Mitchell is "Spot On"! On the same track as Peter Schiff; anytime that the Federal Government gets involved and attempts to "Price Fix" we can always expect wholesale price increases!
This is an excellent video; albeit long! I encourage everyone to watch at least the first 15 or 20 minutes of the video...Schiff is explaining the same thing as Mitchell above, but in a more overall, "governmental" viewpoint: https://www.youtube.com/watch?v=ahMGoB01qiA&t=582s On Sun, Jul 16, 2017 at 11:03 AM, MJ <[email protected]> wrote: > > Friday, July 14, 2017 > > *Health Costs Are Rising Because of Price Controls *Daniel J. Mitchell > > > When discussing government involvement in the health sector, I usually > focus on the budgetary implications. Which makes sense since I’m a fiscal > wonk and programs such as Medicare > <https://danieljmitchell.wordpress.com/2011/05/17/whos-right-on-medicare-reform-ryan-and-rivlin-or-obama-and-gingrich/>, > Medicaid > <https://danieljmitchell.wordpress.com/2011/06/27/block-granting-medicaid-is-a-long-overdue-way-of-restoring-federalism-and-promoting-good-fiscal-policy/>, > and Obamacare > <https://danieljmitchell.wordpress.com/2016/08/02/the-ever-growing-fiscal-burden-of-obamacare/> > are diverting ever-larger amounts of money from the economy’s productive > sector. > > I also look at the tax side of the fiscal equation and complain about how > the healthcare exclusion > <https://danieljmitchell.wordpress.com/2016/04/29/the-healthcare-exclusion-is-the-tax-codes-most-harmful-loophole/> > mucks up the tax code. > > Though it’s important to understand that government involvement doesn’t > just cause fiscal damage. All these programs and policies contribute to the > “third-party payer” problem, which exists when people make purchases with > other people’s money. > > [image: []] > > Such a system is a recipe for inefficiency and rising prices > <https://danieljmitchell.wordpress.com/2015/05/24/government-subsidized-third-party-payer-is-a-great-recipe-to-make-a-sector-of-the-economy-more-expensive-and-less-efficient/> > since consumers generally don’t care about cost and providers have no > incentive to be efficient. And since government figures show that nearly > 90 percent of health care expenditures > <https://danieljmitchell.wordpress.com/2009/12/28/the-real-healthcare-chart-of-the-day/> > are financed by someone other than the consumer, this is a major problem > <https://danieljmitchell.wordpress.com/2017/03/23/the-worlds-most-inefficient-healthcare-system-part-ii-created-by-government-financed-by-government/>. > One that I’ve written about many > <https://danieljmitchell.wordpress.com/2015/01/13/our-healthcare-policy-problem-is-much-bigger-than-obamacare/>, > many > <https://danieljmitchell.wordpress.com/2014/04/10/the-lefts-pro-single-payer-health-care-graphic-right-diagnosis-wrong-prescription/> > times. > > But there’s another economic problem caused by government – price controls > on insurance – that is very important. Indeed, the fights over “community > rating” and “pre-existing conditions” are actually fights about whether > politicians > or competition should determine prices > <https://danieljmitchell.wordpress.com/2015/11/07/if-we-want-prosperity-prices-should-be-determined-by-markets-rather-than-politicians/> > . > > > *The “Death Spiral” *Simply stated, politicians want insurance companies > to ignore risk when selling insurance. They want artificially low premiums > for old people, so they restrict differences in premiums based on age > (i.e., a community rating, enforced by a guaranteed-issue mandate), even > though older people are statistically far more likely to incur > health-related expenses. > > [image: []] > > They also want artificially low premiums for sick people, so the crowd in > Washington requires that they pay the same or similar premiums as healthy > people (i.e., a pre-existing conditions mandate), even though they are > statistically far more likely to incur health-related expenses. > > Set aside that the entire purpose of insurance is to guard against risk. > Instead, let’s focus on what happens when these types of price controls are > imposed. > > For all intents and purposes, insurance companies are in a position where > they have to over-charge young and healthy people in order to subsidize the > premiums of old and sick people. That’s sounds great if you’re old and > sick, but young and healthy people respond by choosing not to purchase > insurance. And as fewer and fewer young and healthy people are in the > system, that forces premiums ever higher. This is what is meant by a “ > death spiral > <https://danieljmitchell.wordpress.com/2016/01/12/more-perverse-but-predictable-economic-consequences-of-obamacare/> > .” > > The pro-intervention crowd has a supposed solution to this problem. Just > impose a mandate that requires the young and healthy people to buy > insurance. > > [image: []] > > Which is part of Obamacare, so there is a method to that bit of madness. > But since the penalties are not sufficiently punitive (and also because the > government simply isn’t very competent), the system hasn’t worked. > > And to make matters worse, Obamacare exacerbated the third-party payer > problem, thus leading to higher costs, which ultimately leads to higher > premiums, which further discourages people from buying health insurance. > > So how do we solve this problem? > > > *Race to the Bottom *One of my colleagues at the Cato Institute, Michael > Cannon, is a leading expert on these issues. And he’s also a leading > pessimist. Here’s some of what he wrote a week ago > <https://www.cato.org/publications/commentary/health-care-bill-would-rescue-obamacare-take-democrats-hook> > as part of a column on the Senate bill to modify Obamacare. > > ObamaCare’s “community rating” price controls are causing premiums to > rise, coverage to get worse for the sick and insurance markets to collapse > across the country. The Senate bill would modify those government price > controls somewhat, allowing insurers to charge 64-year-olds five times what > they charge 18-year-olds (as opposed to three times, under current law). > But these price controls would continue to make a mess of markets and cause > insurers to flee. > > But he wasn’t enamored