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October 22, 2013

Obamacare To Travel Similar Road Medicare Traveled To Popularity?

Topics: Political News and commentaries

obamacare failure.jpg

Liberal reader and enthusiastic Obama supporter 'Horowitz' emails in the below link, along with a cynical message to "share this with all your doomsday advocates" (I assume that Horowitz is referring to those of us that have little faith in Obamacare's chances of actually becoming functional without significantly reducing our level of care. increasing costs to both individuals and businesses, significantly adding to the debt, and turning full-time jobs into part-time).

Via Ron Grossman, Chicago Tribune reporter, September 29, 2013 - Affordable Care Act traveled road similar to Medicare in 1960s:

The route to a Naperville hospital where Lillian Avery became Medicare's first beneficiary was lined with rhetorical road signs much like those facing Obamacare as registration is scheduled to begin Tuesday. Convinced that compulsory health insurance will write the obituary of the American way of life, some members of Congress are willing to shut down the government unless the Patient Protection and Affordable Care Act of 2010 is defunded.

Rep. John Duncan Jr., R-Tenn., traced the road to perdition to the enactment of Medicare, half a century ago, saying this month: "Before the federal government got into health care, medical care was cheap and almost everyone could afford it."

In 1965 the Tribune, in an editorial titled "Reflections as we Jump Off a Cliff," worried what Medicare would do to the quality of care in the U.S.

Avery took her own small part in the milestone in stride. Informed that hers were the first hospital bills paid under the program, she quipped to a Trib reporter: "Oh boy. Now I can go to New York and get on the television program 'I've Got A Secret."

As it did for Avery, Medicare quietly became a fact of life for senior citizens. Of those eligible, 82 percent had signed up at Social Security offices two weeks before the deadline to enroll -- despite decades of conservative politicians and pundits issuing the-sky-is-falling forecasts whenever the subject was broached.

Continue reading.

As Grossman's piece continues, the point and tone of the article is that, as was the case with Medicare, once Obamacare is working, there will be continued and almost irresistible pressure to expand it into a universal system. On the one hand he just may be right ... once an entitlement actually works and takes hold, reversing it is near impossible. However, is a comparison of Obamacare to Medicare valid?

I'm saying there isn't, and the main reason is that as Dave Ramsey says, the math just doesn't, and can't, work ... and my money is on Peter Schiff being right when he wrote in Forbes back in July of 2012 that unless we can summon the political will to repeal the poorly conceived law 'now called Obamacare', we should all brace for higher health care costs, many more layers of impenetrable federal bureaucracy, a significantly weaker economy, diminished employment opportunities, and lower living standards:

Now that the Supreme Court has given its narrow blessing to the Affordable Care Act, the big question is whether it will deliver the benefits that its proponents promise. Unfortunately, as it is now constructed, the plan will backfire causing fewer healthy people to buy insurance, raise premiums for those who do, destroy employment opportunities, cripple the health insurance industry, and weaken the economy.

In order to guarantee insurance to all, regardless of age, health or pre-existing conditions, the framers of the plan concede that it is essential that the young and healthy (who are less likely to be heavy users of health care) pay into the insurance pool. The surplus generated from their premiums compensates for the money lost to those receiving more in services than they pay in premiums (e.g. older people and those with medical conditions). The ACA has given these healthy people a "Get out of Jail Free" card that many of them are sure to play.

Most healthy young people know that they are losing money to insurance providers, at least in the near term. That is the nature of insurance. You pay to prevent costly exposure to an unlikely event. And just as homeowners wisely pay for fire insurance even though they don't expect their homes to burn down, given the high cost of medical care it is also practical that healthy young people buy health insurance.

ACA makes it illegal for insurance providers to deny coverage to anyone for any reason. This allows healthy people to drop insurance until they actually need it without incurring any risk. It's like allowing homeowners to buy fire insurance after their houses burn down.

To counteract these new free rider incentives, the law imposes "no insurance" penalties (also defined as taxes by the Supreme Court). The problem is that these "penaltaxes" (for lack of a better word) are insufficient to the task. In fact, Chief Justice John Roberts ruled the law constitutional precisely because the burdens were not high enough to compel behavior. (In other words, he thought the law was constitutional because it will be ineffective.) The numbers support his arguments. ...

Continue reading here.

So, which side is right?

For one thing, being skeptical of the success of what is undoubtedly a poorly planned law (even Max Baucus, one of its main authors, called it a "train wreck" - a comment he later walked back under political pressure from the WH) that is based on mathematically improbable assumptions, is not being a "doomsday advocate" ... it's being realistic - regardless of one's political leanings. On the other hand, to ignore such shortcomings could be said to be letting ideology blind one to the facts. But in any case, for the financial health of our country and the health and care of our citizens, we should all hope that somehow, someway, the politicians in Washington find a way to eventually repeal and replace what Schiff aptly refers to as a "poorly conceived law" and spare the country from "higher health care costs, many more layers of impenetrable federal bureaucracy, a significantly weaker economy, diminished employment opportunities, and lower living standards" ... some of which we are already beginning to see take place.

Bottom line ... no one knows for sure ... Horowitz and his fellow liberals could be right and Obamacare will follow the road to acceptance that Medicare did. However, if the math doesn't work and the law isn't reformed so that it does, Obamacare has little chance of success. Seeing it follow the road to popularity that Medicare did is likely a long shot ... albeit in the ever-advancing nanny state of Obama's "transformed America" ... I guess anythings possible regardless of whether it makes sense economically, does what it was promised to do, and passes the common sense test.

Posted by Hyscience at October 22, 2013 3:43 PM

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