Friday, November 9, 2012

6 Reasons Why ObamaCare Won't Survive

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The media commentators all agree on one thing: The re-election of Barack Obama guaranteed that his signature piece of legislation -- ObamaCare -- is now likely to go forward.

However, there is a silver lining that no one is talking about. There are 6 major flaws in the legislation that are so serious that Congress -- both Democrats and Republicans -- will be forced to face them, whether they want to or not.

  1. ObamaCare is not paid for. At least not in any politically realistic way.

  2. ObamaCare promiases what it cannot deliver. In order for the country as a whole to get more medical care, there must be more doctors and nurses and hospital personnel - something that ObamaCare does not create.

  3. ObamaCare mandates and subsidies will destabilize entire sectors of the economy. We could see entire firms dissolve and re-combine, just in response to health insurance subsidies, rather than based on economic considerations.

  4. ObamaCare creates perverse incentives that threaten the quality of care. Within the newly created health insurance exchanges, insurers will profit from healthy enrollees and incur losses on the less healthy.

  5. A weakly enforced mandate will undermine the health insurance marketplace. The fine for being uninsured will be small, relative to the cost of insurance. And there is not much the IRS can do to people who ignore the mandate, other than withhold refund checks.

  6. A strongly enforced mandate will strain almost every family budget. If we are required to buy coverage and denied the right to scale back benefits, chose higher deductibles, etc., health insurance premiums will crowd out more and more of the average family's budget.

So, when the doctors stop seeing senior patients, when the hospitals leave the market (as one in seven will in the next eight years, according to the Medicare Actuary) and when the insurance plans cut back on the benefits they are providing, there will be enormous pressure on Congress to reverse all of this. And most inside-the-Beltway folks are firmly convinced they will be reversed.

As always, thank you for your continued readership and support!

Richard Walker
Chief Operating Officer

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  1. Obamacare promises to make health care affordable. The risk factors associated with the policyholder are equally distributed so as to bring uniformity in the health care costs. I somewhat agree that the incentive for the health insurers will now be diverted, and instead of quality, the focus will now be more on quantity. However, Obamacare has brought about significant changes. The provision to let the young adults stay insured under their parent’s policy till the age of 26 is appreciable. In fact, it has actually brought out positive results in the industry, since more and more young adults can now stay covered. Nevertheless, President Obama might have to give up the expansion plans for Obamacare, due to the stringent financial budget.

  2. I love to learning more on this topic if possible, as you gain expertise, will you update your blog with more information?