The list of those opposing health reform includes Tea Partiers, libertarians and other small government advocates; the Chamber of Commerce, Association of Manufacturers, and National Federation of Independent Businesses; health plans (some of them), brokers, and insurers.
For some the issue is personal “liberty”, decrying governmental intrusion into what they believe should be an entirely “free” market.
Others are more specific, outraged that they are forced to buy a service from a private insurer.
But for some, primarily the larger DC-based organizations and their dues-paying members, the issue appears to be more broad, a general perception that reform is yet another indicator of increased governmental intrusion into ‘their’ business. Private companies want to be left alone, to run their businesses and do their stuff without what they view as often unnecessary and ill-advised interference from bureaucrats. The faith in the free market, the belief in unfettered competition’s ability to deliver the best result for the most is the underlying driver, driving many big companies – who would benefit from the mandate and most other provisions of the PPACA, to work diligently to overturn health reform.
Understand that those of us with insurance (including big corporations, small employers who provide health insurance, and governmental entities (and therefore taxpayers)) are subsidizing the health care needs of those without. The 49 million Americans without health insurance get health care, they just don’t pay for it; those of us with insurance do through the miracle of cost-shifting.
The willingness of reform’s opponents to sacrifice their corporate profits on the altar of the free market is admirable, as is the enthusiasm of libertarians and true followers of the Tea Party ideology.
But I wonder how ideologically pure they’ll be if reform is overturned.
As evidence of the potential consequence of failing to think thru the long-term and unintended consequences of ideological purity, I give you the Export-Import Bank, an agency of the federal government.
Stick with me here; the Ex-Im Bank provides credit to American companies selling goods and services abroad. For many companies, it is the ONLY source of credit financing their overseas business. As a result, the Ex-Im Bank helps drive exports, which creates and maintains employment, improves our balance of payments, and builds American companies.
But – the Ex-Im Bank is in deep trouble; the House has rejected further funding for the bank [opens video] (which is very profitable, generating over $5 billion in profits) thus the Bank will have to shut down in two months. If it does, businesses from tiny crop dusting aircraft manufacturers to Boeing, chemicals to finished products will find markets dry up, sales fall off, and profits plummet. We can expect layoffs at the Boeing plant in South Carolina, the duPont plants in North Carolina, Air Tractor in Texas, and Keller in Wilmington.
If that’s the necessary consequence of a return to an unfettered free market with less government intrusion, than so be it.
But that’s not what many backers of the GOP want. In fact, a long list of ardent supporters of the GOP, those who helped funded the historic gains won by Republicans in the 2010 midterm elections, are pretty unhappy with the men and women they elected. These new legislators, and ones who’ve been around for years, are the ones who are denying funding for the Ex-Im Bank, and thereby hurting the very folks who funded their successful campaigns. GOP Sens. Saxby Chambliss of Georgia, Charles Grassley of Iowa, Tom Coburn of Oklahoma Rand Paul of Kentucky Jim DeMint of South Carolina and Mike Lee of Utah are all opposing re-authorization of the Ex-Im Bank.
What some – Heritage and the Club for Growth – decry as corporate welfare and unfair competition, others of a very similar political stripe champion as critical to American business.
The same will happen with health reform.
If the Supremes overturn health reform and/or the individual mandate, employers, taxpayers, and individuals are going to see higher health insurance premiums. The entire market will be in a death spiral. As more opt out of coverage, the cost for the shrinking number of insureds will increase. Members of the Chamber of Commerce, the NFIB, and the Club for Growth will find their profits eaten up by health insurance premiums, or they’ll be forced to drop coverage entirely.
Individuals outraged by the mandate will be free to find coverage on their own, coverage which will be unaffordable for all but the richest Americans without any pre-existing medical conditions. New Jersey, a state with no mandate and restrictions on medical underwriting, provides insight into what individual insurance costs would be if the Court overturns the mandate (thanks to Bob Laszewski for the research)
a two adult plan with a $2,500 deductible and 80% coinsurance for example, there are only three carriers offering it. Aetna at $4,913 per month, Celtic at $12,322 a month, and Horizon at $6,127.78 per month. [emphasis added] These rates do not vary by age.
Yep, annual insurance premiums for two adults would cost between $60,000 and $148,000.
