It’s what they wanted all along. To manufacture crisis after crisis so that the American people would, eventually, beg for a solution that had been the goal of progressives for more than a generation—the government takeover of health care.
Just as socialism is supposed to be the “transitional phase” before a communist state takes hold, Obamacare was only the intermediate step. The recipe was simple: strike a devil’s bargain with insurance companies, then completely destabilize the health insurance industry by forcing premiums to be kept unsustainably low, while at the same time engaging in reimbursement sleight of hand. Meanwhile, rely on your political opponents’ (rightful) quest to destroy the law, knowing that in their single-minded zeal, they could serve you the very thing you’d been looking for (the end of private-sector health insurance).
Who could blame the insurance companies? The Democrats held all the cards of power, and Big Insurance knew that the goal was to eventually drive them extinct. But in the meantime, they could ignore the Bizarro-world economics that undergirded Obamacare while basking in the guaranteed-customers of the Individual Mandate.
The problem is, the guarantees of the individual mandate only deliver the promised profits if the insurance companies are either allowed to set at-market rates or are properly reimbursed for their government-created losses. Otherwise, like a sick patient so desperate for a cure that he takes to being “leeched”, they’re slowly bled to death.
Let’s be clear: the HMO model for health care provision is far-from perfect. But absent a return to an actual free-market in health care, it is better than the system that we are being dragged to.
But what if those most-concerned about the transitional phase of Obamacare are inadvertently hastening the coming of socialized medicine?
The “Taxpayers Before Insurers Act” could do just that. Billed as a way to exploit yet another of Obamacare’s inherent weaknesses as a way to hasten that law’s just demise, instead it is a very useful tool for progressives to reach their ultimate goal.
The mechanism was straightforward: health insurance companies operating on the Obamacare exchanges were required to collect money from customers in order to subsidize those whose pre-existing health conditions made health insurance unaffordable (much in the same way that many states tax automotive insurance in order to subsidize those whose driving records put the cost of mandatory car insurance out of reach).
As anyone with a passing knowledge of health care economics had predicted that the costs of health care were going to rise considerably once insurance companies were forced to insure higher-risk customers. Worse, once regulations were created by Health and Human services, companies found themselves forced to keep their premiums even more artificially low. These monies were supposed to offset those costs.
And that was the deal. Problem is, in order to sell the bill of goods to the American voter, the predicted costs at the foundation of the Affordable Care Act were far too low. Insurance companies were left with three options, essentially: leave exchanges, close up shop, or renegotiate with HHS.
It’s that renegotiation which is at the heart of the Taxpayers Before Insurers Act. Keep in mind—these are not “federal” funds. In this instance, the federal government is very much akin to an escrow account facilitator. The monies are collected, set aside, and are supposed to be disbursed back to the insurance company… but not for the sole benefit of the insurance companies (which is where things get disingenuous).
The merits of Obamacare aside, the legal questions aside, the political and economic philosophies aside, at the very least, the stated intent of Obamacare is the benefit of Americans. At the heart (again, setting aside realities, merits, philosophy, but taking the intent at its word) is the maintenance of the HMO system for the benefit of Americans.
So to claim that the current system benefits insurers over taxpayers misses the very point of the system as it exists. The system assumes that until some other mechanism for delivering health care to Americans is created, that interests of “taxpayers” and “insurers” are one and the same—that insurers are compensated so that they can remain in existence and part of the Affordable Care Act’s universe of providers.
But if those insurers are unable to make-up for their government-mandated losses by receiving the monies that the government mandated that they collect and that the government was holding for them in order to maintain their existence, then they will wither and die. This then allows the left to then claim that the HMO is fundamentally unsustainable, and that America needs a government-run, single-payer system in order to provide universal health care.
The desire to destroy Obamacare is a right one for conservatives. Obamacare is unsustainable in the long-term. But without a plan in place to return market principles to health care in America, rushing headstrong into that destruction will wind up bringing conservatives the very thing they don’t want: socialized medicine in America. The Taxpayers Before Insurers Act could very well deliver that horrendous result.
Andrew Langer is President of the Institute for Liberty