Obama’s Health Insurance Deception

Originally published in The Daily Caller, January 6, 2010 (now deleted).

The president repeatedly assures us that if we like our current health insurance plan, we can keep it. That’s like telling New Orleans residents on the eve of Katrina that if you like your house, you can keep it.

After the healthcare storm hits, millions of people won’t have a health insurance plan to keep. This man-caused disaster is going to wreak such devastation on insurance companies that many of them, particularly the smaller ones, will be forced out of business.

President Obama is being quite disingenuous when he repeats his mantra. He means you’ll merely be allowed to keep your health insurance plan if you still have access to it. The government won’t directly revoke your plan. For millions of people, though, it indirectly will do so.

Even he seemed to acknowledge as much. When ABC’s Jake Tapper pointed out to him that employers will force employees off private-sector insurance in favor of the government-sponsored plan, Obama didn’t dispute it.

So Mr. Obama, next time you use that talking point, please add that caveat. Or scratch the word caveat. How about, tsunami warning.

Under Obamacare, millions of workers will be forced off their plans. (The Lewin Group estimates 16 million.) With a choice between paying thousands of dollars per employee for health insurance, or the less-expensive payroll tax (up to 8 percent of salary under the House bill, or a flat $750 under the Senate version), lots of employers will opt for the tax.

And you may like your “Cadillac” insurance plan, but a new tax on those mean you likely won’t be able to keep that either.

The greatest devastation will happen to the insurance companies themselves, and their customers. Just ask folks in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont and Washington state. As detailed in a Heartland Institute report, during the 1990s those states imposed “guaranteed issue” on insurance companies, where the latter had to provide coverage to anyone with pre-existing conditions, even those who wait to buy coverage until after they’re sick or injured. And “community rating” severely restricted insurance companies from charging different customers different rates, regardless of factors such as age, lifestyle choices, or health status.

Guaranteed issue and community rating defeat the whole concept of insurance. Yet they’re centerpieces of the both the House and Senate healthcare bills. To find out what will happen on a national basis when these go into effect, look to the above-mentioned states.

The mandates caused insurance companies’ costs to far exceed their revenue. Not surprisingly, droves of them either went out of business or left the respective state.

In Vermont there used to be 33 companies in the individual and small group insurance market, but after the “reforms” only one significant player remained. In Washington the number dwindled from 30 to seven. In Maine, ten down to one. In Kentucky, 45 companies left the state’s individual insurance market. In Massachusetts, 20 of them stopped marketing plans.

Meanwhile, premiums skyrocketed – not because of profiteering (as many Democrats would have you believe) but because of the state mandates that dramatically pushed up insurance companies’ costs. In New Jersey for example, family coverage under an Aetna plan vaulted from $769 in 1994 to $6,025 in 2005. In Vermont, a $3,500-deductible individual policy for a 33-year-old shot up to $379 per month, versus $61 per month for a $2,000-deductible policy in non-“reformed” South Carolina.

People dropped their now-unaffordable insurance policies, either joining the ranks of the uninsured or enrolling in public welfare programs. In 1995, 7.5 percent of Maine’s population was on Medicaid. In 2003, it was 18 percent.

If and when Obamacare goes into effect, people will game the system by the millions, waiting until they need healthcare before they sign up for insurance, and dropping it afterward.

As “BillCarson2” wrote in a comment to a Washington Post blogger, “We have no intention of buying coverage until we know big health bills are coming. As soon as we receive care, we’ll drop the coverage we bought like a hot potato. And yet, somehow we’re to believe that premiums won’t go up when people game the system like my wife and I plan to? Are liberals nuts?”

Some think the individual mandate – where everyone will be required to buy insurance or else pay a $750 tax (under the Senate bill) – will save the insurance companies. But premiums under Obamacare will rise so high that paying that tax will be a more attractive option for millions of (mainly healthier) Americans.

After the mayhem hits, people will say, “Hey President Obama, you told me I could keep my insurance plan. But because of you, I don’t have one to keep.”

 

 

 

 

 

 

Trackbacks

  1. […] yours truly back then wrote an article pointing out the folly of believing Obama’s pledge. But I’d be lucky if a few hundred […]

  2. […] Finally, now that the news is splattered everywhere else, The Economist is forced to follow suit. What it described in the above-linked article is a consequence of Obamacare that any economist worth his or her salt could have predicted. […]

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