800 Days Late and a Dollar Short on Obamacare
I am about 800 days late and
as many dollars short on this topic, but what the hell, let me talk about
Obamacare. This is not only the
signature piece of legislation of Obama’s term, it illustrates everything that
is wrong with his domestic policies and with him as a President.
Take
Your Medicine
First, Obamacare never enjoyed
popular support, and against the direct wishes of the people, was jammed down
our throats. As a series of polls showed
consist lack of support, Obama, in an arrogance about his abilities of
persuasion that is wholly without evidence, made repeated speeches to explain
to us exactly why we do not know what is good for us and why we should simply
take our medicine and shut up. Repeated
such speeches did nothing to change anyone’s mind. Obama’s style is to lecture the people as if
he is addressing a group of kindergartners – you don’t know what’s good for
you, just trust me.
The
Con
Second, the sales pitch was
the pure con. You want to know the most
effective way to rip people off – you convince them that someone else is
ripping them off, and that you are going to save them from such thievery. This leads
to the creation of two incompatible straw men, both of which were characterized
as ripping us all off. First, we were
told directly by Obama that doctors are constantly ordering unnecessary
procedures to pad their income. Second,
we were told directly by Obama that insurance companies were constantly denying
people life-saving procedures. So
apparently the insurance companies were fine green lighting the unnecessary
procedures ordered up by the unethical medical profession, but when it came to
covering necessary procedures they fought tooth and nail. How approving unnecessary amputations at its
own expense led to more profits for the insurance companies remains unclear,
but they were clearly recouping it by denying necessary procedures all of the
time. Obama put the cherry on top with
his repeated lie about his mother being refused coverage by her insurer for
necessary medical procedures. (Don’t
believe me? Go to NPR: http://www.npr.org/blogs/itsallpolitics/2012/09/07/160726548/retell-politics-story-about-obamas-mother-gets-another-look).
Add to these lies the cynical insistence during
the political fight that the fines that would be levied against those who didn’t
purchase insurance were not a tax, followed immediately thereafter with the
argument in favor of the constitutionality of the legislation that it is a
tax. Keep in mind that the stock price
of health insurance companies all increased the day Obamacare passed – what
does that tell you about how they were ripping you off before, but now they
will purportedly be set straight?
The
Unintended Consequences of Excessive Regulation
There was a recent article
about the restaurant chain parent company Darden scaling employees back from
full-time to part-time employment in order to reduce the cost burden placed
upon it by Obamacare. Under Obamacare, companies of a certain size must provide affordable
health insurance to employees working an average of at least 30 hours per week. If they do not, the companies can face fines
of up to $3,000 for each employee. By
scaling people back to part-time status, the company avoids the costs imposed
upon it by Obamacare. This is the “unintended”
consequence which, while perhaps unintended, is completely predictable. This is a classic example of the difference
between the statutory incidence of a tax – who nominally is designated to pay a
tax – and the economic incidence, which is who feels the pain of the tax. The letter of the law makes it look like the
employer either pays for the employee’s insurance as part of his overall
compensation, or pays the fine, which can go to subsidizing the insurance
purchase for those who cannot afford it.
No
cost to the employees, right? Not
exactly. Obamacare is a tax on the
decision to employ a full-time worker. Suppose prior to Obamacare, the company employed full-time workers for $10
per hour. Now, under Obamacare, it is mandated to provide insurance, equivalent
in value to $2 per hour. One option, not taken by this company, is to cut the wage to $8 per hour,
so overall comp stays the same. Why didn't they do this? It is likely that the
value of the insurance to yoing employees far exceeds its cost, so they don't
view it as $10 in total comp - they might view as $9 in total comp. So they
leave to work elsewhere. Rather than do that, the company can avoid the tax by
splitting jobs in two. They also know that this will lead to turnover, but
perhaps they expect it will be less turnover than that which would come from cutting
wages. Of course it is expected to be bad for business, because they obviously
were not choosing that option in the first place, but it is in their opinion
the best response to the effective tax. Now consider the worker - prior to
Obamacare he had no insurance, but he had a full-time job. Now his hours have
been cut back, and because no employer is obligated to provide him insurance,
he is mandated by law to buy it himself. Again, because he is probably young
and relatively healthy, he doesn't want to buy "community - rated"
insurance with a premium that treats him like he is a 50 year old guy with
gout, he opts out and pays a fine to the government (or is that a tax? it
depends on whether you are trying to shove a program down people's throats or
argue in front of the Supreme Court). End result - the worker makes less money,
pays a fine he never had to pay before, and still doesn't have insurance. At
least he has more liesure time – he can sit around drinking Chartreuse and
watching bowling. The economic incidence of the tax falls
partially on the company, but more fully on the employees, who are the intended
beneficiaries of the policy.
