you can imagine, health insurance should be no different (consider we do it now with Medigap insurance through vendors such as AARP).
Instead we’re likely to see the opposite happen. And, as usual, we’ll suffer the unintended consequences – less coverage, dropping people at the first sign of a disease which carries substantial cost and, of course, insurance companies which aren’t as financially sound as others going out of business.
The bottom line is Obama still doesn’t understand the unrest and dissatisfaction with the direction of this country (as represented by the Tea Parties) has to do with the size, scope and cost of government. The solution here is simple and something which has been proposed by the GOP for quite some time. The administration’s answer, however, is to do precisely the opposite. Obama’s answer to everything is more government, more control, more spending.
And that’s the wrong answer.