“You know what the insurance companies are like,” I was told by a statist neighbor, who adores Obama but concedes her healthcare premiums have gone up. How does the irrational individual solve the cognitive incongruity of rising prices and her undying love of the state?
She blames markets.
But even the stupid statist press can deny no longer that “insurance is at dramatically higher rates,” and some of the reasons are these:
First, the Affordable Care Act (ACA) sets minimum standards for benefits, including mental-health and substance-abuse treatment, maternity care, prescription drugs, and rehabilitative care, which were not included in many of the old plans. Also, insurance companies are now required to take all comers, regardless of their health status, and so rates are rising to cover their costs as well.
MORE.
Here The Heritage Foundation is forced into explaining the economically obvious:
…Contrary to a key intention of the legislation, the combination of mandates and taxes will not help to reduce the deficit. In fact, the PPACA will likely increase the deficit by an average $75 billion per year, and as a result, the nation’s publicly held debt will be $753 billion higher at the end of 2020. Such astronomical debt crowds out other productive investments and will lead to an estimated 670,000 lost job opportunities per year. …
he policy combination of spending and taxes alters the macroeconomic performance of the economy and feeds back onto the budget. A dynamic simulation shows that the higher initial costs are not an investment that pays off with a higher return in later years. Indeed, these front-loaded costs slow economic growth with higher inflation and higher interest rates, which overwhelm the benefits the proposal hoped to gain in later years.
The bill’s taxes, penalties, and fees on investors and businesses will decrease the amount of investment in the economy. This reduced investment will in turn lead to a decline in productivity, causing the economy to produce $706 billion less worth of goods and services. A smaller economic pie means that workers earn lower wages and salaries. Higher taxes on investment also put upward pressure on interest rates as investors seek to achieve their after-tax desired rate of return. …
…Lower wages reduce the amount of taxable income that could otherwise have been achieved. This will both increase the deficit and grow the total debt—which in turn puts upward pressure on interest rates and crowds out some savings that could have gone to new productive business investments.
Higher interest rates mean that more American tax dollars will go toward paying the interest on the federal debt rather than paying down the principal. Simulations using dynamic analysis estimate that the government would spend an average $23 billion more per year on interest rate payments over the 2010–2020 year window than it would without the PPACA.
MORE.
And from “Obama’s Politburo Of Proctologists”:
The pit of perverse incentives Papa Obama is engineering includes leveling the insurance industry, which by definition must discern and discriminate between applicants based on their health status (largely under individual control). Under his benevolent rule, private insurers will be subjected to a host of new regulations, “including a requirement to insure all applicants and a prohibition on pricing premiums on the basis of risk,” in the Cato Institute’s Michael Tanner’s rendering.
This means one thing: moral hazard. Writes libertarian economist Walter Block: “The greater the protection from the random expenses of sickness the greater the potential over-consumption of the item in question.”
We currently labor under “a seeming patchwork of indemnity insurance arrangements, managed care, private payment, and charity.” Yet the fewer the intermediaries interfering with the primary, patient-doctor relationship, the better the patient’s prognosis. The president’s prescription for too little freedom, however, is even less of the same!