One possible outcome of the Obamacare ruling is particularly worrisome – finding only the individual mandate unconstitutional, but not why you think.
Tomorrow morning every news agency, media outlet, pundit and analyst will be eagerly awaiting the Supreme Court ruling on Obamacare. While I sincerely hope that the whole thing is turned into a 2,700 page footnote in history, I am concerned that what will survive will lead to a socialist healthcare system in America because healthcare insurance companies (payers) will no longer be able to function.
If only the individual mandate is struck down, but the remaining provisions left in-tact, insurance companies will be forced to seek those costs from the few non-pre-existing customers left – us. Our premiums will “necessarily skyrocket” to cover the costs associated with those regulations. Here’s how it works:
The requirement that insurers must offer coverage to those with pre-existing conditions at a “fair price” means people no longer have to need to carry insurance while they are healthy. They only need purchase it when they get cancer, get really hurt in a car accident, fall off a ladder or whatever. Then they can just jump on to our health plan at near the costs the rest of us pay. So they magically get $10,000 or more in urgent care, critical care, surgery, x-rays, MRIs, CAT scans, hospital stay, post-care and more while having paid only one month’s premiums into the risk pool. Where does the rest of those tens of thousands of dollars come from? Easy – the rest of the middle class who has been dutifully over-paying for too much coverage so that Freddie Freeloader can then drop his coverage after he’s healed up from his drunken-binge car wreck.
Why would anyone carry coverage until they get really sick or hurt? Just pay doctor’s visits out of pocket until you get really sick or hurt, then just jump on a plan for a few months until you’re better then leave. As this behavior increases so will premiums – the money has to come from somewhere. In time, no one will keep insurance long-term which will precipitate the demise of insurance payers – at least in their current form.
Most middle and low-income earners don’t treat healthcare like a responsibility. They don’t put away for future expenses like they do for college or retirement because insurers do that for them. The next logical step for insurance companies will likely turn their worlds upside-down – payers won’t be paying first anymore.
I would expect that payers will go to only high-deductible plans. They will exist in tiers so that the higher your deductible, the smaller your premium. This might allow them to charge incredible premiums for low-deductible plans so that even those with pre-exiting conditions have to pay the initial five, six, ten or twenty thousand dollars of expenses out of their own pockets before the payer starts kicking in.
Employers may choose to no longer provide coverage as the premium increases make it impossible for them to operate their businesses. Americans will have to provide for themselves. The noise from the electorate will increase in volume demanding that something be done about the insurance company profits and Congress will swoop in to rescue them. Voila – single payer, government-provided health care is born at the demand of the American people.
This was the intent of the law from its inception. Kill the payers, enrage the voters, become the only answer to a problem Congress created. The Supreme Court may just speed up what was the ultimate goal.