Monday, October 12, 2009

Obama Loses Friends, Likely Also Healthcare Bill

A major accounting firm, hired by a consortium of health insurance providers, does the projected math on the Baucus healthcare bill (still not actually released for anyone to read). They conclude the obvious: bringing additional people into the system, not allowing exclusion of pre-existing conditions, mandating coverage of all kinds of services with little or no out-of-pocket cost, mandating no preferential premiums for healthy individuals--all that will raise the cost of health insurance considerably.

Democrats cry that the study is flawed. They say it didn't take into account things like subsidies. The authors of the study acknowledge that they didn't take subsidies into account. Their point is that the unsubsidized cost of insurance will rise considerably, as everyone who thinks through the math has realized already. And since subsidies amount to taxing the money from some people to give it to others, the subsidy doesn't change the cost, just who pays it.

Recall that the Democrats have periodically demonized health insurance providers to make their case. This was a clever, if cynical, political move. No one likes their insurance company. Premiums are always too high, payouts are always too low, and you have to fight like the dickens to get them to give you what you ought to have.

Well, that's natural. Insurance companies have to stay solvent, and they can't do that by charging premiums that don't cover their risks or by paying out benefits that exceed covered losses. It's not profits that make insurance companies that way: mutual companies operate without paying dividends to shareholders, and they're no more loved than for-profit companies. It's simple arithmetic that makes them mean.

And that's just as true when the government runs the show. Eventually--as the present budget mess reminds us--even government must live by the math.

So, back to the beginning: it's acutely obvious that giving more stuff to more people will cost more. There is no magic bank of "waste and abuse" that can be instantly tapped to make up the difference. And there's only so much of other people's money to pay for all this.

While we're rambling, we'll note again what makes this matter especially difficult. Health insurance is different from property insurance. There's a clear limit to the value of my car or house. But as far as I'm concerned, my health and life are priceless. My insurance company is justified in paying out only what my car is worth if it's totaled. But if they put a price on my life, well, I'm going to be pretty angry. And I won't care whether it's Blue Cross or Humana or Health and Human Services that does that.

This, by the way, is not to say that nothing will be right until we can spend everything we want to spend on healthcare. It is a grim reminder that what's wrong with the system is that you can't always get what you want, especially if you expect a third party to pay for it.

Back to the study. We think this is another death knell for ObamaCare. To quote the Gray Lady:

The vehemence of the reaction from the White House and Congressional Democrats also reflects a concern about public opinion. If millions of people with insurance conclude that their premiums will go up, that could undermine chances for passage of comprehensive legislation.

Yep. The majority of folk like what they've got and will fight like demons to make sure it doesn't cost them more. This is another indication that the end of the line is near.

1 comment:

Q said...

In this health care debate I am puzzled why there hasn't been better discussion on Health Savings Accounts. Our family has used an HSA for over a year now and have been very satisfied with it. The plan has allowed us to make wise decisions on our health care. We price certain services and products. When given a choice of treatments we ourselves do an informal "cost/benefit" analysis and figure out what is best for our family's situation.

In short, we have felt more empowered in our health care decisions through the use of our HSA