The news you're not supposed to know...

An Introduction to Austrian Economics: Understand Economics, Understand Everything
The Century of the Self: The Untold History of Controlling the Masses Through the Manipulation of Unconscious Desires
The Disappearing Male: From Virility to Sterility

The Obama Deception: The Mask Comes Off
Operation Gladio: The Hidden History of U.S. Sponsored False Flag Terrorism in EuropeThe New American Century: The Untold History of The Project for the New American Century
Article posted Dec 13 2013, 1:48 AM Category: Economy Source: Mises Institute Print

Why Are Obamacare Exchange Policies So Bad?

by Hunter Lewis

As millions of people began to lose their old medical insurance policies, President Obama and other Obamacare supporters replied that the new exchange policies were better. This was another lie.

Obamacare exchange medical insurance policies are much worse than previous private policies. They not only restrict access to hospitals and doctors more severely than ever before. They also pay doctors much less, in some cases 50 percent less.

In the past, private insurance companies paid doctors more than Medicare, and Medicare more than Medicaid. No longer. Now private Obamacare policies will pay barely more than Medicaid. Consumers should avoid these new exchange policies if at all possible.

Imagine yourself needing a new doctor because your old doctor is not in the approved network. But no doctor will take you because your policy does not pay enough. This happens to people on Medicaid all the time. Now it will happen to Obamacare exchange policy holders.

The rate that your policy pays a doctor is crucial information in choosing a policy. But insurers will not give you this information. To make it even more complicated, insurers may pay doctors different rates for the same service, depending on how much they think they need them in their network, and they may change the rates at any time.

Why are the new exchange policies often paying doctors barely more than Medicaid rates? Top medical policy analyst John Goodman explains that Obamacare has put limits on what can be charged older and sicker insurance customers. The natural response by insurers to these price controls is to try to sign up younger and healthier customers and discourage others.

How to attract younger and healthier customers? Insurance companies know that younger and healthier customers tend to shop on price. Why wouldn't they? They do not expect to use the insurance, so they are less likely to look closely at the quality of the policy and more likely to buy the cheapest.

But all the Obamacare mandates are driving up the cost of the policy. If doctors are paid as they have been in traditional private insurance policies, younger customers would find the price of their policy soaring, which would lead them to drop insurance entirely and pay the penalty. The penalty is not big enough to deter them.

Insurance companies respond to this dilemma in the only way they think they can. They squeeze the doctors fees and gamble that enough of them will go along to take care of the policy holders. Will this gamble pay off? It is doubtful.

Many doctors, doctor networks, and hospitals are already refusing to go along, so the policy holder will be stuck with insurance that is useless because no doctor will take it. Expect to see hospital emergency rooms flooded with even more patients under Obamacare, and expect to see the waits get even longer.

Older and sicker insurance customers may think they like the idea of price controls that work in their favor. But will they like insurance companies taking every available legal means to discourage their buying a policy or staying on that policy? Would you want to be covered by a company that does not want your business?

With Medicaid enrollees swelled by Obamacare, and much private insurance turned into what John Goodman calls "Medicaid Lite," what will happen to medicine? The most likely result will be large numbers of doctors taking early retirement and fewer talented young people entering the field. The supply of medicine will shrink while the demand, fueled by government subsidies, increases.

The result will be even more sharply rising prices, no matter what additional price controls are imposed. There is already a back-up price control board included in Obamacare, but using it will just make things worse. It will also not help when additional Medicare price controls on payments to doctors included in Obamacare also take effect.

We have seen too many tragic examples in history of what happens when government price controls shrink supply while increasing demand. We do not need another lesson. History students are taught that Queen Marie Antoinette of 18th century France, when told the peasants lacked bread, said: "Let them eat cake."

Why did the peasants lack bread? It was because the French government had price controlled wheat, with the result that farmers were losing money on their crops, and simply stopped planting. The result was soaring bread prices, starving peasants, in time the French Revolution, and, of course, Marie Antoinette losing her head on the guillotine.

The only way to provide good medical services at a reasonable cost is to bring back market pricing. We need the market not only to get supply and demand back into balance, but also to decide what exactly will be supplied. When was the last time that anyone saw a normal market price in medicine?

