Well the first reports on the effects of Obamacare are in and it’s not looking like the universal blessing promised. And that’s entirely aside from the software snafu.
According to some reports, more people are having their insurance carrier drop them than have been able to enroll in healthcare exchanges. Others are finding their premiums increasing by significant amounts.
It’s difficult to get hard numbers for this as yet and effects seem to be uneven. I walked into a liquor store the other day and talked to two middle-aged men behind the counter who were approximately the same age and I assume in the same state of health.
One told me nothing was changing for him so far. The other said he’d just gotten a notice stating his premiums would be increased 32 percent specifically because of Obamacare.
How did anybody not get this? To lower the cost for the old and infirm, and cover people with pre-existing conditions, the premiums HAVE TO be raised for people who are young and healthy, i.e. those who least need extensive coverage.
And since these are the people mostly likely to not buy insurance (unwise choice) or buy insurance only for catastrophic illness and accident with a high deductible (wise choice), then they must be forced to buy more insurance than they need, at a higher price than they want to pay.
And since the premiums for healthy young people starting out their careers in a depressed economy are likely far higher than the first year’s fine for not buying insurance… well it’s not hard to see what choice a lot of them will be making.
The system is likely to take a serious financial hit the first year, assuming they ever get it off the ground to begin with. The second year of operation is not likely to be much better unless they seriously hike the fines for non-compliance.
Way back when this thing was first formulated and the arguments were going back and forth about what Obamacare would or would not do, I asked the opinion of a recently retired insurance broker.
What he said was, “There were a lot of little things that needed to be fixed in the system. They didn’t need to scrap it entirely and start all over again.”
When I’ve brought that observation up lately I’ve gotten a lot of, “Oh but they didn’t, it won’t change a thing for most people.”
Well, it looks like that’s not going to be the case, though I’d be happy to be proven wrong.
Let’s go back to economics 101. When you have a demand for goods or services and assuming an inelastic demand, the only way to lower the price is to increase the supply.
Contrariwise, when the supply declines the price rises. And this is the important part, when government legally mandates lower prices you get shortages.
“Inelastic demand” is economist-talk for a demand that stays constant no matter what happens to the price. People are going to buy food regardless of how expensive it gets for example.
A lot of demand for medical care however is not inelastic. If the price rises people are far less likely to go see a doctor for the sniffles.
My father, a retired orthopedic surgeon, used to estimate that about 60 percent of his patients didn’t need to see him. They came in with ailments that were going to get better within a fairly short period of time no matter what he did.
Other physicians in family practice or internal medicine, fields that deal less with actual physical trauma, have told me as many as 90 percent of their patients just need to be made more comfortable while they get better by themselves.
You’d assume when a visit to the doctor gets expensive people would suck it up for minor illnesses, aches and pains. Unfortunately a lot of them turn instead to the emergency room option where the staff can neither turn them away nor effectively collect payment.
We could lower the cost of medical care by increasing the number of medical practitioners. But that might present problems if young people look at the cost of med school and decide the return isn’t worth it.
So what’s the answer?
I don’t know, but I don’t think this is it.