Adverse selection, why does it make single payer the only way
that works?
It starts with a nice, but misleading idea.."All other things being equal, public, nonprofit insurance can be cheaper than for-profit insurance"
Right?
Wrong. Because Public insurance has to be fairer. The private insurance we all know is profitable and expensive,
right? The catch is "if all other things are equal". The problem is they wont be equal.. They will be extremely unequal.. Of course,
the insurance companies figured out long ago, they need to apply reverse psychology to get what they want. The trick is to play Brer Rabbit and the Briar Patch.. They cant let on that they want public option, to kill single payer... They can't let on that they know how and why it will die! They have to say the opposite. So they lie now about how the public option has an "unfair advantage" - The opposite, true reality is that there is actually a disadvantage that we hope public option bears, and the "disadvantage" is caused by the public option
doing the
right thing- now. That "right thing" is community
rating. By accepting the sick.. they accept that the plan will
have higher costs than the private plans. Their risk pool will be
sicker. Thats Adverse selection.
Adverse
selection and moral hazard are
the two main concepts that will effect the price of any so called
public option. Any civilized "public option" would need to cover
everybody and be affordable to all. But, Obama is not making any promises for the ultra-vague "public option". NO guarantee is
offered at all on affordability, and since it will need to at least break even,
to be revenue neutral, things look very bleak. Even if it still could not be affordable, all other things were equal, then it
could be cheaper than the private insurance, right.. Sure, by at
least a bit, even if the old system is preserved along side it. BUT
things CAN'T be equal. Because the insurance companies avoid the
sick people that the public option will need to cover because its
uncivilized to do what the private insurers do, and tell them to
look elsewhere, or pay so much they can't afford to join or stay.
This will cause what is known as a death
spiral.
Originally, Obama wanted to avoid the sick by charging them a
fair price, which, given that the "normal" model in US private
health insurance is risk
pricing, would exclude many. Then, that price would be far
higher for sick people. After a lot of pressure from folks who saw
where he was going with that during the primaries part of his
campaign, we are NOW getting vague and ambiguous indications from
proxies that risk pricing may not be used in any public insurance
part of the "public option". Thats because risk pricing is whats
making it so hard for one fifth of the people in the US to buy
insurance. Since the insurance part of the public option for
the better off people (who can eventually pay whatever premium
thats asked for it) can't price by risk, we should accept that
it will lose money unless it can also save
that 31% that is spent on billing and insurance company
overhead. But, then it wouldn't be "optional". Thats also
why the PR campaign funded by the insurance companies is so fixated
on the word "option". Its the key to keeping healthcare
unaffordable for most.
As the risk pool will shift, and the costs rise, the less
affordable the premium can be.
THAT IS WHY THE PRIVATE MARKET IS NOT THE PLACE FOR HEALTHCARE
IN A CIVILIZED WORLD.
Who needs insurance the most now? People who are sick. People who
need security and stability. People with assets to protect.
Public option, at almost any price, will attract the sick who
can afford it, especially those who have assets to protect. Only
the poorest Americans will be eligible for Medicaid (which is the
part of Obama's public option for the medically indigent - people
aren't eligible until after they have exhausted their
assets. They must be very poor.
What about the middle class?
No guarantees of ANY help so far. Indications that PR machine
is being employed to drown out all discussion of real issues.
By who? Who has the motive? ...
What about the typical person who posts here? They fall through the
net. For that hypothetical normal family in which nobody is sick?
(people with children.) Its hard to say. The more the ratio of sick
to well shifts towards the sick the harder its going to be for
Obama to meet his goal for the insurance program without single
payer. Actually, "impossible" seems like a more appropriate word.
The higher the premium rises, the fewer people will be able to
afford it. The healthy, those who have other options, will leave.
the private health insurers will "insure" that Obama's experiment
with "universal healthcare" fails. The scripts have already been
written, I'm sure. Many sick people will leave too, because they
can't afford even the plan's "fair" price. Obama wont meet his goal
of saving "normal" families $2500 a year. Headlines will say that
"universal" healthcare will have failed because of those sick
people, and God knows what we will do then. This play acting will
take years to play out, but its clearly what will happen.
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