#Obamacare: more proof that liberals don’t “get” economics

Posted by: Phineas on April 22, 2014 at 2:30 pm

**Posted by Phineas

Obama loan officer at work

Obamacare insurance commissioner

Sometimes I think one of the greatest acts of charity I could perform would be to buy progressives each a copy of Thomas Sowell’s “Basic Economics: A Common Sense Guide to the Economy,” because they clearly were not paying attention in high school or college:

The practice of offering relatively inexpensive health plans with bare-bones provider networks has created tension between making health care affordable and keeping it accessible. It’s set to come to a head this week in Olympia.

The growth of “narrow networks” in Washington comes as the Affordable Care Act limits the ability of insurance companies to control their costs. That’s made it harder to offer plans at a range of prices — something the companies want to do as they compete for comparison shoppers on the health exchanges.

Many companies figured out they could sell cheaper plans that offer consumers fewer choices of where to get care. That caught some consumers, and Washington’s insurance commissioner, by surprise.

Commissioner Mike Kreidler says companies need to justify those narrow networks.

Mr. Kreidler wants insurance companies to prove they need to narrow their networks; after all, under Obamacare, they’re not really allowed to run their own businesses anymore. So he’s proposing new rules, regulations, and reporting requirements that have even the people running Washington’s exchange screaming that this will increase costs to the consumer and hinder companies from providing effective service. Kreidler, however, like many other fans of bureaucracy, just doesn’t get it:

Kreidler says he doesn’t believe prices will increase. He sees himself as walking a fine line, but with his compass oriented decidedly toward the consumer.

“Oriented” like a missile aimed straight at their wallets, he means.

Moe Lane provides a succinct explanation of why, to put it kindly, Mr. Kreidler’s belief is… “ignorant:”

There are three major elements to healthcare plan decisions:

  • Cost: How much does it cost per month or year, just to have it?
  • Deductible: How much does the consumer have to kick in for any given procedure?
  • Network: Who is willing to take you on as a patient, if you use that plan?

With me so far?  Good.  What Obamacare does is turn all of this into a zero-sum game: it mandates an across-the-board, let’s-slap-something-together, we-don’t-care-about-your-stinking-special-circumstances product and doesn’t really care how insurers and consumers cope with the situation.  So the insurers are left with a quandary: if they want to keep the networks intact, thanks to the various mandated procedures and general bureaucratic detritus either the total cost will go up, individual plan deductibles will, or both. And the same is true for the other two categories: push one down and the other two rise. All the good intentions in the world will not alter this calculation.

To use another example, the three legs of Obamacare mentioned above are like a balloon: squeeze one portion, and another must expand. It’s a law of physics, just as the cost to do business and the consequent price of insurance policies are subject to immutable laws of economics.

But technocrats like Mike Kreidler think they can control complex economies with a flourish of their pen, without there being any consequences for others. Perhaps along with a good book on economics, he should learn a lesson in humility and study the parable of King Canute.

Meanwhile, Washington voters should think of Mr. Kreidler and his “compass” as their premiums go up. They elected him with 58% of the vote in 2012; 2016 would be a good time to undo that mistake.

(Crossposted at Public Secrets)

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4 Responses to “#Obamacare: more proof that liberals don’t “get” economics”


  1. Carlos says:

    Obviously, Mr. Kreidler’s Econ 101 prof was Nazi Pelousy.

  2. Drew the Infidel says:

    Abraham Lincoln said it best: “What is conservatism? Is it not adherence to the old and tried, against the new and untried?”

    “Hope and “change” do not constitute solid plans. You can hope in one hand and sh*t in the other and see which one gets full the fastest, can’t you?

  3. Tuerqas says:

    Kreider: “No, no, no, you guys don’t get it. Everyone in the healthcare industry and the insurance business that is over paid will just get less money, see? That simple. In the balloon analogy, I am just pricking a small hole in the balloon, totally controlled, you understand, like Barney Frank and the housing market.”

    It reminds me of: ‘Now Sir Galahad, Lancelot, and I will jump out of the rabbit, taking the French completely by surprise…oh, hmmm, perhaps if built a giant wooden badger!’

  4. bobmontgomery says:

    Why do we have to keep bringing up all that faults and flaws and “this isn’t working because” arguments and turn this thing into a big debating society topic, or something just to keep us constantly irritated, when the fact of the matter is, the concepts of risk, and actuarial tables and the whole gamut of the insurance business, has been blown to smithereens. As has the concept of private contracts. There is no such thing anymore. When you are forced to pay for something that has already occurred, like a physical condition, then it is not insurance, period. And when you cannot enter into an agreement with a provider network and your insurance company to take care of your personal health care needs, but are forced to buy what is now essentially a government product, the concept of the marketplace is obliterated. It is only a matter of time until all business in the US will be federally regulated.
    Unless and until the individual States take back what is rightfully theirs.