Commentary Magazine


Topic: federal health-care law

Guess What: ObamaCare Will Make Insurance More Expensive

Ed Morrissey calls our attention to a New York Times article that makes the case that ObamaCare will likely send health-insurance premiums skyrocketing. The Times looks at New York’s state plan:

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

Hmm. Sounds like what happened in Massachusetts, where, lo and behold, insurance costs continued to climb, and, despite an individual mandate, many people chose to pay the fine rather than pay exorbitant insurance premiums. So in New York, the number of insured has dropped to 31,000 from 128,000 as costs soared to more than double the nation’s average.

As the Times explains, “The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.”

So we’re going to force individuals to buy more-expensive plans than they might want (the issue Paul Ryan alluded to at the health-care summit), dump them into pools with high-risk patients, and then hope the costs don’t drive healthier customers out, hiking up the costs for the remaining individuals, who will look to the government for ever-increasing subsidies. Remarkable isn’t it, that the Democrats never looked, or cared to look, at the experience of Massachusetts and New York before jamming through their historic legislation? But then they didn’t much care in the end what was in it or how the CBO flimflam scoring was arrived at. What was important is that they had a “win.”

Now that we’re getting a good idea at what they’ve done, it certainly boosts the “repeal and replace” effort. It would seem the responsible thing to do before the entire country winds up like New York or Massachusetts — with sky-high insurance costs and a new budget-busting entitlement, and nothing approximating “universal coverage.”

Ed Morrissey calls our attention to a New York Times article that makes the case that ObamaCare will likely send health-insurance premiums skyrocketing. The Times looks at New York’s state plan:

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

Hmm. Sounds like what happened in Massachusetts, where, lo and behold, insurance costs continued to climb, and, despite an individual mandate, many people chose to pay the fine rather than pay exorbitant insurance premiums. So in New York, the number of insured has dropped to 31,000 from 128,000 as costs soared to more than double the nation’s average.

As the Times explains, “The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.”

So we’re going to force individuals to buy more-expensive plans than they might want (the issue Paul Ryan alluded to at the health-care summit), dump them into pools with high-risk patients, and then hope the costs don’t drive healthier customers out, hiking up the costs for the remaining individuals, who will look to the government for ever-increasing subsidies. Remarkable isn’t it, that the Democrats never looked, or cared to look, at the experience of Massachusetts and New York before jamming through their historic legislation? But then they didn’t much care in the end what was in it or how the CBO flimflam scoring was arrived at. What was important is that they had a “win.”

Now that we’re getting a good idea at what they’ve done, it certainly boosts the “repeal and replace” effort. It would seem the responsible thing to do before the entire country winds up like New York or Massachusetts — with sky-high insurance costs and a new budget-busting entitlement, and nothing approximating “universal coverage.”

Read Less

RE: ObamaCare Hits Home

Verizon and Caterpillar aren’t the only employers warning of rising health-care costs due to ObamaCare:

Deere & Company, Iowa’s largest manufacturing employer, said in a statement this morning that the recently-passed health care legislation will cost the company $150 million after tax this year.The company said the impact would be felt primarily in the second quarter, between April 1 and July 1.

Deere spokesman Ken Golden said the charge would be taken as a one-time cost to cover the new tax the Health Care bill imposes on subsidies paid to corporations for retiree prescription costs under a 2003 Medicare bill.

“The 2003 legislation encouraged companies to stay in the game and continue to fund their retirees’ prescriptions,” Golden said. “Otherwise, the retirees would go onto the Medicare prescription program which would cost the government more money.”

Manufacturers of medical devices are also sending out warnings. (“Medical-device maker Medtronic warned that new taxes on its products could force it to lay off a thousand workers.”) The Boston Herald explains:

A dire warning from Bay State medical-device companies that a new sales tax in the federal health-care law could force their plants — and thousands of jobs — out of the country has rattled Gov. Deval Patrick, a staunch backer of the law and pal President Obama.

