Monday, March 22, 2010

ObamaCare in a Nutshell

Now that the 2700+ page Senate version of ObamaCare has passed, I thought a few people would be interested in what is actually inside it. Pelosi, said that after it was passed we could find out what is great about it. I will break it down into three simple problems, and three government solutions in the bill.

Problem #1: Too many people do not have health insurance.
Solution: Make it a law that all people must have health insurance.

Problem #2 was caused by the solution to problem #1

Problem #2: Poor people can't afford to buy health insurance, even if mandated.
Solution: Have the government pay for poor peoples health insurance.

Problem #3 was caused by the solution to problem #2

Problem #3: The US government is broke, and can't pay for poor peoples health insurance.
Solution: Raise taxes on the rich.

In a nutshell this is a massive welfare program where wealth is redistributed from top wage earners to non or low wage earners, and not much else.

Any problems with the above solutions.

Solution #1 is an unconstitutional taking of liberty (a constitutionally guaranteed right), and a violation of the commerce clause as well. Before this Bill, I had the liberty to determine my own medical care. That has now been taken from me. Liberty is a right granted by God, that can't be taken by congress.

Solution #2 is not a solution because the government does not have a surplus to pay for any additional entitlements.

Solution #3 is not a solution because raising tax rates does not raise tax revenues. This has been proven over the last 50 years where Federal tax revenue has been about 19.5% of GDP regardless of tax policy. Raising taxes on the rich does not produce any additional tax revenue unless the GDP goes up as a result. Tax increases in a vacuum lower GDP. This tax increase on the rich will lower GDP and lower overall tax revenue. The Bush tax cuts of 2001 and 2003 raised and did not lower federal tax revenues for example.

What was Obamacare Sold As?

A way to bend the cost curve down.

What does it actually do?

Bend the cost curve up.

Why?

Because there is no such thing as a free lunch (see the laws of thermodynamics). There are lots of insurance goodies that sound nice, and sound free, but they are not.

1) Eliminate the lack of pre-existing condition requirements
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

2) Let children stay on their parents policies until 26
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

3) Eliminate the annual coverage limitation.
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

4) Eliminate the lifetime coverage limitation.
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

5) Vision, Dental, and Well Baby Care now must be covered.
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

6) 10 billion per year in new taxes on insurance companies.
Raises the amount of money insurers must outlay without any additional premiums. Insurance premiums must go up.

Insurance companies typically pay out 70% of premiums in claims. Assuming this rate will continue until 2014 when ObamaCare starts to fully take effect, each of these early changes will raise insurance premium costs. Otherwise, all of the insurance companies will simply go out of business. Would you continue to operate a business whose costs keep going up, but could not raise prices? Individual policies will be hit the hardest, because pre-exisitng are almost never allowed in individual policies. Ultimately, insurance premiums will go up across the board as the goodies listed above become law. Insurance companies are not evil, they just want to earn a fair profit. If they are earning abnormally large profits, the free market system would incentivize new entrant into the industry which would lower prices. The fact that the health insurance industry appears to be not operating as a free market, is 100% the fault of government over regulation. In this case the government is both the cause of the existing problem and the proposed solution with ObamaCare.

What about getting people covered by insurance? When does that happen?

That does not happen until after 2014. The travesty of this steaming pile of crap bill, is that as urgent as Obama made the problem seem, the Bill is written to do nothing about the problem for 4 more years. When Obama signs it into law this week, he will be assuring that nothing will fixed or reformed in health care until he is long out of office, and the bill is likely repealed. Nice work chief.


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6 Comments:

At 4:50 PM, Blogger Bayne_S said...

In order to get the total cost of the bill over the course of the next 10 years under $1 trillion dollars many provisions had to have adoption delayed by 4 years.

It is urgent problem but not politically viable with mid term elections this year to have a $1 trillion dollar entitlement program on your record.

 
At 4:56 PM, Blogger Misti said...

you should write about poker

 
At 7:14 AM, Blogger desogw said...

well this also affects the poker industry @misti. so there's no point in telling what to write about. I also write about poker and uk bingo, but sometimes I also include topics that are somewhat irrelevant, though when internalized it is relevant to the niche I'm writing about. peace :) by the way, I did like the article, it concerns poker players who're american citizens.

 
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At 7:05 PM, Blogger Ainokea said...

superficial article that is a knee jerk reaction. healthcare in this country is a huge problem, second only to evil insurance companies. Take a look at what the insurance companies have been doing for decades. If you don't think they are evil, then you have your eyes closed or live under a rock. Oh yeah, you live in Arizona....

 

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