You Can Have Anything on the Menu, as Long as it is SPAM
Economic freedom means very little to the
Obama administration, and Obamacare reflects this directly. I have a high deductible
health plan in combination with a healthcare spending account. I researched all
of my options when I went out on my own, and this was clearly the one that made
the most sense. There is also evidence from the Rand Health Care Experiment that such plans reduce health care costs, not through people ignoring real healthcare that they need, but by limiting expenditures on low cost healthcare items. Obamacare puts these plans in jeopardy, when what we really need is more people on plans like these.
I am fully f7*^ing qualified to make rational
decisions regarding the best way to insure myself and my family, but my freedom
to contract for the insurance coverage I desire is thrown away. Under Obamacare, the medical loss ratio requirement (“MLR”)
of Obamacare requires that insurance companies spend 80 percent of revenue from
premiums on medical claims or anything that improves the quality of health
care. (The additional 20 percent is for administrative and other non-medically
related expenses.) If the minimum of 80 percent is not met, the insurer must
issue a rebate to the consumer. The structure of my insurance plan makes it
incompatible with the new MLR rules. And
I’m not alone – there are 11.4 million people with similar coverage. (see: http://blog.heritage.org/2012/02/24/side-effects-if-you-like-your-hsa-get-ready-to-lose-it/)
This is one of the many ways in which Obama’s repeated promise - “If
you like your health care plan, you’ll be able to keep your health care plan,
period” – is a falsehood.
When we decide that a private
good or service – like health insurance – is to be guaranteed to us through the
Big Government Restaurant, never forget that the nature of the Big Government
Restaurant is to have a very short menu – there is really only one entrée ever
available. The fact that Obamacare leads
to the elimination of a transaction between me and my insurance provider that
is mutually beneficial to each of us is one of those unfortunate “bumps in the
road.” As the old line from Monty Python
goes, you can have anything on the menu as long as it’s SPAM.
Subsidizing
Choices Rather than Insuring Risk
We insure against uncertain low
probability events that can be costly.
Those are the 2 elements that create the demand for, and subsequent
supply of, insurance contracts. If
treating cancer cost $10, there would be no need to insure against it. If getting cancer were a certainty, there
would be no one offering you an insurance contract. Because it is a costly but low probability
event, we willingly pay an annual premium equal to the expected costs of
treatment in the event we get sick, multiplied by the very low probability we
will actually get that sick. There is
also one major thing to consider – sometimes we influence the probability of
our getting sick. If we smoke, or drink
a lot of Chartreuse, or eat pork rinds while watching professional bowling, we
increase the odds of getting sick. This
is called moral hazard.
All of this explains why there
is no insurance for milk. Milk is a low
cost item, and your need to purchase it is completely determined by your choice
– there is not some low probability unexpected event that is going to lead to
the necessity of your buying milk.
Similarly with birth control – you don’t unexpectedly need it, it is not
a high cost item, and your need to have it is completely a matter of personal
choice. And yet, here we are, with
Obamacare requiring that employers, even religious employers that are
vehemently opposed on moral grounds – are being forced to offer such “insurance”
to their employees. Nice little subsidy
to the abortion and birth control industries – remember my characterization of
Obama’s primary policy question: who can I give shit away to? This one is twofor – at the same time he
gives sh*& away to a favored constituent group, he sticks it in the eye of
religious conservatives all in the name of “insurance.” And this, by the way, is going to control
costs.
All
Pigs are Equal, But Some Are More Equal Than Others
I remember back in the days
when Clinton was turning the White House into a brothel for chubby Jewish
interns, there was a big effort to raise the federal minimum wage law. One of the lobbying organizations that was
instrumental in the effort, which was eventually successful, was ACORN. The ink wasn’t even dry on the new wage law
when ACORN was asking for an exemption from it in its dealings with its own
employees. Rules are for the people we
don’t like, and whenever possible, should be selectively applied accordingly. And so it is with the Cadillac tax on
high-cost insurance coverage, which applies to everyone with such a plan. Except for members of unions. Some Pigs are more equal than others. That tax started as an effort to hit the fat
cat 1 percenters, and the Obama administration didn’t realize that a lot of
unions have these same fat cat deals. So
a policy that stemmed from the question: “Who can I take sh*% away from?” ran
into a slight hitch. No problem – just exempt
those you favor, and move along.
posted by Hatcher at 9:08 AM
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