Monday, February 22, 2010

Obama’s latest health care gimmick: Price controls


Anyone surprised Obama and the Democrats want to control prices? Obama and the Democrat’s so-called "health care reform" was always about giving government more control of the industry.
President Obama will call for new government power to regulate insurance-rate increases as part of comprehensive changes to the health-care system that the White House will unveil on its Web site Monday, senior officials said.
The proposal -- part of a package that a top official said will serve as a "starting point" for the bipartisan health summit Thursday -- comes as Obama has pointed to recent rate increases as evidence that his proposed changes are necessary.
Last week, Health and Human Services SecretaryKathleen Sebelius drew attention to a California health insurance company, Anthem Blue Cross, which planned rate increases of up to 39 percent. Obama mentioned the increases in his weekly radio address and at a town hall in Nevada.
The new proposal, which a White House official described Sunday night, would give Sebelius new authority to oversee, and potentially block, rate increases that are deemed unfair. It would be based, at least in part, on legislation initially proposed last week by Sen. Dianne Feinstein (D-Calif.).
The legislation would create a rate board, called the Health Insurance Rate Authority, which would broadly determine what increases are reasonable and justifiable. The seven-member board would have consumer, industry and medical representatives, as well as experts in health economics.
A top official said Sebelius would conduct an annual review of premium increases, and could work with state insurance officials to deny increases that were seen as excessive. 
Nothing kills insurance companies faster than dictates from the government. Here in New Jersey, politicians made all kinds of crazy demands on auto insurance companies. The end result were higher rates and fewer choices. Many insurance companies simply abandoned the New Jersey market because they could not meet the demands and remain profitable.

Knowing that single payer is the true goal for Democrats, it is easy to see how price controls are a good start. Once given the ability to deny rate increases, all that needs to be done is to keep adding on more demands (e.g. no higher rates for people with pre existing conditions).  As the demands go up and the rates stay fixed, insurance companies will start to fold and a real health care crisis will be born. Needless to say the only solution to the dwindling number of insurance companies will be single payer.

There is also a political component to this proposal and The Washington Post is quick to point out just how Democrats will use it to bash Republicans: 
But it could prove tricky for Republicans: They must be careful not to be seen in an election year as siding with big insurance companies that are imposing drastic rate hikes on Main Street Americans. 
What is really tricky for Republicans is that this proposal, unlike the last ones, won’t cost several trillion dollars and their best argument against the Democrats is gone. If Republicans are smart they will remind the public of the Democrats behavior over the last year and then ask the public if they still want to give Democrats this kind of control.

13 comments:

American Mom said...

Another way Republicans can respond... remind people of the little legislation that was supposed to create "sweeping reform" in the credit card industry. Now because the government has stepped in and before the laws went into effect, credit cards tightened credit, raised rates and created new fees. This is what happens when government gets involved - the public gets screwed. See here: http://news.yahoo.com/s/ap/20100222/ap_on_bi_ge/us_credit_cards_new_law

Anonymous said...

But...but I thought you said this thing was DEAD? *worried expression*

McJenny said...

I heard on Fox this morning that the gov't controlling board is not needed as the states already handle that on their own.

yukio ngaby said...

The blog "Legal Insurrection" described the plan as a "Balloon Mortgage." That was my reading of the Obama plan too.

It seems that Obama is absolutely intent on wrecking the US economy with permanent, unsustainable costs coupled with govt. oversight. It makes no sense to me. Do Obama and these others really believe this can work?

Angie Lee said...

There actually is another solution, one that greedy politicians are too stupid to see: Private pay.

Abolish health insurance except for catastrophic (major medical). People pay for it out of their own pockets, they will be more mindful of cost and, over time, competition will lower the price of services across the board.

The amount of stupidity at best and malice at worst is truly breathtaking in its magnitude.

"Duyah, let's tell everyone millions lack healthcare when they really lack health INSURANCE. They don't know they difference, and it makes for good theater seeing the libtard base get worked up into a lather about how UNFAIR it is."

"Let's restrict how much private companies can earn, since they're the backbone of the economy. The faster we break them, the faster we move into socialism. Regulate them out of existence and tax to death any too stupid to go quietly into the night."


No increase in premiums for preexisting conditions!!!11!11! Millions more covered at "no additional cost!!11!!1!!!" Never mind the fact that once govt forces out all private companies, the bill gets larger and larger for the govt as single payer. How "f***ing retarded" can they be?

The money to cover expensive medical conditions has to come from SOMEWHERE and with fewer younger, healthier people buying coverage, the cost is spread out over those who do buy. THAT is why the rates went up. Add to that the fact that it was for plans INDIVIDUALS buy on their own and the govt refuses to give them the same tax break given to businesses, OF COURSE THE RATE IS GOING TO GO EVEN HIGHER!

That is what happens when govt diddles where it has no business diddling.

