A completely predictable fiasco

Health insurance companies have already notified at least 3.5 million Americans that their plans are being cancelled as a result of Obamacare. 
That number, reported Monday by the Associated Press, is the latest data point in a string of bad news for the Obama administration, which has struggled to explain why the president regularly told Americans that under Obamacare, they wouldn’t lose their health plans if they liked them. 
The president attempted to explain away the cancellations last week as beneficial to American consumers. 
Those facing cancellations are Americans “who’ve got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident,” Obama said from Boston last week.
I realise that economics is not a strong suit for President Jackass. It's difficult to spend the 20 minutes required to understand the concept of supply and demand when you're preening for your next photo op or the next kid-gloves media interview. But I'm still amazed that this administration pretends to have had no clue that any of this would happen, when every last one of these consequences was so completely predictable.

Is it really that difficult for someone with a college degree to understand that if you force everyone to buy something that not everyone would want to buy, the price of that thing goes up? How hard is it to figure out that if you insist on pretending that old farts carry the same risks as the young and the stupid, then insurers will immediately move to charge young folks more in order to offset the risk of their older customers kicking the can? And exactly how stupid does someone have to be in order to be unable to understand that young people, when confronted with a fine that is actually less costly than the cost of health insurance, will generally choose to pay the fine and live without insurance?

Obarmy and his cronies have at every turn betrayed a complete lack of understanding of how this business works. This is unsurprising since apparently no one in this most inept and clueless of administrations has ever actually run a business. The insurance business, from the point of view of an insurer anyway, is actually a very simple and, when done right, pretty profitable one: calculate your risks accurately, price your policies in line with those risks, and hold sufficient capital reserves in place to ensure that no one systemic risk can destroy you. That's really about it.

But when you socialise the risk pool and demand that everyone enter the same pool at the same time with the same costs, then that profitability disappears, and insurers are left with very painful choices: ditch the insurance market altogether, raise prices to nosebleed levels, or lay off workers. And all three are happening right now.

Now the only thing left for these idiots to do is to demand that companies not do what they're supposed to do and maximise profits.

Again, none of this surprises me in the slightest. Every last one of these things has been seen before in other markets where the government has intervened and insisted on meddling with voluntary exchanges. It's not like this sort of idiocy is new either- it's actually been ongoing for decades, ever since your worst President, FDR, insisted on forcing companies to provide healthcare to their workers in lieu of wage increases during WWII. This American peculiarity of insisting on paying for every little healthcare expenditure using insurance has always mystified me, coming as I do from a part of the world where a visit to the doctor is paid for out of pocket and costs less than $20.

If the goal of the administration was to drive the entire country into a socialised, single-payer system, I have to say, they're doing an absolutely terrible job of it. Sooner or later this entire scheme will collapse and the American people will be forced to demand that their government provide them with the healthcare coverage that insurance companies will simply refuse to provide because it's not profitable. At that point, the government will almost surely go straight into default, because the cost of providing socialised healthcare coverage to an additional 130 million people, when there are already roughly 80 million parasites- er, Baby Boomers- to worry about, will likely break the fisc beyond any hope of recovery.

Ultimately, this sort of thing is very amusing to watch if, like me, you can't wait to see the downfall of this corrupt and diseased institution that we euphemistically call the US government. But spare a thought for the people affected by its stupidity and its greed, because they are going to feel terrible pain for a long time before the final collapse comes.


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