The First Step On a Very Slippery Slope

Greetings from the Left Coast, where we here at Left Coast Blues do the heavy thinking for those who just can’t be bothered.

Well, the House of Representatives has managed to scrape together enough Democratic votes to pass a Health Insurance Reform bill. Note that Congress has pretty much given up trying to clam that it’s “Health Care Reform,” because there’s nothing in the bill that will actually address the high cost of health care itself. Here’s some of what it will do if it actually passes into law (keeping in mind that the Senate also has to pass a bill, which will undoubtedly be different from the House bill, and then a joint committee will have to try to come up with a compromise that both bodies will accept – so we’re a long way from done yet):

It will force everyone to purchase health insurance, and fine anyone who doesn’t comply. I’d love to see a Constitutional challenge to this provision, because I don’t believe that the federal government can constitutionally force me to buy anything I don’t want to buy. And don’t start with the analogy of having to buy auto insurance. There are two big differences: First, the states, not the federal government, are the ones who pass laws requiring auto insurance. Second, you have an alternative – you don’t have to drive a car. If you don’t drive a car, you don’t have to worry about buying auto insurance. But force someone to buy health insurance? I don’t think so.

It will prevent insurance companies from denying coverage because of pre-existing conditions, and also prohibit them from charging higher premiums because of sex, age, or medical history. Sounds good, right? Think about it for a minute: The fact is that insurance rates are driven more by statistics than anything else.

Consider the auto insurance industry. The reason young, single males pay more for auto insurance is because it is an undeniable fact that young, single males have the most traffic accidents of any demographic group. And if you get in too many accidents, guess what? Your insurance is probably going to be cancelled, and you’ll have to pay through the nose to get insurance from a company that specializes in high-risk policies. Why? Because another undeniable fact is that people who get in multiple traffic accidents are statistically more likely to continue to get in traffic accidents. Your premium is determined primarily by the risk of loss that you represent. The same is true of health insurance.

Requiring health insurance companies to write policies on people with pre-existing conditions has been likened to forcing property insurance companies to write fire insurance policies after the house is already on fire. That’s a good analogy. You are literally forcing them to underwrite policies on which they are almost guaranteed to lose money. And if you’re going to also tell them that they can’t charge those people a higher premium for their coverage, what do you think is going to happen?

There is only one possible outcome: everyone’s premiums will be going up. You young, healthy people out there, who would normally be able to get coverage for a pretty reasonable rate, should be royally p!$$ed, because you are going to end up paying more money to subsidize the rates of the folks who have already had two double-coronary-bypass operations. And all those morbidly obese folks out there who are walking coronaries looking for a place to happen? They’ll be subsidized by the premiums paid by the granola- and carrot-stick-eating marathon runners whose weight is twice their height in inches and who have resting heart rates below 45 beats per minute.

A few decades ago, when maternity coverage was optional (before it became a standard feature of most employer-provided plans), it cost about as much to purchase maternity coverage as it did to just pay for the delivery. Why? Because the insurance companies knew that they only reason you would buy maternity coverage is if you were planning to have a baby – so there was a nearly 100% chance that they would have to pay out a claim against the policy.

Today, most employer-provided plans cover maternity benefits. This means that people who have already had their families, people who do not plan to have any children, people who are medically unable to have children, and single people who are not ready to start a family are all subsidizing the premiums of the people who will actually have children and use the maternity benefits of the policies.

Congress knows what will happen. That’s why they want to force everyone to buy health insurance – because the only possible way to partially mitigate the effects of all these new requirements is to vastly increase the pool of insured individuals. But it won’t be enough. Rates will still have to go up. Congress knows this too, and doesn’t care, because when the rates go up, it will just give Congress more ammunition to further demonize the evil, evil insurance companies for continuing to raise their rates. It will be another example of why the country needs a “single-payer” (read “government-run”) health care system.

Oh, and you folks out there who are willing to take care of the little things out of your own pockets, and just want a “major medical” policy to protect you against a major loss in the event of a catastrophic illness – forget it. That used to be a pretty good option if you were relatively young, relatively healthy, and wanted to keep your insurance premiums as low as possible. But now the government also wants to dictate what things your policy must cover. They really want you buying the full-meal deal so you can help subsidize those high-risk people out there.

Finally, I would like to go on record as saying that I am absolutely sick (pardon the pun) of Obama’s line that if you’re happy with your current health insurance policy, the government is not going to force you to change it. Businesses are struggling to stay alive, and providing health insurance coverage to employees is an increasingly difficult benefit to pay. I know, because I’m a partner in a small business. If there is a “public option” that is less expensive than private insurance (and let’s be honest with ourselves – if the government-run insurance plan isn’t less expensive, then what’s the point of having it?) the financial pressure will be immense for businesses to move their employees from more expensive private policies to the less expensive public option. Thousands of them will do just that – and it won’t matter a whit how happy their employees were with their current plans.

So, no, the government may not force you to change your plan. The government is just going to create a financial incentive that makes it nearly impossible for your employer not to change your plan. But the end result is the same.

The rhetoric rings as hollow as the promises not to raise my income taxes. Great. Thank you. But if runaway deficit spending brings back the days of double-digit inflation, or if the dollar becomes so unattractive that the rest of the world decides that oil markets should be denominated in some other currency than the U.S. dollar, causing the price of oil to fluctuate wildly as the dollar rises and falls against that other currency, that’s going to erode my purchasing power, isn’t it? What’s the difference between eroding my purchasing power directly by increasing my taxes and eroding my purchasing power indirectly through irresponsible fiscal policies?

The difference is that the Democrats think that in the latter case we’re too stupid to make the cause/effect connection. Just like they think we’re too stupid to figure out what will happen if they succeed in taking over health care. And maybe we are. We’ll find out a year from now at the mid-term election.

Thanks for listening.