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Guaranteed Healthcare Is the Biggest Obamacare Flaw

Guaranteed-Issue; the “popular” part of the ACA law prohibiting insurers from declining acceptance of pre-existing conditions, fundamentally altered the economy of healthcare coverage. In a very real sense, it outlawed the offer of an actual “insurance” product for covering healthcare costs.

An INSURANCE product is a financial risk-management tool. It is not structured to operate as a savings account or a pre-paid pool of funds earmarked to a specific purpose…. The intended purpose and essential benefit offered by INSURANCE is to help us mitigate catastrophic loss attendant to unforeseen circumstances.

When we undermine the basic equation – premium and deductible based on informed risk-assessment which has a rational basis (rather than a legislated one) we prevent the profitable conduct (pronounced, “sustainable without public subsidy”) of this business model.

What if we covered our homes this way?

We cover our homes against fire, flood, burglary and other calamities. We DON’T expect to FORGO insuring our home until a fire or flood, then compel a company with which we’ve had no previous relationship to cover the losses of that event! If we did make that demand, then codified it with the force of law, the cost of “covering” our homes would quickly rise to a level that have most of us questioning the wisdom of buying insurance UNTIL a fire or flood.

This is the unreasonable demand being made in the effort to retain “guaranteed-issue” – the force-of-law mandate that singlehandedly prohibits private entities from offering a true insurance product for the management of catastrophic healthcare costs.

CONSIDER the principle problem with Obamacare:

Premiums and deductibles have gone through the roof, insurers have left most markets with only one or two choices and a great many healthy people have wisely “opted out” of insurance, noting, rationally, that they can always sign up once a health condition compels it.

If a company is compelled by law to accept a contract GUARANTEED to COST more than it brings in, that loss must be recovered elsewhere OR subsidized by government.

LIBERTY had worked for over 200 years in allowing America’s healthcare sector to become the envy of the world. We heard a lot of lies to the contrary.

Roughly 15% of the population lacked coverage, some voluntarily. That situation was presented as a CRISIS and we got duped into ensnaring an entire sector of our economy in government bureaucracy. The result has been higher costs, more limited access, fewer choices and diminished care for all.

It’s well past time to REPEAL in FULL – this unnecessary, unconstitutional and intrusive law, restoring freedom to the healthcare and health insurance market.

When we undermine the basic equation – premium and deductible based on informed risk-assessment which has a rational basis (rather than a legislated one) we prevent the profitable conduct (pronounced, “sustainable without public subsidy”) of this business model.

What if we covered our homes this way?

We cover our homes against fire, flood, burglary and other calamities. We DON’T expect to FORGO insuring our home until a fire or flood, then compel a company with which we’ve had no previous relationship to cover the losses of that event! If we did make that demand, then codified it with the force of law, the cost of “covering” our homes would quickly rise to a level that have most of us questioning the wisdom of buying insurance UNTIL a fire or flood.

When we undermine the basic equation – premium and deductible based on informed risk-assessment which has a rational basis (rather than a legislated one) we prevent the profitable conduct (pronounced, “sustainable without public subsidy”) of this business model.

What if we covered our homes this way?

We cover our homes against fire, flood, burglary and other calamities. We DON’T expect to FORGO insuring our home until a fire or flood, then compel a company with which we’ve had no previous relationship to cover the losses of that event! If we did make that demand, then codified it with the force of law, the cost of “covering” our homes would quickly rise to a level that have most of us questioning the wisdom of buying insurance UNTIL a fire or flood.

When we undermine the basic equation – premium and deductible based on informed risk-assessment which has a rational basis (rather than a legislated one) we prevent the profitable conduct (pronounced, “sustainable without public subsidy”) of this business model.

What if we covered our homes this way?

