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Monday, February 22, 2010

Obama Still Wants to Have It All on Health Care

The president unveiled his new health care proposal about half an hour ago.

US President Barack Obama has unveiled new plans to advance legislation to overhaul the US healthcare system.

One of the key proposals gives the US government new power to block health insurers from imposing excessive premium increases.

Mr Obama has made healthcare reform a centrepiece of his presidency, but has so far failed to get a new law passed.

There's three key features to his proposal. First, almost everyone will be required to have health insurance. Second, there will be very tough restrictions against health insurance companies as far as who they can and can't cover. Third, the Feds can dictate how much a health insurance company can raise rates.

The president still doesn't seem to get it. Think of this as a balloon. If you squeeze one part, another part will balloon. So, if you force insurance companies to cover everyone, they will charge higher rates. If you force them to cover everyone and you don't allow them to charge higher rates, the insurance companies will squeeze from somewhere else.

The insurance companies will simply cover less. They will also reimburse less to doctors. Milton Friedman once said, "there's no such thing as a free lunch". The president is approaching it as though there is. He seems to think that he can force the insurance companys' hands with no consequences. That won't happen. The more he squeezes in some places, the more the insurance companies will squeeze out of other places. This plan is pure fantasy.


AG said...

So is there no way to make the balloon as a whole smaller?

I for one think a national health insurance regulator makes sense. Rather than a patchwork of 50 state regulators like we have now, a uniform set of regulations would allow people buy insurance across state lines. Without letting the insurance companies simply relocate to Texas or some other state with almost nonexistent regulations.

mike volpe said...

The analogy may not be that great. I think there are ways to make the balloon smaller but not by simply willing it. You can't simply drop costs but telling insurance companies what they can't charge.

Your idea has some merit but I'm not sure that states would cede their power.

Anonymous said...

States wouldn't have a choice about ceding their power or not, if inter-state commerce were allowed in the insurance industry. The Constitution specifically grants Congress the power to regulate interstate commerce.