31 May 2016

Notes from Norm: The Birth of FederalCare

During the height of the economic meltdown in 2007-2008 we were told repeatedly that at the root cause of the collapse was the notion that many companies had been long touted as “too big to fail.”

Unfortunately, we learned all too well that such claims were as accurate as accolades that heralded the Titanic as “unsinkable.”

While the American economy still has not fully recovered from the effects of the crisis during that time, there is an uneasy sense that we’ve at least stopped the bleeding.

Despite the anemic pace of economic expansion, job growth and massive defections from the labor market by American workers, the sheer size and scope of the American economy has shown its resilience.

One of the anchors that continues to drag on the economy is ObamaCare.

And, as fatigued as all Americans are about the partisan fights that continue be waged over this enormous expansion of the federal government, recent events have underscored that ObamaCare itself has truly become too big to fail.

A reality that I believe advocates of the program knew all along to be the inescapable conclusion of a policy that was rooted in politics without regard to its economic impact on Americans. A policy devised to ultimately become so big and intertwined with Americans’ lives and the government that its collapse would require the kind of intervention that the nation saw with big banks and lenders during the height of the last economic crisis.

Government bailing out government. What a concept.

It is truly the emerging scenario when it comes to ObamaCare.

A report from McKinsey & Company reveals that insurers lost money in 41 states in 2014, and were profitable in 9 states.

The Kaiser Family Foundation has made it clear that insurers have lost so much money that the only alternative will be to completely drop out or massively raise premiums on policyholders.

In fact, one of the experts of the Kaiser Family Foundation is quoted as saying, “The industry is clearly setting the stage for bigger premium increases in 2017.”

The urge to scream “I told you so!” is nearly impossible to contain yet it is the obvious response to the collapsing economic model that ObamaCare was based upon.

While the Administration touts how many Americans have enrolled in ObamaCare, they conveniently ignored that massive increases in medical expenses from previously sick and uninsured patients is overwhelming the supply of healthy people the plan needed to buy premiums to cover the costs of the sick.

As reported in Forbes, “For example, Anthem’s fourth-quarter “benefit expense ratio” was 87% compared to 84.5% in the year-ago period.”

These economic problems are likely to become even worse given a recent ruling by a federal district judge in Washington that determined the Obama Administration had no authority to fund a major subsidy of ObamaCare.

The case of House of Representatives v. Burwell, involves Section 1402 of ObamaCare and requires insurance companies to reduce co-payments and deductibles in their plans and seeks to remove those costs from the customer and place them onto the insurer.

As The Atlantic reports, “Section 1402 then allows the federal government to provide “periodic and timely” reimbursements to insurers “equal to the value of the reductions,” thereby shifting the costs from the insurer to the federal government itself.

When Congress passed the act, however, it did not explicitly appropriate funds for those reimbursements. The Obama administration implemented it by drawing upon funds appropriated for Section 1401, which subsidizes health insurance for low-income taxpayers through a tax credit.”

Without this subsidy the economic losses to insurers will only mount, resulting in more of them exiting ObamaCare exchanges and creating even more red ink for a health insurance program that was doomed from the beginning.

There is irony in all of this, even if it comes at the expense of American taxpayers.

After all, it was the President and his Democratic enablers that passed Obamacare, who have, for years, attacked the insurance industry and big business at every turn.

However, if it comes to protecting the President’s “legacy” the same players will do what it takes, even if it means finding more money to prop up ObamaCare and finding more money for an even bigger “business” – the federal government.

Which brings us back to base: ObamaCare was doomed to fail from the beginning. A reality that was so obvious that efforts to hide its flaws were orchestrated from the White House itself, including the President’s false promises of how Americans could keep their doctors and their own health care plans if they chose to do so.

The final outcome of ObamaCare was not a plan in its current form.

The final outcome of ObamaCare has always been in so-called “single payer” health care which would once and for all achieve the dream of liberals of having the federal government the sole health care provider in America.

The collapse of ObamaCare will, if Democrats regain control of the levers of government in Washington, D.C., be the birth of FederalCare – an even larger, more massive, inefficient and bloated health care giant bought and paid for with our tax dollars – and envisioned years ago by architects of the current ObamaCare monstrosity.