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No-contest health insurance?

October 31, 2013

OK, the government has decided you really can’t keep your health insurance if the government doesn’t like it. Whether you like it is immaterial. What I don’t quite get (or maybe I do) is why the insurance companies are simply rolling over and cancelling policies instead of offering competing products.

Antitrust laws have been in place since 1890. The Bell Telephone/AT&T/Western Electric  breakup in 1982 was a result of the government’s use of those laws. The government’s argument then was that telephone service was an essential service for Americans, and shouldn’t be totally controlled by one provider.

Fast forward to 2012. Now  it’s OK for one competitor (the government) to offer an equally essential competing product that is completely vertically integrated(Obamacare).  The insurance companies are apparently colluding with, or have been coerced to allow, the government to make that product a monopolistic offering. That seems odd, given that there seems to be a viable market consisting of people that don’t like, don’t want, can’t afford, and until now didn’t need government insurance.

The initial claim for Obamacare was that everyone’s insurance would be cheaper. Somehow that was equated to lowering healthcare costs, instead of health insurance costs. Obamacare was supposed to provide coverage for some 44 million Americans that didn’t have health insurance. Even the government’s own estimates under a best-case scenario indicate that 30 million of those people still won’t have insurance. It is unclear whether that figure includes people who simply choose not to buy the product, but the inference is that those 30 million will still not be able to afford the new plans. If that number doesn’t include the group whose plans are simply being cancelled, the number could easily be greater than 44 million.

Based on the initial offerings on the website (when it works) all of the so-called affordable bronze plans have extremely high deductibles. You may be able to afford the plan now if you can utilize the highest subsidies, but can you afford to pay the provider for the deductible and co-pays?  Will you ever even meet the deductible? What happens if you do have a catastrophic health event and owe the provider 10, 12 or 20 thousand dollars?  How is that any different from your old high-deductible insurance coverage? You still have to pay the premiums in order to have coverage.

If this thing flops as badly as it appears that it might, a lot more than 44 million people are going to be without insurance. So why aren’t insurance companies looking to their own bottom line and competing?  While I can see that they may have to offer the Obamacare plans, why not go after that market of people who can’t or won’t buy government health insurance but are not eligible for Medicaid?  Strange.

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