Employer health insurance premiums went up on average about 9 percent in 2011, and you can expect a lot more where that came from. Only a fool didn’t see this coming, which is to say the White House, every member of Congress who voted for the health care legislation, and all of their liberal enablers who have dreamed so long for the day when the government would take control of the health care system.
I was in the middle of the fight against ObamaCare. Trying to explain to Democrats and their staffs why the legislation would make health insurance premiums explode was like banging your head against the Berlin Wall.
They would mindlessly—almost zombie-like—regurgitate the liberal talking points, asserting that if we could just get everyone in the health insurance pool, premiums would go down, not up. Didn’t President Obama repeatedly promise that premiums would fall $2,500 for a family by the end of his first term?
So the government:
• Provides coverage to an additional 45 million to 50 million uninsured Americans—note that the uninsured spend less than half of what the insured spend on health care, so their spending will rise significantly;
• Requires insurance to cover lots of additional treatments and services, in many cases free of charge to the patient; and
• Guarantees that people will spend very little out of pocket, which insulates them from the cost of their decisions;
And the president argues—well, he used to argue, until the facts could no longer be denied—that total health care spending would go down!
Every aspect of the current health insurance system that makes health care so expensive—requirements to cover lots of additional therapies, limiting patients’ cost exposure, and subsidizing the most expensive health plans (through employers or the government) so that more people will choose them—is in ObamaCare … on steroids.
Under normal conditions, health insurers and their actuaries would have spoken out vociferously, trying to inject some insurance principles into the debate. But there were at least two countervailing factors this time around.
First, the Obama administration and the Democrats who controlled Congress at the time made it clear that they would make life—and the ability to do business—hell for any insurer that fought them. I can recall talking to an insurance company executive in August of 2009, the summer of the huge rallies against ObamaCare, who told me he had a stack of red folders on his desk—demands from Democratic committee chairmen for various types of information. The message was clear: get on board with ObamaCare or expect to spend a lot of time answering committee demands, or testifying before Congress, or worse. So far I haven’t found anyone willing to speak out on the record about these strong-arm tactics—and probably won’t until 2013.
Second, the primary health insurance trade association, America’s Health Insurance Plans (AHIP)—which is run by, Karen Ignani, who worked as a Democratic Hill staffer and for the AFL-CIO—never took an aggressive stand against ObamaCare.
Ignani and the AHIP board made a decision to work with the administration. That was a reasonable approach at first. However, insurers soon realized that ObamaCare would violate every actuarial principle of insurance and demonize them to boot—and yet barley a peep of dissent was heard from them.
In fact, I, as the director of a small free market health insurance research and advocacy group at the time, received some pressure to tone down our objections to ObamaCare.
Health insurers knew the problems the legislation would create. I sat in the office of an insurance company executive who complained that it would be very difficult to remain in business given the restrictions and price controls in the legislation. But, he said, they were hoping the company would find a way to survive. And yet like so many others, he never spoke out.
The point is that ObamaCare was meticulously crafted by people who didn’t have a clue how health insurance worked or how people respond to the various economic incentives in health care and insurance. And we just got another example of my claim with the notice of the probable mothballing of the CLASS Act, yet another actuarially unsound provision in ObamaCare.
The ObamaCare effort was like those Utopian planners who have a vision for how an economy should work, and then try to force everyone to conform to that vision
And the people who did understand the health care system—and I’m not just talking about health insurers—who should have known better, mostly remained on the sideline … if they weren’t actively helping.
Well, Obama got his health care law—along with a lot of economic turmoil and public dissatisfaction. And now we have to hope the Supreme Court or the 2012 elections will save us from the utopian fools who are only now beginning to learn that remaking a sixth of the U.S. economy was tougher than they thought
Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas. This post originally appeared at Forbes.