Starting with Medicare almost a half century ago, and then Medicaid, the government began systematically eliminating market pricing. Today Medicare sets prices on 7,500 tasks, varied by location, whether paid to a hospital, and other factors. This means that at least six billion transactions are price controlled at any one time. Insurance companies (which actually run Medicare) then adjust these price controls for their own use. Obamacare has made all these existing price controls even more complicated and dysfunctional.

A doctor who calls up Medicare to ask whether a procedure can be reimbursed and at what price may get completely different answers, depending on the office or person reached. But getting an answer from Medicare does not limit liability for getting it wrong. A doctor who gets it wrong may even be charged with fraud and sent to jail. Who would want to be a doctor these days?

In the meantime, people need to be warned to look beyond the price of the new Obamacare exchange policies. They are often barely better than Medicaid and should be avoided if at all possible.
Hunter Lewis is cofounder of Against Crony Capitalism. He is also co-founder and former CEO of Cambridge Associates, a global investment firm, and the author of nine books, including two new books, Free Prices Now! and Crony Capitalism in America: 2008-2012. He has served on boards and committees of 15 not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank. See Hunter Lewis's article archives.

Latest Economy
- Professor Gruber Strikes Again
- Income Inequality Is a Statistical Artifact
- American Ranking Plummets in Global Index of 'Personal Freedoms'
- Your "Children Will Be Fined" If You Fail To Sign Up For Obamacare: People Are Going To Be In for A Shock
- The End of QE Is Not the End of Bad Policy
- "They Just Want The Money!" - The IRS Can Now Seize Accounts On Suspicion Alone
- Hillary: 'Don't Let Anybody Tell You' That 'Businesses Create Jobs'
- Does Ebola Justify the State?

Comments Add Comment Page 1 of 1

Posted: Dec 13 2013, 3:22 PM

71222 might also note the Irish Potato Famine was a lie, except the casualties, deaths and emigration to escape the pogrom of the british policy of pillaging and stealing any food they could find to deny the poor any food, same as stalins ukraine policy and the usa policy to eradicate the bison to coerce the "savages" onto reservations and continue the manifest destiny of wiping out the redskins from coast to coast. the last 2-300 years are the same as the previous thousands of years of cannibalism, genocide and slavery of the masses.

Add Comment


Verification *
Please Enter the Verification Code Seen Below

Please see our About Page, our Disclaimer, and our Comments Policy.

This site contains copyrighted material the use of which in some cases has not been specifically authorized by the copyright owner. Such material is made available for the purposes of news reporting, education, research, comment, and criticism, which constitutes a 'fair use' of such copyrighted material in accordance with Title 17 U.S.C. Section 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. It is our policy to respond to notices of alleged infringement that comply with the DMCA and other applicable intellectual property laws. It is our policy to remove material from public view that we believe in good faith to be copyrighted material that has been illegally copied and distributed by any of our members or users.

About Us - Disclaimer - Privacy Policy

Advanced Search


Remember Me
Forgot Password?

NY Police Union Says 'Blood On Hands' Of Police Critics - 12/21Obama's Plan for Better Policing: The Good, the Bad, and the Body Cameras - 12/09Psychotic Vegas Cop Filmed Beating Man For Filming In Viral Video Queitly Hired By Another Dept. - 12/17A Peace Officer Defies the "Blue Tribe": The Exile of Officer Cariol Horne - 12/19Ignorance Is No Excuse for Wrongdoing, Unless You're a Cop - 12/17Baby Clings to Life After Flash-Bang Grenade Lands in His Crib - 12/20Cops Called For Wellness Check Beat Innocent Man, Pile On False Charges; Jury Exonerates, Twice - 12/17Cop Stops Fellow Cop From Choking a Handcuffed Man, She Was Then Beaten and Fired - 12/18

Rialto, CA Police Made to Wear Cameras, Use of Force Drops by Over Two-ThirdsCop Who Karate Chopped NY Judge In Throat Gets Off Scot-FreeFlorida Cop Smashes Compliant Woman's Face Into Car -- "Maybe Now You Can Understand Simple Instructions"VIDEO: Lapel Cam Reveals A Day In The Life Of A U.S. Police Officer (Tasing, Beating, Breaking & Entering, Stomping On Heads... and Laughing About It)Caught On Tape: Officer Sucker Punches Inmate In Face, Files Report Claiming 'Self Defense'Insult Person On Twitter, Go To JailSWAT Team Brings TV Crew To Film Raid Against Threatening Internet Critic -- Raids Innocent Grandma InsteadCop Karate Chops NY Judge In The Throat