Health Care Reform: yet another perspective (part 2)

Now that the final bits have been signed into law (including student loan junk… how is that related to healthcare again?) it’s a good time to finish this thing, finally. This is part 2 of my response to the monstrous healthcare reform bill. Read Part 1 first if you haven’t already.

Why do I believe that there will be consolidation and reduction of choice, quality and differentiation in the insurance market?

Essentially, the government is changing the rules in the middle of the game, and most of the changes will result in less profit (either by increasing expenses or decreasing revenue). While this was sort of a goal of one of the groups I mentioned earlier in Part 1 (the folks who want to stick it to big, greedy corporations), what will really happen is that the responsible insurers who were playing fair and making a reasonable profit will now become unprofitable and shut down, in turn affecting all of their responsible customers. The greedy insurers who were making outsized profits will now make reasonable profits and survive. Hm. And oh yes, they are going to want to go back to their outsized profits, meaning higher premiums.

Factors that may kill off responsible insurance companies while preserving the greedy ones:

  • less revenue from people currently on expensive individual plans
  • less revenue due to added tax (disincentives) on cadillac plans
  • more expenses to care for people previously denied coverage (or offered more higher premiums) due to pre-existing conditions
  • more expenses due to inability to cut off over-users
  • more expenses due to free preventive care
  • less revenue due to loss of competitive advantage (via new regulations)

The new requirement that everyone buy insurance will add some revenue, but we both know it is likely to end up in the hands of the greedy insurers.

Despite all this, there are two things I admit will probably do some good.

First, requiring everyone to buy insurance should bring more healthy people into the risk pool and remove barriers that discourage people from getting care when they need it.

Second, providing free preventive care services should rein in costs somewhat (as long as there are provisions to limit overuse by hypochondriacs).

However (you knew there was going to be a “however”), I still fail to see why any of this should be done at the federal level.

The wonderful thing about our current healthcare system is that each state is free to innovate and introduce new ideas and systems. Federal mandates quell this kind of innovation. I applaud the President for having a strong national vision, but I would greatly prefer that he leave the implementation to the states.

The United States was never meant to have an all-powerful federal government (the name of the country says it all), yet power-hungry career politicians continue to wrest more and more rights from states and individuals in the name of patriotism. If you can’t tell me off the top of your head what the 10th Amendment is about, please do everyone a favor and read it right now.

A few more tidbits I thought I’d add in for fun. I love considering unintended consequences, here are a few I came up with off the top of my head.

Possible unintended consequences of the healthcare bill:

  • Companies will have a strong disincentive to grow beyond 50 employees. There are already plenty of disincentives due to existing federal labor laws, but $2,000/employee is pretty strong.
  • Look for companies to try to minimize their full-time staff by utilizing more part-timers and contractors, outsourcing, and automating. Again, due to existing federal labor laws and IRS regulations, this is already happening, but the trend will accelerate further.
  • People right around 133% of the federal poverty level ($29,327 for a family of 4) will have no incentive to make more than that. People just above that level will work a little less so they can get free healthcare. There are other magic numbers, $43,320 for an individual and $88,200 for a family of 4, above which there are no premium subsidies, so look for people to try to stay under that level as well.
  • Kids will no longer need to rush out to get a job right after college, they can bum around until their 27th birthday because they’ll still be covered by their parents’ health plans.

Remember, there’s only one way to prevent all unintended consequences and at the same time, avoid doing anything controversial: Do nothing! And I mean that with all seriousness. How I wish the federal government would just wind down all of its controversial programs (including the hundreds of military installations all around the world, many of which are unwanted by the locals) and return the money to the taxpayers. Oh wait… the federal government could trim 40% of its budget and STILL not have any money to return to taxpayers. Ridiculous, isn’t it?

Anyway, I’m sure I can come up with more, but that’s plenty of food for thought. And by now you’ve likely concluded either that you will never agree with me, or that you have always agreed with me. Meaning these two blog posts were rather useless as a tool to inform and persuade. But that’s okay… the reason I write these posts is (1) to clear my mind to work on more productive things and (2) to try to keep my writing skills sharp (or at least keep them from getting worse).

But if you do want to debate, sound off in the comments!

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