(Welcome to a new front page contributor Chip Jones. – promoted by Rob “EaBo Clipper” Eno)
As the sun has set on the day when the President announced to the press that he’d postpone the implementation of the Affordable Care Act, allowing insurance companies to offer the old plans, troubling realities are surfacing.
The problem with this over simplified statement is that it is burdened by the influence of cost at both the front (staying on your existing plan for this year) and the back (when you transition to the new ACA plans in a year.).
What we first have to acknowledge is that the pricing of insurance is not affected like the pricing of a ham sandwich or a gallon of gasoline at the pumps. Let’s look at retail gasoline as an example. One of the author’s good friends owns a “petroleum distribution company”. In simple terms, he owns a company that delivers heating oil, propane gas, and operates two gas stations. For the sake of simplicity, let’s look at the retail price of a gallon of the gas he sells. The pricing decision is quite simple. On the screen of his computer, overlooking the scenic gas pump island of his original station, is the website that reports the “spot price” of gasoline he purchases at the wholesaler in Chelsea, MA. To this price, he simply adds the cost of taxation that government places on a gallon of gas, plus a figure (measured in pennies, not dollars, folks) that represent his cost to deliver it to your tank (shipping, running the station, etc.). Quite simple math…add the price you pay for it to the cost of delivering it and you come up with the price at which he breaks even. To this he adds a couple cents so he makes a few bucks at the end of the month. Not a difficult pricing decision for him.
Now let’s look at the insurance industry. The pricing of insurance is more complicated. There is not a wholesale purchase price to which reselling prices and profit can be added. In fact, actuaries and underwriters have to form what is an educated guess of what insurance payment will be to providers over a wide spectrum of patients and based on what services the insurance coverage offers. Can you even begin to fathom what the addition of dental coverage would be if the two age groups most likely to use it, teenagers with braces and the elderly with dentures, were factored in? And then, objectively, decide the ramifications of underestimating those costs because the “insurance marketplace” changed due to a cumbersome federal law that requires certain services be afforded everyone.
Do any of the readers really think that those dentures and braces, when paid for, wouldn’t threaten the very existence of a person’s coverage? Do any of the readers, when they look at it from this optic, think that underwriting mistakes don’t threaten the very existence of certain coverages and certain insurance companies? What then does the unfortunate person do who has had no need for dentures, but is receiving treatment for liver cancer? Pay for that treatment out of pocket when the insurance company goes “belly up”? Not likely. The insurance company and the cancer patient go to “the dirt hotel”.
You see, based on the complicated and costly way insurance companies have to assess their costs and set their rates, and given the fact that the ACA has added more required coverages and decreased the ability of plans to offer differing plans to people who are willing to assume different levels of personal risk, no previous coverage exists, because they never costed it out. ObamaCare, by its very nature as a list of government mandates, that create real world costs made the policies of the year previous extinct….non-existent.
And a President who stands at a podium and assures people he will “allow” insurance companies to see to citizens what they don’t even have, is either born of sheer ignorance of how insurance works (meaning you have no right to regulate it) or you are simply lying.
So, today, what we really have is a President who likely told a “bigger lie”, “Based on ‘administrative measures I’ve put in place, insurance companies can now sell you your old coverage.” to cover for his original lie, “If you like your coverage, you can keep your coverage.
But going back to the “parable of the cancer patient” who didn’t need dentures, but needs chemo and radiation to save his very life, can you hear the true whopper roll of this Presidents lips?
“If you like your life, you can keep it.”
As posted at: http://conservativereport.org/…