The Baucus bill would, among other things, attempt to create a uniform market in health insurance for individual and small group insurers (not large group insurers though). According to the Heritage Foundation's summary, it would:
- establish a federal comprehensive minimum benefit package
- prohibit insurers from imposing annual or lifetime limits on benefits;
- set annual out-of-pocket cost-sharing maximums
- require issuance to all applicants (no pre-existing condition denials)
- allow variation in premiums based only on geography, age, and family composition
With this they are attempting to create a uniform, fungible commodity out of something that is inherently heterogeneous and non-fungible. Throw in the insurance exchanges and you have the basic requirements for perfect competition - fungible commodity, low transaction costs, and good information. Classical theory predicts that in the long run firms will not be able to make a profit in a perfectly competitive market.
Here are a few of the consequences I predict for that system.
(1) Prices will go up, at least in the short run, due to increase in demand for health services as more people purchase services under conditions of moral hazard.
(2) The federal minimums will quickly become the only plan offered for most people.
(3) People unfortunate enough to have an unusual kind of illness not covered by the minimum benefit would pay exceptionally high premiums for "specialty" plans
HHS will be lobbied continuously to adjust the minimum benefit (expand it by consumer groups and contract it by insurers).
(4) Insurers will look for creative ways to make it easier for healthier people to join their plan and harder for unhealthy people to join their plan. (Expect a lot of direct mail if you are on the soccer team.)
(5) Those insurers that remain in the market will eventually lobby the government for assistance to sustain it or to regulate prices (a lot like farmers do now, another almost perfectly competitive market).
In other words, the government will be determining services and setting the price. The only major difference between this and a single payer system is that payments will be routed through private insurances companies to providers rather than through the IRS.
STEPHANOPOULOS: I don't think I'm making it up. Merriam-Webster's dictionary: "Tax- -- A charge, usually of money, imposed by authority on persons or property for public purposes."
OBAMA: George, the fact that you looked up Merriam's dictionary, the definition of tax increase indicates to me that you are stretching a bit right now. Otherwise you wouldn't have gone to the dictionary to check on it.
"stretching a bit" by looking it up the dictionary? Obama said in 2007 that he wanted single-payer. He also said we may need to raise everyone's taxes to do it. So here it is all wrapped up together as Carter demonstrates here so well.
It's ultimately single-payer (which the liberals like but cannot admit this is) and a tax increase (which liberals also like but cannot call it that).
Posted by: Gary on September 21, 2009 07:14 AMI don't see any basis for (2) and (3); why wouldn't profit-seeking companies behave competitively?
(4) is a good argument for single-payer. So is (5), although all sorts of companies always lobby for all sorts of things.
Posted by: Bruce on September 21, 2009 08:03 AMCorruption is the result. It is a protection racket.
Posted by: Gary on September 21, 2009 08:06 AMMaybe a new thread should be opened about that. That has got to be illegal.
For numbers (2) and (3), "for profit" companies will behave that way because their profits will be capped. The new Health Czar gets to set the profitability of each company. They are no longer "for profit" but "fixed profit at the whim of the Government".
I think the 5 points are spot-on, and reflect what we have seen in other highly-Government-intrusive markets. It becomes essentially a Government program that happens to be "staffed" by private people. Fascism in it's classical sense.
Posted by: Shanghai Dan on September 21, 2009 09:56 AMIt is time for everyone to clear their minds and focus upon Obama Care that will cause terminal damage to the private sector economy and destroy the best health care system in the world.
Posted by: Paddy on September 21, 2009 11:13 AMOf course, regulating insurance company profits is problematical. It's what you get when you try to combine society's desire to provide healthcare to everyone -- best done via a single-payer system -- with millions of dollars of lobbying by entrenched insurance companies, corrupt politicians, and gullible citizens who are worried about death panels and want the government to keep its hands off their Medicare.
As for your claim that this is "Fascism in it's classical sense", it simply doesn't come close to any definition of fascism, let alone the "classical" one, whatever that is.
Posted by: Bruce on September 21, 2009 12:06 PMFirst, if you look at the data objectively -- rather than assuming that anything America does is perfect -- it's hard to conclude that we have the best healthcare system in the world.
Second, in the areas in which our system is excellent, there's little evidence that we should thank insurance companies for that. They add little value, huge costs, and unbelievable hassles. The credit goes to our doctors, medical schools, researchers, hospitals, etc. -- not our insurance companies.
Posted by: Bruce on September 21, 2009 12:19 PMBetter question. If the companies are making the capped profit margin % on the basic plans, why would they offer supplemental insurance?
Posted by: Chris on September 21, 2009 12:22 PMThey're taking over, or are in the process of taking control of:
- Banks
- Mortgage companies (now controlling salaries of even loan officers
- Car companies
- College loans
- Health insurance companies
- Newspapers
- Energy
What don't liberals want the government to take over? Maybe that list will be shorter.
Posted by: Gary on September 21, 2009 12:23 PM-
We don't know this, do we? It's entirely up to the President, isn't it?
Posted by: Gary on September 21, 2009 01:23 PMWe can do this right as a country, but not if one side dictates everything and their real goal is perpetual control, as is the case currently.
Posted by: scott on September 21, 2009 01:28 PMUn-constitutional stuff he is for.
First Amendment... not so much.
Perhaps the federal government would spend its time better trying to win wars instead of sticking its nose into the people's business.
General McChrystal is going to quit if he doesn't get the forces he needs to win in Afghanistan.
Posted by: Gary on September 21, 2009 02:29 PMTry and force me to buy health insurance, you little fricken weasel. Your entire government won't be able to make THAT happen.
Posted by: hinton on September 21, 2009 04:45 PMI do not understand the mentality of capping profits. To often the facts get muddled by gross misrepresentation of numbers.
There is this prevailing opinion that insurance companies are cash rich and are making a ton of money. If you look at the dollars, maybe they are, maybe not, based on your definition of a lot. If you look at the profit margins, absolutely not.
Health care plans run at margin of about 3.3% according to the ranking I found by simply googling 'insurance industry profit margin'. http://mjperry.blogspot.com/2009/08/health-insurance-industry-ranks-86-by.html
A 3% profit margin is very thin, challenging to manage and subject to tumble based on many factors. Even lumping in auto, life, etc insurance sectors only push the number to 5-8%.
And those pushing for nationalized control/care know this. They know that it will kill the insurance industry.
Carter nailed it. The insurance industry exists due to it's ability to risk-pool it's resources. The second the risk pooling is removed, it becomes a financing apparatus. There will not be a baseline where a beancounter can calculate what the premiums will need to be to cover the amount of company outlay in claims. In order to do this, premiums will have to be raised (or a government bailout...even better.) many fold to provide the capital necessary.
This is then the perfect storm.
Posted by: Chris on September 21, 2009 08:46 PM"The American public...just like your teenage kids, aren't acting in a way that they should act," Dr. Chu said. "The American public has to really understand in their core how important this issue is."
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With all due respect, Mr. Chu, you can get bent. And the libs wonder why we're pissed off. Liberals may like to have their butts wiped for them, but not most people.
You certain they will cap profits as a percent of revenue? For CEOs and individuals the Obama Administration is very intent on capping dollar values, rather than revenue-related compensation...
As far as fascism, see Mussolini. The corporate state and all that... It's what the Obama Administration clearly wants, with its control over industries, setting compensation/profit rates, etc.
Posted by: Shanghai Dan on September 22, 2009 09:11 AM