No, not a private failure, a state failure. When you buy groceries, you ask how much they cost, right? But when you go to the doctor, or when get your prescription filled, or get surgery, you don’t ask how much it costs, right? That is because you have health insurance that pays for all of it. This means you spend more time figuring out how much to pay for groceries than you do for a $2000 medical procedure. This is why grocery prices remain reasonable while health care costs explode because nobody is shopping around for health care, so the insurance companies make the pricing decisions which means the patients and doctors do not.
The reason this problem doesn’t happen with other kinds of insurance is because traditional insurance is protecting against rare and catastrophic events and charging a premium based on the likelihood of those events, where as medical insurance pays for everything. If car insurance paid for oil changes, you would not shop around for an oil change. You would go (more often) to the most convenient location and ask for the expensive stuff because your insurance is paying for it. Your car insurance will have too many customers getting too many pricey oil changes which means they have to raise premiums to stay in business, but if they make you pay more, then you’re going to get even more oil changes to get your money’s worth. This is the death cycle of health insurance.
Basically, since you don’t pay for most medical services, you use too much of it, which drives up the cost to the insurance company and so they have to raise your premiums but the more they charge, the more you try to get your moneys worth. On top of that, since Obama care will increase coverage by forcing everyone to buy health insurance, the problem will get worse. The more you force people to buy insurance they don’t want, the more medical services they would consume to get their money’s worth.
Another problem is that health insurance premiums are not based on how risky someone is where as car insurance is. If you’re a safer driver, you’re less likely to get into an accident than a risky teenage driver which is why you will have a much lower premium than the teenager. If, however, car insurance companies were forced to charge everyone the same premium, then they would have to increase the premiums to make up the difference for the reckless drivers. So what does this have to do with health care? Many states limit how much insurance companies can charge people with pre-existing conditions and Obama care will make it illegal to base insurance premiums on someone’s medical riskiness.
Now you might say that it’s not fair to charge someone more for a disease they couldn’t help getting, but as I said, fairness has nothing to do with economics. Economics is based on price and incentive, not fairness, and again, there are other ways to help the disadvantaged but that kind of fairness belongs with charities not health insurance. I would donate money to a charity fund with pre-existing conditions but I wouldn’t force insurance companies to charge them the same rate. Also, since insurance companies are forced to ignore pre-existing conditions, people will no longer want to buy health insurance because they can just wait until they get sick and then purchase insurance instead of wasting all that money beforehand. It’s like having the ability to purchase home owners insurance the day after your house was burned down. The only people who are going to be purchasing the insurance are those who are going to cost the health insurance companies a ton of money, which means health insurance companies would have to charge their healthy customers more and more, but that would drive even more healthy people to not buy health insurance.
That is why many young healthy Americans don’t buy health insurance. They realize they’re being overcharged to make up for the sick and elderly. This is also why Obama care has to force everyone to buy health insurance. If they didn’t, the lack of healthy people kicking money into the insurance pool would collapse the system. Making a product less desirable for customers, then forcing them to buy it is not an elegant solution. It’s like pouring gasoline on a fire, then buying a bigger fire extinguisher. When Obama care is fully implemented, a lot more people will have health insurance, so a lot more people will now want to visit the doctor, especially since the new law makes cheaper higher deductible policies illegal. Forcing people to pay for premium insurance will drive them to seek more doctors visits to get their money’s worth. Demand for doctors will go up but the supply of doctors will remain the same. Since the same amount of doctors will have to handle many more patients, there will be a lot longer wait times and lower quality of service. Obama care basically increases the demand for services without increasing the supply which means prices go up and quality goes down.
These are only some of the side effects. Obama care is over 2800 pages long. There are people who follow a lot of it and created a flow chart—Obamacare FlowChart
68 grant programs,
47 bureaucratic entities,
29 demonstration or pilot programs,
6 regulatory systems,
6 compliance standards and 2 entitlements.
2200 references in the law and 600 new authorities which cannot be challenged.
150 new bureaucracies and boards have been created between doctor and patient.
17 new mandates on insurance.
Green diamond are taxes
the chart is only actually ⅓ of the size so it shows “bundles of bureaucracy.”
one brown bundle hides 59 grant programs.
19 special interest provisions, including the “Louisiana Purchase” and special interests for unions.
Buried deep in the law are 19 special sections that cannot be challenged by the courts or any regulatory system.
16,500 new IRS agents to police the law and an explosion of jobs in the HHS Department.