Clifton B said...

American Mom:

You cite a perfect example of the law of unintended consequences!

Clifton B said...

Anonymous:

Yep, still dead. This new wrinkle is just lipstick on the same old pig. Look at the bill released today. It is basically the save as the Senate Bill that everyone hated with just a few tweaks. If Democrats could not pass the Senate bill, how can they pass this one? Price controls is certainly not a big enough sweetener.

Angie Lee said...

Sorry, Cliff, but I can't stop.

I think about this kind of thing in terms I can relate to: My own life experience.

My health insurance premium (most paid by my employer) is a couple hundred bucks a month, for my entire family: NINE people, including myself with MS and a child having open heart surgery at age 5. With MS, I can run up bills in the vicinity of $50,000 a year just for MAINTENANCE. If I need to go to the ER or - heaven forbid - be admitted, the tab is WAY bigger.

So... In exchange for my giving them a couple thousand dollars a year, my insurance carrier pays out multiple tens of thousands a year. Who pays the difference, the amount they lose? Everyone else, that's who.

When they push this crap through (and they will, make no mistake about that), more and more people (healthy or otherwise) will be pushed into the system, and the bills will get larger and larger. Then the "premiums" (taxes) we pay will get larger and larger. They MUST; if they don't, the program runs at a deficit, the national debt gets larger and larger, and our kids and grandkids will be subjected to a life of indentured servitude to the state to pay for it.

Clifton B said...

Yukio:

A Balloon Mortgage is a great example. Everything will be OK up front, but when the big payment comes due down the line, is when all hell breaks loose.

Also keep in mind that the goal for Democrats is not to reform health care, but to control it. When looked at it from that perspective, these crazy bills begin to make sense.

Clifton B said...

Angie Lee:

"Abolish health insurance except for catastrophic (major medical). People pay for it out of their own pockets, they will be more mindful of cost and, over time, competition will lower the price of services across the board..."

You are a woman after my own heart! I have been saying this for years! One of the biggest reasons why health care costs so much is because there is so subsidizing for everything. Does anyone think a hospital would charge $50.00 for aspirin if people were paying for it out of their own pockets?

Health insurance should only kick in for major stuff (debilitating diseases, major surgery, etc), little everyday things like broken bones, check ups, pregnancy should be paid for out of pocket.

Clifton B said...

McJenny: Yes, some state already have these boards and have already made a mess of things. No need to repeat.

Clifton B said...

Angie Lee:

"When they push this crap through (and they will, make no mistake about that), more and more people (healthy or otherwise) will be pushed into the system, and the bills will get larger and larger. Then the "premiums" (taxes) we pay will get larger and larger. They MUST; if they don't, the program runs at a deficit, the national debt gets larger and larger, and our kids and grandkids will be subjected to a life of indentured servitude to the state to pay for it."

Ah, that would have been the scenario without price controls. With price controls and these demands, the insurance companies must fold. That is the whole plan. To cause private insurance to fail and then offer single payer as the only logical solution.

I still say this won't pass. I cannot imagine 218 House Democrats sticking their necks out during an election year for such an unpopular bill.

Angie Lee said...

"Ah, that would have been the scenario without price controls."

They're either lying to themselves or completely delusional. That is exactly what would happen WITH them. If they institute price controls, COST will still rise (another thing they are too stupid to understand, COST versus PRICE), especially in the face of the inflationary fiat monetary system we operate under. Cost and price are two entirely different beasts. When the cost of a service exceeds the price set by govt:
1. There will be less of the service, potentially down to ZERO. There is no incentive to offer a service when you know you'll bleed red ink. If the cost of inpatient admissions far exceeds the reimbursement a hospital can expect to receive, they will no longer provide that service. Corporations, unlike government, cannot promise the future wages of the next generation in payment for today's self-gratification.
2. Research into disease conditions and development of new medications or equipment or appliances (think Grandpa Joe's hook prosthesis versus what you might see today) will CEASE. No more minimally invasive procedures with the help of laparoscopy - you're getting opened up, higher risk of morbidity and mortality, not to mention lost wages. Got AIDS? Too effin bad, there's no money to find a cure or even to develop a medication to help prolong your life or at least make it more bearable. (Smells like population control to me.)
3. By artificially keeping the price low, you stimulate demand. The more something is in demand, the less of it there will be. Eventually, you will have created your very own shortage of healthcare (truly a shortage of health CARE, not INSURANCE).

I could go on, but...

And how do we solve these problems? Break the private system and institute single payer, then pump more money (premiums, AKA taxes) into the system? HELL, NO. John and Jane Q. Public are pretty pissed right now about the tax levels we already pay, so Congress can't take that tack... kick the can down the road, make our kids pay for what we get today.

They're smart enough to turn NASA's space exploration over to private industry and NOT smart enough to figure out national healthcare would be a disaster?

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