Thursday, August 18, 2016

Obamacare Death Spiral: Incompetence or Cunning?

This week Aetna announced that it was going to reduce its exposure to Obamacare, offering less policies on Obamacare exchanges.

So the Obamacare death spiral continues.

The question is: was this the plan all along? To crash the health care system and then announce that the only solution was to go to "single-payer." According to La Wik:
Single-payer healthcare is a system in which the state, rather than private insurers, pays for all healthcare costs.
So was this the plan all along? I must say that I doubt it. That's because I think that political people are not long-term thinkers. They are just thinking about how to do the next thing.

I'd say that the Obamacare designers probably wanted to do single-payer, but knew that they couldn't pass it in 2009. So they designed a program, according to the model of Jonathan Gruber, that kept the elephant in the room, corporate employee health plans, while laying waste to the individual health insurance market to prop up the Obamacare subsidized population. Then, I expect they said, we'll revisit it in ten years.

You can see the attraction of single-payer to the ruling class. When the government "pays for all healthcare costs" it means that the taxpayers pay for all healthcare costs. When the government pays for all healthcare costs it removes the embarrassments of co-operatives going out of business and Aetna retreating from Obamacare.

Also, of course, it means that people don't have to get good jobs with good benefits to get good healthcare. Everyone gets care according to need and pays according to means. What is not to like?

The problem is, of course, that healthcare become a similar game to education. In education the customers are not the students but the teachers and administrators and vendors. So the outcomes for students are not that important compared to the outcomes for teachers, administrators, and vendors organized to get results from politicians. The middle class get half-decent service and the poor go to the wall. Also, because the government is in charge it doesn't get the blame the way that insurance companies get the blame for health care costs today.

Of course, the trend in all government programs is to centralize and standardize and increase government control. But when control is central and administrative you get a system that is very bad at responding to peoples' needs, and very bad at adapting to changing needs and conditions.

The problem is, of course, that the government system will be designed to offer free stuff up front, and hide its costs behind a curtain. Innovation is stifled and existing powerful interests are protected.

It is telling that Obamacare was passed by filling the insurance companies' mouths with gold and risk corridors. These were the same organizations that every Democratic partisan had been excoriating for years as profit-seeking wasters. Yet the Obama administration got Obamacare passed by stitching up a deal to get insurance company buy in.

Of course it did. Yet most people drink the KoolAid that government is there to help.

No it isn't. Government is in the business of rewarding its supporters and buying the support of opponents when necessary.

What should Republicans and conservatives do about this? I suppose the answer is to provide an Amazon or Uber alternative. Something that can sidestep the existing special interests and deliver services in a new way while the special interests aren't looking. How should/could this be done? I don't have a clue, but I sure would love to see some scrappy newcomer figure out a way to do it.

Meanwhile, if I were a Democratic politician I would blame the whole Obamacare mess on the insurance companies and their obsession with profits.

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