November 8, 2013
ObamaCare: Designed for Failure
By Charles E. Moore
You must understand, no matter what President Obama, Nancy Pelosi, and Harry Reid say, that ObamaCare was designed for failure, not just for itself but all the insurance companies involved. When a poison pill is ingested into the system, the body starts to die, killing off the healthy organs and itself in the process... leaving a void for something far worse to take its place.
It has been the progressive's dream since 1912 to introduce national healthcare and control one-sixth of the nation's economy. Now that they are so close to the finish line, they needed one final push to send it home.
On one side of the table, you have a progressive government, and on the other side, you have those pesky free-market corporations that offer insurance to a couple hundred million people in this country. Now, if you are the government and you want the whole table to yourself, what is the fastest way to get rid of the competition? Bury them with a massive amount of regulations and mandates along with rules that make it nearly impossible to make a healthy three percent profit (according to US News and World Reports). Enter... ObamaCare.
A brief history lesson: prior to 1912, the Republican Party was made up of progressives like President Teddy Roosevelt. In his 1912 independent bid for a third presidential term, he called for universal health care for all Americans. After losing to the Republican ticket, many of the progressives left the GOP and the tone was set for a more conservative party ideology that has lasted generations. However, the seed was planted... universal health care for all the concept would bounce in and out of political conversations for the next hundred years.
Three decades later in 1943, President Franklin D. Roosevelt called for social insurance "from the cradle to the grave." The Wagner-Murray-Dingell bill was introduced to the full Congress. It called for compulsory national health insurance to be implemented within the Social Security Act. But opponents killed any vote on the legislation.
Over the following 50 years, presidents from both parties took several small steps including founding the Department of Health, Education, and Welfare in 1953; tax exclusions for many employer-provided benefit plans in 1954, and Medicare and Medicaid in 1965. Then came the biggest stride towards national health care in the modern era, the Health Security Act in 1993 by the Clinton Administration, soon to be dubbed "Hillarycare" because of the powerful role given to her, i.e., to sell it to the American people. Ultimately the bill failed in 1994 because of staunch opposition from conservatives, libertarians, and the health-insurance industry. But Progressives were now closer than at any time in the past and it has been a major topic of every election since then. (Historical facts according to CNNhealth)
So now, back to the present... Obamacare is the last step towards universal health care and a single-payer government system. Over the past few weeks as the events of Healthcare.gov unfolded on the national news, I started to doubt my hypothesis that ObamaCare would overwhelm the private payer system and cause its ultimate collapse. But then, I began to expand my thinking.
Since 1995, along with my wife, I have owned and operated a successful health insurance brokerage agency in Pittsburgh, Pennsylvania. Through many conversations in the past year with insurance company senior directors and vice presidents, I have heard echoed back to me one common theme... Obamacare will wreck the current system by placing too many burdens on private carries and making it nearly impossible to make the aforementioned healthy profit.
At the heart of ObamaCare is health insurance for all. To accomplish this, you must do away with medical underwriting so even the sickest in society can obtain coverage in the same manner as the healthiest of 25-year-old men and women. Sure, this seems reasonable but it strips the ability of insurance companies to properly price their product. So, in turn, they must price high to protect against unforeseen losses. The majority, healthy insured, will now have to pay higher premiums to cover the shock claim expense of the minority... the sick and unhealthy. Whether or not a successful society should help and protect the weakest among us is an argument for another article. (I can hear the critics roaring about this as I type these words, but this article is about cold hard business and cunning politics.)
Remember, President Obama has said what will make his system work is that millions of healthy uninsured Americans will buy coverage and offset the gigantic expense of the unhealthy. Keep this in mind as I quickly digress.
Here's a simple illustration of the absurdity of no medical underwriting allowed for the insurance companies. Imagine for a moment that your automobile needs a repair because the engine is running rough and stalling. Under the current free-market system, you could take your car to an auto repair garage where a qualified mechanic would test drive your car and look under the hood. After so doing, he would give you an idea of what was wrong and give you an estimate for the repair. If the mechanic simply thought that you needed an oil change and new plugs, the expense would be low, but if the mechanic felt that there was a larger problem, the expense would be higher. Now take away this dynamic. The mechanic cannot ask questions, cannot test-drive your car, and cannot look under the hood. He must give a price based on what you tell him over the phone. What do you think would happen? Suddenly, all mechanics in the country would start charging exceedingly high prices to protect themselves from large repairs. People would start doing small repairs themselves, thus robbing the garage of profitable, moneymaking customers. However, if the problem was too difficult, they would have to take it to the garage and pay a high price but the mechanic would have no room for profit because he still cannot ask how bad the problem is ... so he loses money because only the worst of car repairs come through his doors.
This is what is going to happen to insurance companies. I have seen the high prices coming for 2014. On October 31, I sat down with Congressman Timothy Murphy to show him real-world examples of what the rates from health-insurance companies would look like for small businesses in the Pittsburgh area. Increases of 50 percent or more will become the norm. I already know of several employers that plan on dropping healthcare once the increases take hold in 2014. When they drop the group coverage, they will give their employees extra money in their paycheck to buy coverage on their own. Once this happens, the users of health insurance will pay the premium out of their pocket but the young and healthy may chose to pay the $95 annual penalty and spend the money on consumer goods ... starving the insurance companies of the most-needed demographic.
If President Obama was serious about getting the young on the insurance doles, why did he make the penalty for the first and second year so low? The penalty is so low, almost as enticements for the young to not chose coverage and purposely starve the insurance companies of these very profitable clients. So, over the next two years, insurance companies would choke to death on the high-risk users of health insurance ... paying out claims that outnumber the premium dollars coming in. In two years, many more millions of Americans will be uninsured and others that want insurance will not be able to buy it. It will be a calamity and give the federal government the perfect crisis to come in and rescue the American people. And the pièce de résistance, President-elect Hillary Clinton will have the chance to say, "President Obama tried to give private insurance carriers the chance to be good citizens and provide a service that all American can afford but they failed because they are evil greedy corporations. Now it is time for the government to do what we should have done in 1993 ... single-payer health insurance provided by the government." Actually, President Obama is already uttering nearly this very thing, calling insurers 'bad apples'. Once the insurance companies have gone out of business or have been badly damaged it will be too late to stop it. The evil of last resort will be the federal government.
So, as I watched the failure of the rollout unfold on TV, I questioned whether or not the progressive agenda actually had the skill to pull this off. Maybe they were really inept, as government most times is, and there was no way to pull this off. But then it hit me like a Mack Truck. What if the rollout was going as planned, secretly behind closed doors it was planned to fail. You see, the insurance companies still must abide by the restrictive and burdensome regulations starting Jan. 1, 2014 no matter what happens with the government website. But the failure of the government web site only speeds the demise of the insurance companies.
The website was supposed to be a fast and efficient way for the young and healthy to sign up for affordable healthcare but its failure will only be an additional disincentive for people to sign up for health insurance -- leaving only the truly needy standing in line to buy coverage. The failure is basically a steroid injection into the true nature of ObamaCare. Destroy the body from the inside, quickly shutting down the organs badly needed for life, destroying the poison pill of Obamacare at the same time. Leaving the door wide open for Hillary Clinton to say in 2016 the nine most terrifying words in the English language, "I'm from the government and I'm here to help."