We cover our homes against fire, flood, burglary and other calamities. We DON’T expect to FORGO insuring our home until a fire or flood, then compel a company with which we’ve had no previous relationship to cover the losses of that event! If we did make that demand, then codified it with the force of law, the cost of “covering” our homes would quickly rise to a level that have most of us questioning the wisdom of buying insurance UNTIL a fire or flood. When we undermine the basic equation; premium and deductible amounts based on informed risk assessment which has a rational (rather than legislated) basis we prevent the profitable conduct (sustainable without public subsidy) of this business model.

What if we attempted to insure our homes the way we “insure” our health?

We cover our homes against fire, flood, burglary and other calamities by purchase of insurance policies before these things happen.  We wouldn’t expect to forgo insurance on our possessions until a disaster takes place, then hold some company with which we have no previous relationship responsible for the losses suffered as a result of the disaster.   If we made such an unreasonable demand, then succeeded in CODIFYING that demand into law, the cost of “insuring” our home would quickly rise to a point that would prevent the purchase of “insurance” unless a looming loss precipitates it.

It should come as no surprise that this precise course of events has followed the unreasonable demand that insurance companies treat health insurance this way.

CONSIDER the most-often cited problem with ObamaCare:   “Too few healthy people participate.”

The choices in health insurance used to include a wide variety designed to attract people at every stage of life.  Younger, healthier people are often well served to “self-insure” routine care and to purchase policies to cover only “major medical” events.  Families with young children often prefer an HMO construct.

The ACA has outlawed the “major medical only” policy, forcing all into “Comprehensive” coverage policies; a gross OVERPURCHASE of requirements for nearly everyone,  especially younger people.  Ironically, though the only 4 policy constructs left legal under the ACA “cover” everything under the sun, the deductibles approximate the price of a used car.  Most people have no reasonable expectation that their policy will actually “kick in” absent a major event involving hospitalization.  The result is that we self-fund our routine care WHILE carrying a premium the size of a mortgage payment.

Not surprisingly, many of the younger, healthier people on whose participation the ACA depends to work have elected to forgo insurance altogether, penalties notwithstanding.   Guaranteed Issue is the force-of-law distortion compelling insurers to issue policies to people who wait UNTIL a health disaster to purchase insurance.   A better recipe for gathering the sickest and costliest of insured persons could hardly be devised.  With every premium and deductible increase caused by it, the more entrenched does this negative cycle become.

LIBERTY had worked for over 200 years in allowing America’s healthcare sector to become the envy of the world. We heard a lot of lies to the contrary.

Roughly 15% of the population lacked coverage, some voluntarily. That situation was presented as a CRISIS and we got duped into ensnaring an entire sector of our economy in government bureaucracy. The result has been higher costs, more limited access, fewer choices and diminished care for all.

It’s well past time to REPEAL in FULL – this unnecessary, unconstitutional and intrusive law, restoring freedom to the healthcare and health insurance market.

The new administration has promised to repeal ObamaCare BUT has promised to leave “guaranteed issue” in place, as this provision is “popular.”  That would be a major, basic-economics-defying mistake.  Political popularity cannot change economic realities:

  • If a company is compelled by law to accept a contract guaranteed to cost more than it generates, that loss will require recovery elsewhere in the business or subsidy by the public
  • If a rational person is assured that their own action/expense is not required in order to mitigate risk of catastrophic loss, that action/significant expense will not be undertaken.    It is not necessary.

Liberty facilitated the development of America’s Healthcare sector for over 200 years; causing it to become the envy of the world.  We heard a lot of lies to the contrary while being “hard-sell” sold on the merits of government-run health insurance.   Roughly 15% of the American population lacked health insurance – some voluntarily.  That situation was presented as a “crisis” and we got duped into allowing the entire healthcare sector to become ensnared in bureaucratic quagmire.

The predictable result has been higher costs, more limited access, fewer choices and diminished care for all.   It’s well past time to REPEAL IN FULL this disastrous, unconstitutional and intrusive law and restore FULL LIBERTY to the health care and health insurance markets.

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The opinions expressed in this commentary are solely those of the author and are not not necessarily either shared or endorsed by iPatriot.com.

Patricia Anthone

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