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The Unaffordable Mandate Act

Posted By Howard Hyde On December 10, 2013 @ 12:10 am In Daily Mailer,FrontPage | 11 Comments

“If you like your (sub-standard, lousy, bottom-feeding) health plan, you can keep it, period. No matter what. Unless it changed. Unless we change the rules. Unless you can’t.”

Right. We all heard that loud and clear, twenty-how-many times in 2009 and 2010. Those Republicans (and non-political citizens, and union members…and Democrats) who are shocked by the millions of policy cancellations forcing people into dysfunctional government exchanges need to just get over their misunderstanding of the president’s unequivocal words (no doubt taken out of context) and talk about the real issue. What really matters is how sub-standard, lousy and bottom-feeding the old plans were and how much better the plans offered on the exchanges are… going to be, once a few minor bugs are ironed out of the crony outsourced half-billion-dollar no-bid dot-com/dot-gov product.

Stage-4 cancer patient Edie Sundby, whose United Healthcare plan has paid over $1 million without hassle but which has now been cancelled due to non-compliance with the ACA, leaving her without recourse to continue treatment from the three medical centers in two states that have kept her alive for the past seven years, might disagree. So might millions of others.

But let’s take them at their words: “Sub-standard”, “lousy”, “bottom-feeding”. Are they talking about iPhones? Toyotas? Oranges? Mutual funds? French Wine? No, these products are relatively freely sold in highly competitive markets across not just state lines but national borders. Nokia (Finland) has to be better at making cell phones than Apple (California) or it will lose customers and could get acquired by Microsoft (oh, wait — that really did happen). Florida oranges dominate the juice market, even in California. French wine makers cannot rest on their laurels in a world market that includes California.

Health insurance, on the other hand, for decades prior to Obamacare, has been offered in severely and increasingly constrained markets, forced to comply with the dicates of 50 different state insurance commissioners, each with their own favored list of mandatory coverage provisions. Competition is limited; bureacracy and compliance are king. Patient/consumer choice is reduced. If any plans are “sub-standard”, “lousy”, or “bottom-feeding”, that’s the reason why; serving regulators is not the same thing as serving customers.

Not everyone needs or wants pre-paid maternity services, contraception, fertility treatments, quitting smoking, acupuncture, chiropractic, naturopathy or massage therapy. The top priority of insurance has always been and of necessity must be: protection against health and financial catastrophe, something that Obamacare is rapidly banishing from the market. Hair plugs don’t qualify for that definition (I know I’ll get hate mail for that).

People who want additional non-catastrophic services could have the choice to pay for them directly without having their costs added to their insurance premiums. But by mandating these services and more, state insurance commissioners and now Obamacare drive up the cost of plans unnecessarily while potentially denying consumers access to things they need and want more urgently, like better customer service, lower prices, more choices of doctors – or just more insurance companies willing and able to participate in the market and compete for the patient/consumer’s dollar.

The key word is choice.  Mandates are the choice killer that drive competitors out of the market.

Mandates, whether pre- or post-Obamacare are a dead weight on the economy, forcing costs to rise unnecessarily, making us all (especially us 99%) poorer.  In 2012, the 6 most expensive states (average family premium per enrolled employee for employer-based health insurance) had premiums on average 28% higher than the 6 least expensive states ($17,167 vs. $13,387) and 43% more mandates (48 vs. 34) [Sources: Kaiser Family Foundation and Council for Affordable Health Insurance].

In a free market, if the consumers want the coverage, they will demand it anyway and the mandate is superfluous except to enable the rooster (government) to take credit for the sunrise. If consumers don’t want it, it’s an extra unnecessary expense, no different economically or in terms of moral hazard than compelling non-smokers to buy cigarettes; might as well smoke ‘em if they’re ‘free’. Either way, the army of bureaucrats needed to enforce the mandates, with their guaranteed salaries, iron-clad job security and (unfunded) defined-benefit pension plans – not to mention health care – must be paid for somehow (hello taxpayer and grandchildren). Mandates are just one more way that politicians can pretend to be Santa Claus to some, buying votes along the way, while imposing hidden costs on the less well-organized and connected.

In a free market, instead of having just a handful of insurance companies and plans available, toeing the line to the extensive rules and regulations of the particular state government, consumers would be able to choose among dozens of providers from any state in the union. And for that matter, from any nation on Earth: insurance is a financial product, and the British, Japanese, Singaporeans and Swiss are rumored to have some financial skills. Many more people than today would be able to find a plan that works for them at the intersection of their needs and their means, with consumer reports, reviews in traditional and social media, and word-of-mouth from friends and family members to guide them. Insurance companies, operating under uniform and stable rule of law and under no mandates other than what consumers demand, with neither subsidies nor presumptions of guilt, like companies in any other industry competing in open markets, live and die by their reputations. In the era of Facebook and Twitter, no insurance company could survive if a significant number of its customers assessed its products and services as “sub-standard”, “lousy”, or “bottom-feeding”, unless it operated within a government-protected so-called “exchange”.

Which is why real reform that actually has the chance of bending the cost curve downward for consumers must increase competition among a multitude of providers, nationally and internationally, rather than herding wholesale swaths of the population into increasingly restrictive regulatory corals at Healthcare.gov.

The President’s and his supporter’s sales pitch seems to have shifted to “If you like your health plan, you can change the subject.” But harping on the failings of the status quo ante is an indictment of government intervention, not of free-market capitalism.  We’re going to have to move in the direction of the latter if we ever hope to achieve anything super-standard, un-lousy or top-feeding.

Howard Hyde is author of ‘Pull the Plug on Obamacare’, available on Amazon.com in Paperback and Kindle editions.  He is editor of the website www.HHCapitalism.com. He may be reached at HHCapitalism@gmail.com, and/or follow on Twitter @HowardHyde.


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