If anyone out there is still wondering if ObamaCare’s ultimate goal is to destroy the private market for health insurance and force everyone into a public “option” (bad word there — “option” implies “choice,” and there will be no choice here), let’s just drive that final nail into that coffin.
Under the terms of ObamaCare, insurers must allot 85% of premiums they receive towards care for the insured. And just to make things more interesting, they have to do that individually, on each and every policy, not overall or by average (they can’t add up all their premiums and make certain that 85% of that goes back to customers’ care). Which locks them into a 15% maximum profit.
Pretty good, in theory. Hell, most insurance companies make less than a third of that right now, so that’s a good deal for them, right?
Suckers.
The theory behind insurance is pooled risk. Some people will “overuse” their insurance, costing more than they pay in premiums. Others will “underuse” it, and they will make up the losses. The reason this is a good bet for the customers is that no one can know for certain which category they’ll fall into ahead of time. The insurance companies, through some accounting magic that’s just this side of psychic, can calculate just how much the overall costs ought to be and base their premiums on that number.
Now here’s how ObamaCare utterly destroys that system that virtually guarantees not only survivability, but profitability.
First up, those who “underuse” their insurance will totally screw up the system. I know a guy who lost his primary care physician a few years ago, and went over a year without a new one. In that year, though, he kept his insurance going. That means for one whole year, he paid his premiums and didn’t get a single benefit back. The insurer paid 0% of his premiums towards his health care — by his (stupid) choice. That simply would not be allowed under ObamaCare — the insurance company would have to find some way of giving him back his money, or pay a hefty fine.
Second, the 15% is the “ceiling” on profits. There is no floor. As noted, some people “overuse” their benefits, and they actually cost the insurance company more than they pay in premiums. A run of bad luck by the insured could wipe out any and all profits for the entire pool.
Third, the not-more-than-but likely-considerably-less-than-15% has to cover all the costs of the insurance company. All overhead has to come out of that artificially capped but not guaranteed margin. And that one is the real killer.
For example, as former Guest Wizbanger Rob Port noted, the costs of investigating and finding fraudulent claims can’t be charged as part of the 85% that must be spent on customers.
Not only will fraud investigation have to come out of the 15%, so will any and all accounting — including the reams and reams and reams of paperwork (even if electronic) that will be required for the insurers to prove that they are in full compliance with every single rule of ObamaCare.
Such as documenting that every single policy holder individually received at least 85% of their premiums’ worth of health care.
And let’s not forget the costs of lobbyists to stay on the good side of the Powers That Be that seem hell-bent on destroying the private insurance industry. We’ve already seen that contributing healthily to the Democrats can buy a certain level of “protection.”
I’m currently choosing my health care plan for next year. I have three different plans to choose from (or none, but that’s not an option for me and my wonderful health issues), as well as differing levels of vision and dental. And within those plans are variables that don’t apply to me, but are there anyway (dependents, for one). And my employer has, within our subsidiary of Very Big Corporation, about 20,000 people. (And we make up about 7% of VBC’s total payroll.)
And this year, my company got clever. It took bids from several insurers, and then chose two to provide coverage. So they’re competing against each other, with hopes of getting the whole contract next year.
Let’s say that under ObamaCare, 12,000 my colleagues buy into the company’s health plan, divided evenly among the three plans. (The remainder are covered through spouses, partners, or other family, or get on a “public option” plan. I’m just pulling that number out of my butt here.) That means that the insurance company has to keep 12,000 individual records that they can produce, on demand, to show that every single one of those customers got back at least 85% of what they paid in premiums. They can’t just pull out a single spreadsheet and say “here, we took in a million dollars on this plan and spent $900,000 in direct care, so we’re good.”
This is what you get when you have people micromanaging private businesses when they’ve never run anything.
There’s an old principle that it’s always easier to destroy than to create, and it certainly applies here — it’s a hell of a lot easier to destroy the private insurance business (and force people to be dependent on the grand, benevolent, efficient, eminently trustworthy federal government) than to create a more useful and efficient system.
And there’s an old saw that one should never ascribe to malice that which can adequately be explained by stupidity (or ignorance, or incompetence — there are plenty of variants that all boil down to the same thing).
I’ve reached the tipping point where I can no longer excuse the flaws of ObamaCare as stupidity or ignorance or incompetence. It’s simply too complex to have “spontaneously generated” or “evolved” into its current form — there has to be an “intelligent design” behind it. Quite frankly, if someone were to be tasked with coming up with a “health insurance financing reform” plan that would lead, stealthily but inevitably, towards destroying the current system, putting all private insurers out of the health insurance business, and the demand of a government-run universal plan, they couldn’t have done it any better.
Repealing ObamaCare quite frankly, ain’t gonna happen before 2013 at the least. But defunding it — starving it of the literal rivers of cash it needs to function — is certainly a possibility, especially if Republicans take back the House (which is where, Constitutionally, all tax and spending bills have to originate).
I’m not that fond of my insurance provider. But I have more trust in them — especially since I know they’ll have to compete to keep the contract next year — than I do in the federal government to take over and run the health coverage of everyone in the whole country.
And anyone who thinks the government can and will run that more efficiently, fairly, and honestly than private industry is simply too crazy, stupid, or power-lusting to be trusted.
Correction: Apparently, “policy” in this context does not refer to the individual policies issued, but the entire plan — which mitigates but does not eliminate the headaches that will be caused by this micromanagement on behalf of the feds. Personally, I am relieved that the geniuses behind ObamaCare aren’t quite as malignant as I had presumed.
