Free Lunch!

The Obama administration is in full campaign mode with the PPACA.  They have put together a web site that sings the praises of "Obamacare".  It is a perfect example of what is wrong with this legislation.

Climb aboard and enjoy the ride!

See the web site here: This Is Obamacare.

Read it carefully.  Marvel at the "benefits". Forget about who might pay the bill. Forget that anyone even has to pay the bill.  It's a great web site.  Kudos to the people who built it.

The trouble is that there is a bill, and it's huge. None of this comes for free.  Every benefit comes at someone's cost. For each of these benefits, there is a price, not always measured in dollars.

As glossy marketing material, this is slick, but scratch the surface, and it is revealed as a serious problem, raising costs, restricting choice, and interfering in medical care.  The word "disaster" is not an exaggeration.

The web site makes 6 claims. Let me walk through them, and add my comments on each:

This Is Obamacare:Affordable, accessible care for every American.Scroll down to see Obamacare in action.

"Obamacare in action" is a web site?? I wish it were so.

Nearly half of Americans who have individual insurance plans will receive assistance averaging $2,672 to purchase plans on the Obamacare marketplace.

The PPACA was supposed to save money. Claiming that billions of dollars will be spent on subsidies hardly sounds like a selling point, especially since a critical source of data - mandatory reporting by employers - has been delayed until 2015. The delay of the employer mandate means that the IRS will be "flying blind" on who will be eligible for these subsides. Claiming subsidies will be on the "honor system". I think it is possible that there may be some fraud in this program.  I'm reminded of the old joke: "Will the person who lost a $20 bill please get in line."

Fraud aside, every million people who get these subsidies will cost other taxpayers $2.7 billion dollars. Like all subsidies, the benefits to the taxpayer are questionable, and the costs are very real. Score one for those who like to pass out money and buy votes. Taxpayers foot this bill.

In insurance, this is called "guaranteed issue". Insurance is a contract to assume risk. "No pre-existing conditions" is the moral equivalent of forcing fire insurance companies to issue policies after the fire has started.  It's nice for the guy with the fire. Not good for the insurance companies. It makes people who buy insurance before the fire into fools, because there is no penalty for not having insurance. With guaranteed issue in place, only the sick will buy insurance, and premiums will soon be spectacular. It's called adverse selection. (also here) The "mandate" will not drive people to sign up, because the "penalty" is small versus the cost of insurance. Taxpayers and insurance customers pay this bill.

Requires insurance companies to spend 80% of premium dollars on health care. If they don't, they'll be forced to give consumers a refund to make up the difference.

Arbitrary and illogical mandates cause arbitrary and illogical results. There are many ways to meet this sort of mandate, none of them sensible.  Companies can re-classify their spending as "health care".  Who's to say it's not? This will give auditors lots of work to do. Another tactic would be to scrimp on "overhead".  Administration, fraud detection and customer service are all mighty important, but they are also "overhead".  Welcome to poorly managed payment processing, rip-offs and phone mazes.

Taxpayers, ratepayers and those who depend on insurance pay this bill. With incentives in place to fudge accounting, welcome to the corruption of insurance accounting.

Allows young adults to stay on their parents' health insurance until they're 26 years old.

Let's translate: Everyone else pays for your children until age 26. Some call this the "Slacker Mandate". The PPACA makes it illegal to offer an insurance policy that does not include "extended childhood". Insurance premiums will obviously rise, and "children" will have no reason to get their own insurance until age 27. So much for personal responsibility. So much for being able to buy just the insurance you need.  Couple it with adverse selection, and make a guess how people are likely to behave. Ratepayers pay this bill.

Gives tax credits to small business owners so they can afford to offer quality health care to their employees.

The PPACA will drive costs up, causing.  Here is another group shielded from the true cost of the PPACA. Yet another problem with it papered over with tax money.

Individuals get subsidies.  Businesses get subsidies. Yet there are still massive problems with the incentives.

Taxpayers and employees pay this bill.

Ends lifetime insurance caps and protects families from going bankrupt just because they get sick.

Force insurance companies to pay unlimited costs. Raise premiums again. Remove any spending discipline that might remain.  It would be nice if doctors, hospitals, and money were unlimited, but they aren't. A doctor can only be in one place at a time, and there are only so many doctors.  It is foolish to pretend that there are no limits.

The emotional hook is that "getting sick" should be made painless with insurance, but we know it's not true. If you have a serious illness, who will run your business?  Who will care for your children?  Does anyone seriously think that the hospital bill is the only serious concern for people who might die from an illness? Score one for politicians selling snake oil with other people's money.

After each of these claims there is a refrain:

And Republicans voted more than 40 times to take it away

It's been called a Train Wreck for a reason. This is the only good news on the web site. 

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I see a simple story above. "Free Lunch!"  Come and get it!  Vote for me, and these goodies are yours.  Ignore the costs.  Ignore the incentives and unintended consequences created by these policies. "Someone else" will pay. You will benefit.

The American people will learn very soon how damaging this law is. Simple minded propaganda like this web site should be greeted with the scorn that it deserves.