Thursday, December 8, 2011

Why Obamacare cannot work

RealClearMarkets

As the 2012 election approaches, the mainstream media is crawling back into the tank for their guy. How do I know this? Because of a new round of articles touting the "unappreciated benefits" of President Obama's health-care law. It is an obvious attempt to build support for the unpopular legislation and rehabilitate Obama with the independent voters who have abandoned him.

Exhibit A: the Los Angeles Times just published an op-ed by a lady with the improbable name of Spike Dolomite Ward. She's a California artist (which explains the name, I suppose) who offers her apology to President Obama because she was dissatisfied with ObamaCare until she benefited from one of its provisions, a federally funded program to provide health insurance to people with pre-existing conditions.

The story goes on about how this woman decided to risk going without paying for insurance and than found out she had third stage breast cancer. Now she wants someone to pay. Who pays?

The PCIP is funded by federal subsidies for now, but it will be phased out by 2014, when Obama's health-care law will make it universal, mandating that all insurers provide coverage to people with pre-existing conditions. But it's simple economics that if insurance companies are forced to take on a lot of expensive coverage for people who are already sick, they will have to make it up out of the premiums paid by everyone else. So for now, we're paying for Ward's health care with our taxes, but by 2014 we'll be paying for people like her in the form of higher premiums. I suspect we're already paying for it now. The first thing that happened when Congress passed ObamaCare is that my insurance premiums went up by 50%, as my insurance company rationally anticipated the coming increase in its costs.

The article talks about moral hazard and the economic principles of not just focusing on the seen but also the unseen effects of a policy. This is where liberals and statists excel. They trot out a woman, a mother, a victim of the economic conditions we all find ourselves and say see if it wasn't for Obama this woman would suffer needlessly. They appeal to peoples emotions and not reality and the long tern effect of their policy. However nothing in life is free and somebody has to pay. If everybody drops their insurance and rolls the dice and just waits until they get sick then that defeats the whole purpose of insurance and costs for everybody except the freerider go up until no one can afford medical care. If you say anything like this you are made out to be heartless. We can not make public policy in this country for 330 million  people based on the most emotional and obscure circumstance we can find and then treat it as the norm.

The author of the piece sums up the piece this way:

The only way this kind of system can survive is if relatively few people take advantage of it. If everyone follows Ward's example, dropping their insurance and waiting for government subsidies or mandates when disaster strikes, the system will collapse. The only reason it hasn't yet collapsed is because people like me keep paying our premiums. That's what I mean when I say that I am paying for her health care. Chances are, you are paying for it, too.

Ward admits that she didn't do enough of her own research to understand what was in ObamaCare. But she still hasn't; marveling at the fact that you just got free stuff does not count as "research." From Ward's myopic and frankly self-serving perspective, it seems to her that a benevolent political leader has saved her from financial ruin. From our perspective-the perspective of those unseen folks who pay the bills-it looks an awful lot like President Obama just bought her vote with our money.

I don't begrudge Ward for taking the benefits that were offered to her. In dire circumstances, she has to do whatever is necessary for her health and for the good of her family. But she might want to take a closer look behind the politicians' press releases and figure out where the money for her treatment is really coming from. Instead of giving the credit to Obama, she might consider offering us an apology and some thanks for continuing to pay our premiums so that she didn't have to.

And she should pray that we keep on doing it.

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