Monday, November 10, 2008

Obama's Plan to End Private Health Insurance

Grace-Marie Turner of the Galen Institute makes the case that the Obama plan will end private health insurance as we know it. Here are excerpts from her article:
Obama's Plan to End Private Health Insurance

...ObamaCare would create a new National Health Insurance Exchange (NHIE), which would function as a 50-state clearinghouse in which people could connect with insurers. Through the NHIE, participants would be able to purchase private coverage or buy into a new federal insurance program.

On the surface, this arrangement seems fair. But Obama would also stipulate what type of coverage the private plans had to offer. In other words, the federal government would heavily regulate the cost and content of private health insurance, albeit indirectly.

..."Guaranteed-issue" statutes require insurers to accept all applicants regardless of their health status, and "community-rating" requirements prohibit insurers from pricing their premiums according to expected risk. Both regulations make health insurance significantly more expensive.

If people know they can get insurance at a fixed price regardless of their health status, they have an incentive to buy the policy only after they've gotten sick and need medical care. It's no coincidence that the six states with guaranteed-issue laws have the six highest average premium prices. Of those six states, the three that also have community-rating laws—Massachusetts, New York, and New Jersey—have average annual family premiums that are roughly double the national average.

Nevertheless, Obama supports nationwide guaranteed-issue and community-rating laws. He has pledged that "no American will be turned away from any insurance plan because of illness or pre-existing conditions." He might as well pledge to double everyone's insurance rates.

Under ObamaCare, public insurance programs and their private competitors would likely be subject to the same rules regarding benefits and underwriting. But public programs would be supported by a constant stream of tax dollars. They could undercut premiums and offer generous benefits that would bankrupt private insurers—and then cover the losses by drawing on taxpayer subsidies. In other words, the federal government would have the ability to drive up the cost of private health insurance while keeping its own insurance program artificially cheap.

If the Obama plan were implemented, Americans would naturally flock to the new public insurance program. Advocates of government-run healthcare would claim "victory" and demand an expansion of it. Slowly but surely, private insurers would be supplanted by the public program.
Once private insurers are driven out of the market by unfair competition from the government plan, Americans will then be left with a defacto single-payer system -- something President-elect Obama has already said would be his first choice for a health care system.

Americans may wish to recall either the metaphor of the frog in the boiling water or the similar parable of "catching the wild pigs":
[In a classroom discussion a student asks his professor,] 'Do you know how to catch wild pigs?' The professor thought it was a joke and asked for the punch line. The young man said this was no joke. 'You catch wild pigs by finding a suitable place in the woods and putting corn on the ground. The pigs find it and begin to come every day to eat the free corn. When they are used to coming every day, you put a fence down one side of the place where they are used to coming. When they get used to the fence, they begin to eat the corn again and you put up another side of the fence. They get used to that and start to eat again.

You continue until you have all four sides of the fence up with a gate in the last side. The pigs, who are used to the free corn, start to come through the gate to eat; you slam the gate on them and catch the whole herd. Suddenly the wild pigs have lost their freedom. They run around and around inside the fence, but they are caught.

Soon they go back to eating the free corn. They are so used to it that they have forgotten how to forage in the woods for themselves, so they accept their captivity.

The young man then told the professor that is exactly what he sees happening to America. The government keeps pushing us toward socialism and keeps spreading the free corn out in the form of programs such as supplemental income, tax credit for unearned income, tobacco subsidies, dairy subsidies, payments not to plant crops (CRP), welfare, medicine, drugs, etc. While we continually lose our freedoms -- just a little at a time.