FT188: “When it comes to Obamacare the left is either ignorant or devious.” —Old Pithy

Posted by PITHOCRATES - September 20th, 2013

Fundamental Truth

People buy Insurance to pay a Small Fee to Insure against a Large and Unexpected Financial Loss

What is insurance for?  To help mitigate a large financial loss.  Crossing the ocean can be dangerous.  There are storms.  Wars.  Even pirates.  Shippers can lose very costly cargoes.  Most ships make it to their destination without incident.  Wise people noted this a long time ago.  And they came up with an idea.  Insurance.

Let’s illustrate this with an example.  Let’s say there are 100 ocean crossings in one year.  Each one of these crossings has cargo valued at $10 million each.  Let’s say of those 100 crossings only three sink.  A loss of $30 million.  A loss few can afford.  But there are only three ships that sink.  And at the beginning of the year no one knows whose ships will sink.  It could be anyone.  And everyone of the anyone has a very strong desire not to be the one losing a ship with a $10 million cargo.  So they are willing to pay a small fee to insure against a greater loss.

Here’s a general idea of how it works.  With 100 crossings valued at $10 million each that’s $1 trillion in total cargo.  Of that $1 trillion there’s a very good chance based on past history that $30 million of it will sink to the bottom of the ocean.  So if we divide that catastrophic loss by those 100 crossings that’s an additional $300,000 insurance cost to add to each of the 100 crossings.  So instead of a possible loss of $10 million a shipper will only have a definite ‘loss’ of $300,000.  Which is far less than $10 million.  And something they can plan for.  As they can add it to the price to their customers.

People don’t buy Health Insurance because a Larger Percentage of the Population doesn’t get Cancer or have Bad Car Accidents

Because of insurance none of these shippers will have to suffer a $10 million loss should it be their ship that sinks to the bottom of the ocean.  This is insurance.  Everyone pays a small fee to protect themselves from a great financial loss.  And that fee is far, far smaller than that potential financial loss.  This is the only way great things get done.  Great things require huge outlays of money.  And no one would risk those outlays if they didn’t have a way to mitigate their losses should their ship sink.  Literally.  Or figuratively.

This is insurance.  Paying a small fee to insure against an unexpected and catastrophic financial loss.  Health insurance today doesn’t do this.  It pays for everything.  Including the routine things we know about and can budget for.  Things that are unlikely to bankrupt us.  Office visits.  Flu shots.  Physicals.  Breast exams.  Colonoscopies.  These are all part of living.  We know we will have these expenses.  Just as we know we have to buy groceries and gasoline.  But there is no grocery and gasoline insurance.  And thank God for that.  They’re expensive enough.  Can you imagine their costs if they went up like health insurance?

The reason why health insurance is so expensive is because it is not insurance.  It doesn’t just pay for the unexpected and catastrophic financial losses.  Like incurred from a cancer diagnosis.  Or a car accident.  It pays for everything.  In our shipping example that would be like those shippers paying a $10 million insurance premium to insure a $10 million cargo.  Which would never happen.  Because it would be less costly to lose the occasional cargo.  Because every ship doesn’t sink.  At most three may in one year.  Even if all three ships were yours it would be cheaper to replace $30 million in cargo than paying $1 billion in insurance premiums.  This is why a lot of people choose NOT to buy health insurance.  Because a larger percentage of the population doesn’t get cancer or have bad car accidents.

The Left learned after the 1994 Mid-Term Elections that they had to Lie to get National Health Care

Obamacare just makes everything worse.  Because it forces insurance companies to pay for even more routine and expected medical expenses.  Increasing the cost of health insurance even more.  Which in turn increases the cost of business.  Which provides most health insurance these days as an employee benefit.  With Obamacare mandates to provide more of everything the cost has grown so much that businesses have been dropping their health insurance benefits.  Or cutting back hours to escape the Obamacare mandates.  Making Obamacare a big part of the anemic economy.  For it is a great disincentive to creating jobs.  And hiring people.

