Skip to comments.:Obamacare, Gov't Insurance Exchanges, & The Coming Price Explosion
Posted on 08/19/2011 1:04:43 PM PDT by Nachum
One of the features of the Patient Protection and Affordable Care Act, the health-care reform bill colloquially known as Obamacare, is the creation of insurance exchanges that will offer heavily subsidized policies and coverage for people who cannot get insurance through their employers.
In projecting the program's costs, the Congressional Budget Office figures that about 7 percent of the workforce currently covered by employer-provided insurance will drop those policies and sign up for the subsidized insurance. That estimate - and hence, the cost structure of the program - has been challenged by sources such as McKinsey & Company, the consulting firm, which reckons a far higher percentage of workers will opt out of their current job-based plans. In a survey of employers released in June, McKinsey found that 30 percent will "definitely or probably" drop their coverage as Obamacare kicks into high gear in 2014. Among "employers with a high awareness of reform, this proportion rises to more than 50 percent," says the report. Why? It will be cheaper to pay fines than to provide coverage.
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And remember the regulations are being written by the same folks who, it is reported, spent $1 million of government money to promote Obamacare in the week leading up to the 2010 election. Wait until you see how many more people are made eligible in the name of “administrative efficiency”.
“At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee estimated that Medicare would cost only about $ 12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly “conservative” estimate. But in 1990 Medicare actually cost $107 billion.”
IMHO...the cost projections for ObamaCare are far more corrupted and off base than these were....
I don’t like Obamacare but am not sure I follow this logic.
He is saying that the cap on administrative expenditures will force insurance companies to cut commissions to brokers. And without brokers out to shop around for the best deals, employers won’t be able to get affordable coverage.
But the advent of the internet and Expedia.com cut commissions to travel agents by 90%. Most of them are out of business now, but the cost of airline travel did not skyrocket.
I will give you a real-life example:
Medical device manufacturers know that after 2014, they will not be allowed to introduce new, more effective (and expensive) devices.
Once cost controls go into effect, nobody will pay for treatment with a more expensive device when an older, cheaper device is available. It will not matter that the new device extends life further or is more effective.
Therefore, every major device manufacturer is preparing to introduce their latest, greatest device, in the next year or two, at incredibly high prices......so they can make a profit for a few years before the clamps come down.
After 2014, the only way to make a profit is to produce medical devices cheaper and cheaper.....meaning send them to China for manufacturing, putting thousands out of work here in the US and in Europe.
Insurance doesn't work like that. The only reason that insurance agents and brokers exist is because insurance is difficult to sell and voluntary. The size of the commission is based on the difficulty of the sale.
We do have free market equivalents of insurance exchanges and they not only aren't competitive, but end up pricing themselves out of the market. They still need brokers to sell them as the free market allows other companies set lower prices than the exchange. For instance: In California, there is a state run but not state subsidized insurance exchange. The companies offering coverage in these exchanges actually charge more for coverage than those companies charge for going direct to them with a broker.
The states are rebelling against this feature of ObamaCare, seeing the cost to them as this matures.
Kansas, for example, just said no thanks to the Fed check that was to enable them to set up this exchange.
How is he going to cap the cost to the secretary that has to fill out all that extra paper work?
That is a 30 min job today for Medicare billing.
Not to forget the CURRENT $60 BILLION in FRAUD, WASTE AND ABUSE.
Medicaid isn’t much better with the fraud, waste and abuse.
How is he going to get doctors to accept Medicare patients when all the doctor is getting is half pennies on the $1?
Guess CONSCRIPTION would have to be considered.