Tuesday, December 22, 2009

Into the breach, dear friends...The Senate passes their bill...

Has anyone considered that the new Healthcare de-evolution bill that just passed the Senate may do for the insurance industry what the Community Reinvestment Act did for the banking industry?

In short, The Community Reinvestment Act required lending institutions to lend money to marginal characters living in even more marginal geographical areas. In time, this degenerated into the lending of money to people who began playing fast and loose, speculating on real estate with other people’s money. The insurance industry is on track to become like the banking and savings and loan industry when the government mandates are implemented and activated. We will see people who presently are unable to qualify for policies in the free market for many reasons, forced into that market at bayonet point (by the government) and private companies forced to sell them health insurance policies. The private insurers will be compelled to do so at that same governmental “bayonet point”. Meanwhile, as the persons with pre-existing conditions draw on the system, causing a corresponding increase in costs, the private insurers will loose billions of dollars due to extra claims, increasing the cost for the rest of the pool which will rise to cover those additional costs. So we will see nearly all Americans forced to pay into a system by force of law and see them additionally forced to pay what is in effect a ‘tax’ for healthcare to private insurers that will rise as the load increases.

What could very well happen is that people, who were paying their own way, will reach the breaking point when the costs become too great and simply opt out of the whole private health insurance system and pay the fine for non-compliance to the government rather than pay ever increasing premiums. That point could be reached relatively quickly for America’s employers who pay a large share of healthcare costs for their employees. As the costs rise to cover the additional costs of those who are brought on board due to federal mandate, employers may simply drop their employee’s coverages and pay the fines for not covering them. Young, healthy people who before didn’t pay at all because they were generally more healthy and made the personal calculation that they didn’t need coverage, will opt to pay the fines, which cost less than paying ever increasing amounts for coverage. This will still leave them effectively uninsured as they were before. These uninsured people would become a revenue stream to the government via the fines paid for non-compliance. One could argue that this is in effect, a way of taxing people and businesses in a new, and more cynical way.

As the pool of insured people falls in response to the increasing premiums, due in part to added burdens caused by pre-existing condition customers and due to losses of individual and business group policy holders, private insurers may simply shut down and drop health coverage as a product. If that were to happen en masse’, the nation may find itself with few if any health insurance providers. This is not a scenario beyond the pale when you consider that products like group annuity and whole life insurance have dramatically declined due to market forces. It is possible that these lines of coverage may in the fullness of time; disappear entirely, as the administration costs and servicing costs make them uneconomical to offer. If this were to happen with health insurance, what would happen to the existing policy holders? Who or what would rise to fill the void?

The answer seems obvious. The government would undoubtedly step in to fill that void they caused by their attempt to provide coverage to all in the first place. Single payer would become defacto as the government took over in the void created by them and all the worst case scenarios would come to pass: price controls, ‘death panels’ and eventually, rationing of care. Complete government control of the health delivery services of the nation would become a fact of life for all Americans, thus destroying arguably, the world’s greatest health care delivery system...

As the old Community Reinvestment Act began the march that lead to the collapse of the housing finance industry in America, these governmental mandates on the private health delivery and payment system will hasten the beginning of the march toward a single payer system. This system will ultimately control aspects of your life that were once the exclusive purviews of the citizens and their doctors, and lead to horrific deficiencies in quality and quantity of health services to the people of this nation. It will also lead to ultimate financial collapse of the governmental budgetary system as we would see crisis after crisis develop as we do now with Social Security, Medicare and Medicaid, only on a much grander scale. If one doubts the results, they simply have but to look north to Canada or across the Atlantic to Great Britain to see what single payer systems have done to healthcare in those nations. All the worse case scenarios have come to those countries including rationing, delays in critical services, and outright denial of services and cutting edge drugs and procedures due to cost or government regulation.

Is that what we want? Is that the best we can do for our country?

No comments: