Nobamacare

The repeal or gutting of Obamacare is apparently back on the table.

This US system of so-called health insurance is a joke. The principle behind all insurance is that you pay the statistical or actuarial cost of your protection, based on your personal risk exposure. To over-simplify, the idea is that you can afford to pay 1% of the cost of a condition that you have a 1% chance of getting, and if your number comes up, the insurance company can afford to cover your costs because of the 99 other people paying, who don’t get the condition.

In the case of health “insurance”, this simply doesn’t work for everyone because many people can’t afford to pay, especially those with known conditions. So they are denied coverage, either explicitly, at any price, or implicitly by prohibitive premiums.

Many countries simply say, well that’s no good, so we’ll throw out the insurance model and simply pay for everyone’s healthcare out of tax revenues. This is better than one might think because getting rid of the insurance companies saves enormous amounts of money, and controlling the pay of health care providers saves even more.

Obamacare took a different tack, which was to say we’ll keep the insurance model but make healthy pay insurance premiums which are much higher than their risk to subside the cost of care for the sick. In effect, this gave the worst of both worlds – a tax paid to the “insurers”  and out-of-control costs of care. The insurers liked this because they could charge what they liked, the providers loved it because the insurers had no motive to control costs.

Unfortunately for this model, a loophole was left where healthy people could pay a relatively small penalty and avoid paying the “tax” – excessive premiums. So they did. and the insurers were left with a client base of sick people who could not afford to pay the cost of their care. In order to avoid complete collapse, President Obama took the profits from Fannie Mae and other government lenders and funneled them to the insurance companies as a sub-rosa subsidy. President Trump can stop this with a stroke of his pen.

Personally, I think we should get rid of the insurance companies and fall in line with everyone else. This is not likely to happen, because the insurers and the providers will bribe Congress to continue their largesse.

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