What do Americans know about the purported 30 million uninsured that Obamacare is supposed to be helping?Nothing. There are no statistics as to the demographics of these uninsured, and the fact that these statistics are absent should be a source of concern to the Congressional Budget Office (CBO), the American people, and the lawmakers set to vote on the issue this Sunday.
Why are these statistics important?
The demographics of the uninsured are extremely important when calculating the cost and/or savings of the health care bill and the impact that the health care bill will have on the economy. The reason that they are so important is that the demographics of the insurance company's members pool will change as the result of new legislation in the bill.
The Demographics of the Uninsured
Without statistics as to the makeup of the uninsured it is necessary to speculate as to what the demographic makeup of the uninsured are. Common sense tells us that there will be a percentage of the uninsured that are uninsured because of the fact that they had preexisting conditions which barred them from getting insurance previously. Common sense also tells us that there will be a percentage of the uninsured because they were poor for quite some time, and that they likely will have a great deal of health issues which they will want to address once they are given insurance. Another percentage of the uninsured will be young people who are simply too poor to get insurance or are working at a job that does not offer insurance. Likewise, a percentage, perhaps smaller, of older people working in positions where they were not offered insurance will now receive insurance that was previously unavailable to them.
If we simply take these assumptions to be the demographics of the uninsured, then the health care reform bill looks to be a loser for the insurance industry and the American economy.
Without statistics as to the makeup of the uninsured it is necessary to speculate as to what the demographic makeup of the uninsured are. Common sense tells us that there will be a percentage of the uninsured that are uninsured because of the fact that they had preexisting conditions which barred them from getting insurance previously. Common sense also tells us that there will be a percentage of the uninsured because they were poor for quite some time, and that they likely will have a great deal of health issues which they will want to address once they are given insurance. Another percentage of the uninsured will be young people who are simply too poor to get insurance or are working at a job that does not offer insurance. Likewise, a percentage, perhaps smaller, of older people working in positions where they were not offered insurance will now receive insurance that was previously unavailable to them.
If we simply take these assumptions to be the demographics of the uninsured, then the health care reform bill looks to be a loser for the insurance industry and the American economy.
Changing the Member Pool's Demographics
Since the health care reform bill will require insurance companies to insure those with preexisting conditions the insurance companies will no longer be able to minimize the risk in their member pools. Higher risk in the member pools can be devastating to an insurance company's profits since the profits that an insurance company makes are derived from premiums that are paid to the insurance company that go unclaimed by members in the pool. For example, if 10 people are in a member pool and each of them pay $500 a month in insurance premiums, then the insurance company has a pot of $5,000 from which claims can be paid off of to the members in the member pool. Therefore, if 1 claim is raised by 1 member for that month at a cost of $2,500, then the insurance company pays that claim and either reinvest the remaining $2,500 into the pot to cover future claims, or, the insurance company takes $2,500 in gross profits.
The demographics of the the member pool is crucial in the sustainability of an insurance company. The member pool MUST consist of less bad bets than good bets and the premiums paid into the pool must be greater than awards paid out in claims from the pool. If the member pool does not meet these standards of makeup then the member pool will not be sustainable since it will likely incur more liabilities than revenues taken in. For example, in the same 10 member pool with the same premium payments if an additional member, or a combination of members, submits a claim(s) equal to or greater than $2,500 the insurance company will either make no profit or lose capital as a result of the member pool.
By changing the demographics of the insurance company's member pool and therefore increasing the risk of insolvency within these member pools, insurance company's will have a difficult time staying in business. The reason that insurance company's will have a difficult time staying in business is either they will be unable to make money or they will go bankrupt.
Though some might say that the added uninsured into the pool will balance out the risk for the insurance companies, this can not be said with any level of certainty. For this reason, the CBO projections must be taken to be what they are, political numbers that are simply projections based in theory and not in fact; unless, they have the demographics of the uninsured which I have not yet seen.
Taking the assumptions to the demographic makeup pf the uninsured which were outlined previously, 3 out of 4 new uninsured members introduced to the member pools will have immediate and, likely, costly health care needs that will drain the members pool of capital. Moreover, the younger uninsured, though they are less likely to have critical diseases which will require extended stays in the hospital, are not completely devoid of their own respective risk even though they are a safer bet that insurance companies would likely have taken absent of any health care reform.
What Are Insurance Company's To Do Following Passage of Health Care Reform?