Hopefully they’ll be okay with that, secure in the knowledge that they’ve sacrificed good health and medical treatment, for themselves and their families, on the altar of liberty.
And no, the free market will not come up with a solution. If it could have, it would have by now.
Perhaps the fate of the Ex-Im Bank will encourage the ideologically pure to reconsider their objection to health reform, but probably not.
You need to install a ‘like’ button, Joe. Great post!
Joe:
I love your site and check it everyday for updates, but I have to take issue with you on this post.
You say, “The 49 million Americans without health insurance get health care, they just don’t pay for it; those of us with insurance do through the miracle of cost-shifting.” You are implying that every one of those people aren’t paying for their health care. That’s just not true! Back in the early 90s I was a self-insurer. I paid a reasonable $75-$90 for each PCP office visit, was occasionally hit with a large pharma bill, even paid nearly $3k for each of two MRIs on my back, and I was never part of even the top 35%. Your quoted implications of the # of uninsured cannot be correct because of the self-insureds. Until the # of self-insureds can be quantified, using the 49M figure is irresponsible, no matter who’s doing it.
With your Export-Import Bank example, you say, “For many companies, it is the ONLY source of credit financing their overseas business.” Why? Are these companies poor credit risks? Is the Ex-Im Bank able to offer rates unmatchable by private banks due to government subsidies? Do private banks steer clear of financing export/import business in any significant amount because the Ex-Im Bank exists and fills the business need adequately? If so, isn’t it reasonable to expect the private banks’ behavior to change if the Ex-Im Bank was to vacate the space?
Finally, on your quote of policy pricing in NJ, you state, “Aetna at $4,913 per month, Celtic at $12,322 a month, and Horizon at $6,127.78 per month.” You also state that NJ is “a state with no mandate and restrictions on medical underwriting …” However, you fail to mention that since 1992, NJ required “guaranteed coverage and renewability for all eligible people regardless of their health status. A pre-existing condition exclusion does allow insurers to limit coverage during the first 12 months”. Are these companies pricing to protect themselves from negative selection and really to discourage underwriting? Obviously the amounts are absurd. Why aren’t other companies coming in? Is the government impeding entry of competition by placing unreasonable burdens on certification? The example provided was cherry picked, too. It’s the most expensive of all possible coverages (best to illustrate your point). Details are here: http://www.state.nj.us/dobi/division_insurance/ihcseh/ihcratepage_sp.pdf
Allen – welcome back to MCM, and glad you find it of interest.
Allow me to address your points in turn.
1. “self-insurance” – health care costs have increased . The 49 million figure is actually low, as it does not include the under-insured, those with high deductible plans with no or little money in their deductible accounts. You can’t seriously call these people “self-insured”; if they needed emergent care or had a costly medical condition they would get care at a hospital and we would pay for it. The cost-shifting dynamic is well researched and a logical response of the market.
2. re the Ex-Im Bank, My point is not is it good or bad, appropriate or not. Rather it is that many conservatives who helped the current Congress get elected don’t like what they’ve gotten for their contributions. Re the Bank’s purpose and activity, I suggest you investigate who they are and what they do. For whatever reason, private lending and credit institutions choose to not participate in that market. The Bank is not subsidized, and actually generates a substantial profit (to the benefit of we taxpayers). I can’t tell you why private companies don’t lend or finance, that’s a question for them to address. I’d suggest you read the articles about the dispute among conservatives to get their perspectives.
3. re NJ, the points about their market are exactly what I intended; if the mandate is struck down and the rest of PPACA stands, the NJ market will look a lot like markets in every other state. Carriers will – and must – charge very high premiums to protect against adverse selection. That’s appropriate and necessary. Other companies are not entering the market because it’s a lousy business.
4. re cherry picking, I disagree. As I noted, the indemnity plans quoted were for 80/20, two adult plans with affordable deductibles; I don’t know what the maximum out of pocket limits are as they weren’t listed.
Allen, I’m not arguing that insurers shouldn’t charge a ton if there’s no mandate. I’m saying that if the Supremes overturn the mandate, those are the premiums we’ll all be seeing and the death spiral will violently accelerate.
But my main point is this – be careful what you wish for. Those same conservatives who elected the current Congress don’t like their representatives’ distaste for the Ex-Im Bank.
The strident voices screaming about PPACA are putting themselves in an identical position.