Wednesday, April 14, 2010

The law of unintended consequences, Obamacare edition

Washington has a horrible track record of thinking through the consequences of their actions.  That type of planning is going to be a central feature of Democracy 2.0.  But in the meantime we have to deal with all of the unintended consequences that Washington's lobbyist-driven short-sighted policies throw at us.

I was talking with a friend yesterday.  His company's health insurance year starts on April 1.  The insurance company they were with last year raised their rates by 40%.  So they shopped around and got a better quote from a competing firm.  Or so they thought.

The competing firm had given a preliminary quote that amounted to a 4% increase.  But that was before Obamacare was passed.  By the time they signed all of the paperwork and sent the policy to underwriting Obamacare had passed.  Oops.  Underwriting came back with a 40% increase.

The LA Times is now reporting that this is about to become the norm.  Here's the money-shot (Anthem is a health insurance company that operates in California):
"The irony here is that it was the Anthem rate increase that breathed new life into the healthcare bill," said Jerry Flanagan, medical policy director of Consumer Watchdog, a longtime supporter of tougher premium regulation. "But there is nothing in this bill to guarantee that it doesn't happen again."
Several outlets have now picked up the doctor shortage story.  We were already short on primary care physicians.  We're putting tens of millions of people into their clinics, and the waits are going to get longer.

The political fall-out over this is going to get worse.  Hillary Clinton is now out-polling Obama.  Heck, Ron Paul is in a statistical tie with Obama.  Obama is a one-termer.  He will either lose the Democratic nomination or the general election.

But the political fall-out is minor compared to the social and financial fall-out.  40% increases in health-care premiums will steal a great deal of people's discretionary income.  That's going to slow down all other forms of spending and increase home foreclosures and personal bankruptcies.  All of that will impact hiring.  And the 40% rate hikes will slow down hiring, too.  So our nascent recovery is in real danger of stalling.

Let me be clear on this.  As a member of the unemployed and uninsured class--I would rather have a job than insurance.  If I had a job I could figure out a solution to the insurance problem.  But giving me insurance is making it much harder for me to find a job.


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