So, with an influx of higher risk individuals and greater risk of increased claims brought by previously uninsured individuals in member pools, insurance company's will either have to offset the cost of these new risks by increasing premiums or risk failure at every turn. The former would be the logical choice, however legislation aims to hamper insurance company's ability to do so, at least that is how I read the numbers coming out of the CBO and the claims coming out of the legislator's offices. Therefore, insurance company's will have to make the difficult choice of whether or not the risk is worth the reward. If it turns out that the insurance company's do not find that the risk is worth the reward, then insurance company's will abandon the health insurance market leaving either only an elite few insurance companies that will control the market and severely limit the public's choice of health insurance company's (like cable providers), or, insurance company's will abandon the health insurance market altogether and the government will become the only option available to the public. Both scenarios are detrimental to the public good, and not only from a health insurance standpoint.1/6th of the American Economy
One-sixth of the American economy is attributable to health care goods and services. If the government imposes power over this portion of the economy, then the American economy will be in dire straits. The government is, or at least it is supposed to be, a non-profit organization. The only source of revenue for the government comes in the form of taxes. If the government takes control of one-sixth of the American economy, then the U.S. government will have liabilities equal to the cost of operating one-sixth of the economy since the government will have to pay for all of the health insurance cost of some, and most for the remainder. Furthermore, the U.S. government will automatically take in less revenue than is required since the government will be mandated to insure, at the government's expense, individuals who are unable to pay for their own health insurance. This scenario is not sustainable for the American government. If a government takeover of health care did occur, then the government would inevitably have to cut spending and reduce funding for the uninsured (ration care or abandon the purported purpose of the bill), or, raise taxes (unfunded tax liabilities once again placed on the backs of the American people/dual taxation) in order to make up the difference - most likely it would be a combination of the two. However, other options do exist 1) the government abandons its mandates 2) the government charges higher premiums than the private sector would have under similar conditions since it has higher overhead than the insurance companies would have.
What it all boils down to is, the government will likely run insurance companies out of the industry and then the American people will be in a worse position than they were in before the government stepped in. No surprise, right? Well, unfortunately it will be worse than anything Americans will be able to fix. A blow to one-sixth of the economy would be devastating to the country, and a ripple effect would spread throughout other parts of the economy as well - simply check any major stock market on Friday and you will see what the markets did in anticipation of the passage of this bill. The effects of crippling one-sixth of the economy would certainly have a similar or greater impact on Americans than the recent housing market crash. At the very least, it would send the American economy into a recession equal to that of recent years, and the prospect of such an event is terrifying to say the least; especially if it begins immediately after the bill is passed.
If the passage of the bill causes there to be a double dip in the stock market sending the American economy further into recession, then don't expect people to wait for November to throw the House, Senate, and the President out of office. No political leader will be safe if such an event occurs, and early indications are that the passage of health care reform will do just that, or, at the very least, stave off recovery. The arrogance and ignorance of the Democratic leadership and the Obama administration seem either blind to the will of the American people and the impending backlash that will occur, or, it is just like they are saying, that they will pass it because they think it is the right thing to do and fuck every one else. Me, I'm stuck for a particular analogy that would adequately convey my feelings but I feel like a guy in the crowd who is yelling "NO!" along with the rest of the HUGE crowd as some moron goes to push the nuke button, in slow motion, just to see what it does.
One-sixth of the American economy is attributable to health care goods and services. If the government imposes power over this portion of the economy, then the American economy will be in dire straits. The government is, or at least it is supposed to be, a non-profit organization. The only source of revenue for the government comes in the form of taxes. If the government takes control of one-sixth of the American economy, then the U.S. government will have liabilities equal to the cost of operating one-sixth of the economy since the government will have to pay for all of the health insurance cost of some, and most for the remainder. Furthermore, the U.S. government will automatically take in less revenue than is required since the government will be mandated to insure, at the government's expense, individuals who are unable to pay for their own health insurance. This scenario is not sustainable for the American government. If a government takeover of health care did occur, then the government would inevitably have to cut spending and reduce funding for the uninsured (ration care or abandon the purported purpose of the bill), or, raise taxes (unfunded tax liabilities once again placed on the backs of the American people/dual taxation) in order to make up the difference - most likely it would be a combination of the two. However, other options do exist 1) the government abandons its mandates 2) the government charges higher premiums than the private sector would have under similar conditions since it has higher overhead than the insurance companies would have.
What it all boils down to is, the government will likely run insurance companies out of the industry and then the American people will be in a worse position than they were in before the government stepped in. No surprise, right? Well, unfortunately it will be worse than anything Americans will be able to fix. A blow to one-sixth of the economy would be devastating to the country, and a ripple effect would spread throughout other parts of the economy as well - simply check any major stock market on Friday and you will see what the markets did in anticipation of the passage of this bill. The effects of crippling one-sixth of the economy would certainly have a similar or greater impact on Americans than the recent housing market crash. At the very least, it would send the American economy into a recession equal to that of recent years, and the prospect of such an event is terrifying to say the least; especially if it begins immediately after the bill is passed.
If the passage of the bill causes there to be a double dip in the stock market sending the American economy further into recession, then don't expect people to wait for November to throw the House, Senate, and the President out of office. No political leader will be safe if such an event occurs, and early indications are that the passage of health care reform will do just that, or, at the very least, stave off recovery. The arrogance and ignorance of the Democratic leadership and the Obama administration seem either blind to the will of the American people and the impending backlash that will occur, or, it is just like they are saying, that they will pass it because they think it is the right thing to do and fuck every one else. Me, I'm stuck for a particular analogy that would adequately convey my feelings but I feel like a guy in the crowd who is yelling "NO!" along with the rest of the HUGE crowd as some moron goes to push the nuke button, in slow motion, just to see what it does.
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