Now, anyone with a rudimentary understanding of economics knows this.  If you keep raising the cost of business you will see less economic activity.  The left understands this when it comes to interest rates.  It’s why they want to keep printing money to keep interest rates low.  To lower the cost of borrowing so businesses borrow more to expand their businesses.  So they do understand at least one cost of doing business.  But they seem to be completely ignorant when it comes to taxes and regulatory compliance.  For while they worry about rising interest rates hurting business they don’t have any concern about rising taxes or regulatory compliance costs.  Why?

Because they are truly ignorant?  If so they shouldn’t be anywhere near the economy.  Or they are devious?  And lying through their teeth to deceive the American public to get something they want?  Well, they may be ignorant.  But the smart money is on devious.  For the left has always wanted national health care.  But the people don’t.  When President Clinton tried it he lost the House in the 1994 midterm election.  And the left learned a lesson.  To get national health care they had to lie to the people.  Which is what Obamacare is.  A big lie.  It will do nothing President Obama said it would do.  All it will do is destroy the private health insurance industry by placing regulatory compliance costs on businesses and the private health insurance industry that will simply put the private health insurance business out of business.  As we are seeing.  Leaving uninsured people that the government must step in to insure.  And once they do they’ve got their national health care.  While giving the American people the middle finger.  “Say no to our national health care?” they’ll say.  “Well, [deleted expletive] you.”  They will say this figuratively, of course, with their actions.  For they will never let go of the lie that Obamacare is about lowering costs and insuring the uninsured.  And not the truth that it is nothing but a means to advance their agenda.

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Obamacare: Stupid or Devious?

Posted by PITHOCRATES - October 1st, 2010

The passage of Obamacare is cutting quite the swath of destruction in its path.  Businesses had to book million dollar charges to comply with the new legislation.  The requirement to insure children with preexisting conditions has caused insurance companies to drop plans for children.  (Not because they are ogres.  But because no one will buy insurance for their kid until they’re sick or injured.  So the cost of these plans will have to equal the actual medical costs.  So what’s the point?  If you’re paying actual costs just pay them directly to the health care provider.  And cut out the middleman.)  And now McDonald’s may drop their mini-med plans.  Because these low-premium policies have the same overhead as comprehensive plans.  Which means they spend more of the premium on overhead costs (as a percentage) than the big comprehensive plans.  So they can’t meet the required medical-loss ratio (the percent of premiums they must spend on actual health care benefits).

The idea was to prevent the ‘evil’ health insurance companies from paying huge bonuses to their people to keep costs down.  But bonuses are the least of their cost worries.  The Obamacare mandate to cover an additional 32 million people is a much bigger cost worry.  Especially when there is no cap on benefits and they’re required to cover all preexisting conditions.  And you know what?  It can’t be done. 

Oh, there will be a doctor shortage, too.  Especially when we add another 36 million or so to the Medicare program.  (If you’re doing the math, that’s an additional 68 million new patients that will need doctors.  Can you say rationing and ‘death panels’?  Someone will have to decide how to use these limited resources.  Replace the hip of an 89 year old grandmother?  Or do the appendectomy on the 21 year old man?)

Obamacare is a train wreck.  You have to ask yourself how did they make such a mess of it.  Well, there are two possible answers.  Either they’re just stupid and these are all unintended consequences.  Or this was the plan all along to kill the private health insurance industry.  So the devious bastards could get their public option/national health care they’ve wanted all along.

You can read McDonald’s May Drop Health Plan by Janet Adamy on the Wall Street Journal on line for more detail.  McDonald’s has denied this, however.  You can read the AP’s Health care law may hamper limited insurance plans by Tom Murphy on Yahoo! Finance for their denial.  Whether or not McDonald’s is considering dropping their mini-med plans (unless they get their exemption) doesn’t change the fate of these mini-med plans under Obamacare.  Those mandated medical-loss ratios could push these very popular plans into extinction.

Lying or stupid.  Either way it’s bad for us.

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