with the House proposal, either. Here are some > excerpts from his analysis earlier this year > <https://www.cato.org/blog/house-gop-leaderships-health-care-bill-obamacare-lite-or-worse> > of that proposal. > > The House leadership bill retains the very ObamaCare regulations that are > threatening to destroy health insurance markets and leave millions with no > coverage at all. ObamaCare’s community-rating price controls literally > penalize insurers who offer quality coverage to patients with expensive > conditions, creating a race to the bottom in insurance quality. Even worse, > they have sparked a death spiral that has caused insurers to flee > ObamaCare’s Exchanges nationwide… The leadership bill would modify > ObamaCare’s community-rating price controls by expanding the age-rating > bands (from 3:1 to 5:1) and allowing insurers to charge enrollees who wait > until they are sick to purchase coverage an extra 30 percent (but only for > one year). It is because the House leadership would retain the > community-rating price controls that they also end up retaining many other > features of the law. > > > *Not Sustainable *Though existing law also is terrible, largely because > of Obamacare. Here are passages from Michael’s column > <http://thehill.com/blogs/pundits-blog/healthcare/331987-this-is-not-repeal-it-is-obamacare-lite-or-worse> > in the Hill. > > ObamaCare’s core provisions are the “community rating” price controls and > other regulations that (supposedly) end discrimination against patients > with preexisting conditions. How badly do these government price controls > fail at that task? Community rating is the reason former president Bill > Clinton called ObamaCare “the craziest thing in the world” where Americans > “wind up with their premiums doubled and their coverage cut in half.” > Community rating is why women age 55 to 64 have seen the highest premium > increases under ObamaCare. It is the principal reason ObamaCare has caused > overall premiums to double in just four years. …Why? Because community > rating forces insurance companies to cover the sick below cost, which > simply isn’t sustainable. The only solution ObamaCare supporters offer is > to keep throwing more money at the problem which also isn’t sustainable. > > Anyone who wants to really understand this issue should read all of > Michael’s work on health care issues. > > But if you don’t have the time or energy for that, here’s an image that I > found on Reddit‘s libertarian page <https://www.reddit.com/r/Libertarian/>. > Using not-so-subtle sarcasm, it tells you everything you need to know about > why price controls ultimately will kill health insurance. > > [image: []] > > P.S. None of this suggests we should feel sorry for health insurance > companies. They got in bed with the previous administration and endorsed > Obamacare, presumably because they figured a mandate (especially with all > the subsidies) would create captive customers. > > Now that it’s clear that the mandate isn’t working very well and that > increased Medicaid dependency accounts for almost all of the additional > “insurance coverage,” they’re left with an increasingly dysfunctional > system > <https://danieljmitchell.wordpress.com/2014/07/15/obamacare-cronyism-and-bailouts-for-corrupt-health-insurance-companies/>. > As far as I’m concerned, they deserve to lose money. And I definitely don’t > want them to get bailout money > <https://danieljmitchell.wordpress.com/2014/01/03/tarp-was-bad-but-the-looming-obamacare-bailout-for-corrupt-insurance-companies-could-be-worse/> > . > > P.P.S. Republicans aren’t doing a very good job of unwinding the Obamacare > price controls, but they deserve a bit of credit for being bolder about trying > to undo the fiscal damage > <https://danieljmitchell.wordpress.com/2017/03/14/two-cheers-for-the-fiscal-changes-in-the-gops-obamacare-repeal-and-replace-legislation/> > . > > Addendum: A comment from Seb > <https://danieljmitchell.wordpress.com/2017/07/01/in-one-image-everything-you-need-to-know-about-health-insurance-community-rating-and-pre-existing-conditions/#comment-179007> > reminds me that I was so fixated on criticizing price controls that I never > bothered to explain how to deal with people who have pre-existing > conditions and therefore cannot get health insurance. > > I’m guessing the answer is “high-risk pools” where the focus of policy is > directly subsidizing the relatively small slice of the population that has > a problem (as opposed to price controls and other interventions that > distort the market for everyone). But the main goal, from my perspective, > is to have states handle the issue rather than Washington. > > A federalist approach, after all, is more likely to give us the > innovation, diversity, and competition that produces the best approaches. > States may discover, after all, that insurance doesn’t make sense and > choose to directly subsidize the provision of health care for affected > people. > > In the long run, part of the solution is to get rid of the health care > exclusion > <https://danieljmitchell.wordpress.com/2013/12/27/a-manifesto-for-free-markets-in-health-care/> > in the internal revenue code as part of fundamental tax reform > <https://danieljmitchell.wordpress.com/2012/08/11/a-primer-on-the-flat-tax-and-fundamental-tax-reform/>. > If that happened, it’s less likely that health insurance would be tied to > employment (and losing a job is one of the main ways people wind up without > insurance). > > > https://fee.org/articles/health-costs-are-rising- > because-of-price-controls/ > > -- > -- > Thanks for being part of "PoliticalForum" at Google Groups. > For options & help see http://groups.google.com/group/PoliticalForum > > * Visit our other community at http://www.PoliticalForum.com/ > * It's active and moderated. Register and vote in our polls. > * Read the latest breaking news, and more. > --- > You received this message because you are subscribed to the Google Groups > "PoliticalForum" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/d/optout. > -- -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. --- You received this message because you are subscribed to the Google Groups "PoliticalForum" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
