Saturday, November 9, 2013

Obama knows what's best for you, even if he doesn't understand economics

The President, appearing on NBC yesterday, "apologized" for his misleading claims about the consequences of the ACA. He didn't really apologize, rather he expressed sympathy for people who have had their health insurance plans cancelled, plans they actually wanted to keep and were told--by the President--they could keep. As bad as this is, the President said a couple of other things in the same interview that I think are even more troubling:
Keep in mind that most of the folks who are going to who got these cancellation letters, they'll be able to get better care at the same cost or cheaper in these new marketplaces because they'll have more choice, they'll have more competition. They're part of a bigger pool. Insurance companies are going to be hungry for their business.  
 So, the majority of folks will end up being better off. Of course, because the website's not working right, they don’t necessarily know it right [now].
Let's take the second part first, the bit about most people being better off, even if they don't realize it. The hubris of Obama is striking. He's saying that most people--or at least a majority of them--who have their policies cancelled will benefit from this, even if they think they won't. Obama knows better, he knows what makes people "better off," even if they are not smart enough to realize it, themselves. So, if your plan is cancelled, chances are the replacement one will be better, apparently even if it costs more, has a higher deductible, and/or forces you to get coverage you don't want (like, say, maternity coverage, even if you're a fifty-year-old man who has had a vasectomy).

Of course, in Obama's fantasyland--the one were economies function according to rules based on faulty premises and assumptions--this isn't going to happen, as the first part above makes clear. In Obama's fantasyland, the "new marketplaces" will over better plans for less money as a matter of course.

Why?

Obama imagines it is because there will be more competition and that fact alone will produce the benefits he is promising. But note the underlying reality Obama is either wholly ignorant of or is purposefully ignoring: in these new marketplaces, the plans being sold have to meet various requirements established by the ACA. These new requirements will necessarily drive up average costs. Additionally, the "bigger pool" Obama is counting on will be heavily displaced by people with pre-existing conditions, again driving up average costs.

Then there's the added bureaucracy and paperwork created by the ACA, both for insurers and healthcare providers, both of which will add to costs. Finally there is the cost of healthcare, proper. Nothing in the ACA will drive down actual healthcare costs; exactly the opposite. For instance, the ACA includes the infamous medical device tax and when this goes into effect, it will increase--not decrease--the actual cost of healthcare. That cost will have to be borne by someone and there's no reason to suppose it won't be passed on to the patients.

Really, the same lack of understanding (whether willful or not)--when it comes to economics--on display here is exactly what was behind Obama's previous promise to citizens that led to his "apology." Not only is Obama terribly wrong in all of this, he also has no learning curve to speak of, or simply feels he can mislead the public at will. Given how his sycophants in the media respond to most of his claims, I guess I can understand how he might come to believe the last: he lies because he knows he can get away with it.

But either way, it's a troubling thing, having a clueless President when it comes to economics, or having a President who is unconcerned with the truth. Perhaps it's a little of both.

Cheers, all.

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