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The Unintended Consequences of Deals

November 5, 2013

Let’s imagine a scenario where regular people built a health care law.  A group of 50 people with some knowledge and a good conversation probably would have come up with helping people with pre-existing conditions,  Setting up high-deductible plans that were inexpensive enough that young people would consider signing up, and then finding ways to subsidize people in need through some bureaucratic process.  It wouldn’t be great, but it would at least make sense why they did it that way.

But laws are written by lawyers, with significant lobbying by companies that will be affected by the decisions. The PPACA was co-written with much insurance company input.  While those companies were willing to concede on requirements like covering pre-existing conditions, they were still only on board if they made money.

So, first, it’s funny that they’re being demonized, because if anyone is going to make money, it’s a public corporation responsible to its shareholders.  And the government has been all over health coverage for years, as Karl notes in this Hot Air post.

One of the few things Obamacare supporters like Josh Barro and opponents like Mark Steyn agree upon is that governments (state and federal) have had their mitts all over the health insurance industry for decades.  By 2004, the high cost of health services regulation was responsible for more than seven million Americans lacking health insurance, or one in six of the average daily uninsured.  Obama’s latest talking point tries to pretend otherwise.

As Robert Laszewski, president of Health Policy and Strategy Associates (an expert even acknowledged by Ezra Klein and his ilk), points out, individual health insurance policies have been regulated for decades by the states.  Almost every state in the union has dozens of health insurance mandates (Texas has 62 such mandates).  The most common mandates, adopted in almost every state, cover mammography, maternity stays, mental health parity, and alcohol & substance abuse — i.e., the sorts of mandates the NYT thinks are so revolutionary.

He also notes later that these “bad apples” are some of the biggest insurers in the world.

As I get more cynical with age, I note that many companies are willing to take some bad press in order to look “honest” in the public eye.  I’m not saying that companies are dishonest.  As I’ve said often, a company that harms or kills its customer base doesn’t stay in business for long.  So at this point we’re just waiting for the flush of anger at inoperative websites and mean companies to pass, and then people who really want insurance will sign up for it.  I’m not sure that’s enough to support the twisted economics of the PPACA.

But… as the administration is fond of saying: It’s the law.  Now we have to live with it, and I wonder how many people will feel the pain of living with it based on the deals that were made.

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