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MUST-READ: Why Obama’s health care plan is just wealth redistribution

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Story from the Wall Street Journal.

Excerpt:

President Obama proposes to require insurers to sell policies to everyone no matter what their health status. By itself this requirement, called “guaranteed issue,” would just mean that insurers would charge predictably sick people the extremely high insurance premiums that reflect their future expected costs. But if Congress adds another requirement, called “community rating,” insurers’ ability to charge higher premiums for higher risks will be sharply limited.

Like the homeowner who waits until his house is on fire to buy insurance, younger, poorer, healthier workers will rationally choose to avoid paying high premiums now to subsidize insurance for someone else. After all, they can always get a policy if they get sick.

To avoid this outcome, most congressional Democrats and some Republicans would combine guaranteed issue and community rating with the requirement that all workers buy health insurance—that is, an “individual mandate.” This solves the incentive problem, and guarantees that both the healthy poor 25-year-old and the sick higher-income 55-year-old have heath insurance.

But the combination of a guaranteed issue, community rating and an individual mandate means that younger, healthier, lower-income earners would be forced to subsidize older, sicker, higher-income earners. And because these subsidies are buried within health-insurance premiums, the massive income redistribution is hidden from public view and not debated.

If Congress goes down this road, health insurance premiums will increase dramatically for the overwhelming majority of people.

This is the best explanation of what is really at stake if Obama’s socialized medicine plan passes. Please read it.

What no one realizes is that when one group is funding the lifestyle choices of another group, they stop producing wealth. Maybe they just retire, or maybe they move to another country. But the result is the same: economic growth is stifled and unemployment goes through the roof. These are the unintended consequences of the policies of well-meaning but naive socialists.

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If government can’t fix health care, then who can?

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Story from the New York Post. (H/T Right Klik via Neil Simpson)

Excerpt:

The state is trying to shut down a New York City doctor’s ambitious plan to treat uninsured patients for around $1,000 a year.

Dr. John Muney offers his patients everything from mammograms to mole removal at his AMG Medical Group clinics, which operate in all five boroughs.

“I’m trying to help uninsured people here,” he said.

His patients agree to pay $79 a month for a year in return for unlimited office visits with a $10 co-pay.

[His] plan landed him in the crosshairs of the state Insurance Department, which ordered him to drop his fixed-rate plan – which it claims is equivalent to an insurance policy.

He says he can afford to charge such a small amount because he doesn’t have to process mountains of paperwork and spend hours on billing.

“If they leave me alone, I can serve thousands of patients,” he said.

Government doesn’t like it when private businesses solve problems. Government only wants solutions they can control and regulate. After all, if there is no (government-caused) health care crisis, then these commies would be out of a job. They have to cause the crisis and then market themselves as the only solution.

Right Klik also has a handy list of the problems caused by government.

* “Community Rating” laws, which limit insurers’ ability to charge different prices to different customers, raise prices by 20.3% for individual policies and 27.3% for family policies

* Mandated benefits raise the expected price of an individual policy by approximately 0.4% per mandate. For family policies the increase is approximately 0.5% per mandate. The typical state has about 20 mandates (with a range from 6 to 48) so a reduction from 20 to 10 mandates would imply a 4% decrease in price for individual policies, and a 5% decrease for family policies.

* “Any-Willing-Provider” laws, which limit insurers’ ability to exclude hospitals and doctors from their networks, raise prices by 1.5% for individual policies and 5.3% for family policies.

* Federal law places limits on the discounts employers and insurance companies can provide for healthy, cost-saving behaviors.

* Twelve million Americans go without health insurance because the Federal Government does not allow people to purchase insurance across state lines.

The way insurance works is that people need to pay premiums that take into account the likelihood that they will make claims. The people who make a lot of claims need to pay more. This is what encourages people to take fewer risks and keep costs down. When government gets involved to equalize outcomes regardless of risks, then there is no incentive to live responsibly. The result is a shortage caused by high demand for medical care, and low supply.

How about we just let the free market work instead?