16.4.16

THE LONGEST WAY FROM MARKET-BASED MEDICINE TO MARKET-BASED MEDICINE.

Rick Moran notes the latest instance of Atlas Shrugging.  Apparently participating in the Obamacare exchanges is a losing proposition for the insurance companies.  (That despite all the opportunities for rent-seeking the creation of the two lies for the price of one Patient Protection and Affordable Care Act offered.)
How serious a problem is there? The Kaiser Foundation has been one of Obamacare's biggest cheerleaders. For them to even mention a mass  pullout by insurance companies, you know it's more than a possibility.

The "young and healthy" are not signing up for Obamacare largely because they don't have to. The individual mandate has proven to be so unpopular that the administration felt it a political necessity to carve out numerous exemptions. Even with big subsidies, the "indestructibles" don't feel the need to purchase insurance.

When the end comes, it will come rapidly. The tipping point will come when all insurers pull out of some states completely, setting off a chain reaction that will throw millions of individuals off of their insurance plans and the companies who are left will be unable to handle the number of sick people buying their plans. Costs will far exceed income and Obamacare will sink below the waves.

This would be an incredibly disruptive way to get rid of the law. There are alternatives that would ease the transition back to a private insurance market without the massive numbers of people losing coverage and insurance companies going belly up. That's a desirable goal once Obamacare is history.
But if we view the exchanges as a necessarily messy way to destroy the insurance companies and pave the way for universal Medicaid, all is proceeding as the true believers would have it.  The companies that are left will be taken down the same way that most of the Eastern railroads came down after the wreck of the Penn Central.  Delaware and Hudson managed to stay solvent, and competitor Erie Lackawanna's bankruptcy followed Hurricane Agnes.  And perhaps the political class saw the railroads as sufficiently irrelevant to let Ronald Reagan sell Conrail.
But advocates of a government takeover of health insurance might profitably study the coming of Conrail.  First, hem in the railroads with regulations.  Then create a public agency to pick up the pieces.  The transition will not be pretty.  On the other hand, a future Ronald Reagan might see the opportunity to sell the agency off.
The hemming in with regulations is under way.  The unraveling is coming.  The public agency will not be as simple to sell off as a railroad, in part because the very act of destroying the insurance companies will destroy the knowledge base in risk management apart from that appropriated by Medicaid.

We have much to look forward to.

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