“This bill is a jobs killer,” said Ernie Whiton, chief financial officer of Chelmsford’s Zoll Medical Corp., which employs about 650 people in Massachusetts. Many of those employees work in Zoll’s local manufacturing facility making heart defibrillators. “We could be forced to (move) manufacturing overseas if we can’t pass along these costs to our customers,” said Whiton.

The threat — echoed by others in the critical Massachusetts industry — had the governor vowing to intervene to block the sales tax impact. “I am obviously concerned about the medical device burden here on the commonwealth, which has a very robust industry around medical devices,” Patrick said yesterday.

Well, he wasn’t concerned enough to lobby against the bill before it was passed. But this issue and other predictable consequences of ObamaCare will no doubt absorb much of the debate between now and November. Hey, if Deval Patrick thinks it’s a jobs killer, perhaps “Repeal and Reform” isn’t so far-fetched after all.

Verizon and Caterpillar aren’t the only employers warning of rising health-care costs due to ObamaCare:

Deere & Company, Iowa’s largest manufacturing employer, said in a statement this morning that the recently-passed health care legislation will cost the company $150 million after tax this year.The company said the impact would be felt primarily in the second quarter, between April 1 and July 1.

Deere spokesman Ken Golden said the charge would be taken as a one-time cost to cover the new tax the Health Care bill imposes on subsidies paid to corporations for retiree prescription costs under a 2003 Medicare bill.

“The 2003 legislation encouraged companies to stay in the game and continue to fund their retirees’ prescriptions,” Golden said. “Otherwise, the retirees would go onto the Medicare prescription program which would cost the government more money.”

Manufacturers of medical devices are also sending out warnings. (“Medical-device maker Medtronic warned that new taxes on its products could force it to lay off a thousand workers.”) The Boston Herald explains:

A dire warning from Bay State medical-device companies that a new sales tax in the federal health-care law could force their plants — and thousands of jobs — out of the country has rattled Gov. Deval Patrick, a staunch backer of the law and pal President Obama.

“This bill is a jobs killer,” said Ernie Whiton, chief financial officer of Chelmsford’s Zoll Medical Corp., which employs about 650 people in Massachusetts. Many of those employees work in Zoll’s local manufacturing facility making heart defibrillators. “We could be forced to (move) manufacturing overseas if we can’t pass along these costs to our customers,” said Whiton.

The threat — echoed by others in the critical Massachusetts industry — had the governor vowing to intervene to block the sales tax impact. “I am obviously concerned about the medical device burden here on the commonwealth, which has a very robust industry around medical devices,” Patrick said yesterday.

Well, he wasn’t concerned enough to lobby against the bill before it was passed. But this issue and other predictable consequences of ObamaCare will no doubt absorb much of the debate between now and November. Hey, if Deval Patrick thinks it’s a jobs killer, perhaps “Repeal and Reform” isn’t so far-fetched after all.

Read Less




Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor to our site, you are allowed 8 free articles this month.
This is your first of 8 free articles.

If you are already a digital subscriber, log in here »

Print subscriber? For free access to the website and iPad, register here »

To subscribe, click here to see our subscription offers »

Please note this is an advertisement skip this ad
Clearly, you have a passion for ideas.
Subscribe today for unlimited digital access to the publication that shapes the minds of the people who shape our world.
Get for just
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor, you are allowed 8 free articles.
This is your first article.
You have read of 8 free articles this month.
YOU HAVE READ 8 OF 8
FREE ARTICLES THIS MONTH.
for full access to
CommentaryMagazine.com
INCLUDES FULL ACCESS TO:
Digital subscriber?
Print subscriber? Get free access »
Call to subscribe: 1-800-829-6270
You can also subscribe
on your computer at
CommentaryMagazine.com.
LOG IN WITH YOUR
COMMENTARY MAGAZINE ID
Don't have a CommentaryMagazine.com log in?
CREATE A COMMENTARY
LOG IN ID
Enter you email address and password below. A confirmation email will be sent to the email address that you provide.