Filed under: Politics, Domestic Policy, History, Economy, Freedom, Capitalism, Law, The United States | Tags: Milton Friedman, Incentives Matter, Preventing Bad Behavior.
Incentives matter. When you get the incentives wrong, you can expect things to go wrong. Sometimes people even end up dead.
Filed under: Democrat Corruption, Economy, Health Care, Law, Progressivism | Tags: $63 For Each Insured Person, Incentives Matter, Undiscovered Gems
There are all kind of little-noticed fees hiding here and there in the thousands of pages of the Affordable Care Act. Should be titled ‘unaffordable care.’ The federal health care law will charge employers $63 for each person they insure next year. This is one of the clearest cost increases companies face when the law takes full effect.
Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills. The fees will hit most large U.S. employers, and several have been lobbying to change the levy because it subsidizes individually purchased policies that will not cover their workers at all.
Insurance companies which helped to put the fee into the law, say the fee is essential to prevent rates from skyrocketing when insurers get an influx of patients with pre-existing conditions. This is all part of the plan to cover 30 million people with pre-existing conditions, who are expected to need far more care. Employers didn’t notice the fee and have been caught by surprise. They are understandably upset about it. $63 multiplied by large numbers of workers soon adds up to a big cost.
Boeing, for example, expects the fee will apply to about 405,000 workers and dependents it insures, costing the Chicago-based airplane company an estimated $25 million in 2014 alone. Some benefits experts expect that employers will at least partially pass on the $63 to workers.
The president of an insurer trade group, America’s Health Insurance Plans, claims that those with pre-existing conditions had been going to the emergency room. raising costs for everyone. A representative of an organization of emergency room physicians said some time ago that most visits to emergency rooms were by people with insurance, not the uninsured. HHS claims the high-risk program will lower the premiums for people who buy plans through the individual insurance market between 10% and 15%.
History offers clues — most federal programs come in costing vastly more than original estimates, often doubling and tripling, if not more. When insurance offers “free” care, people use more of it. Folks who would normally go to bed with a decongestant and a hot water bottle with a miserable cold, will, when it’s free go to the doctor’s office instead. Mothers, alarmed when their kid seems to be sick, rush off to the emergency room when it is free. Free is apt to trump common sense. Democrats don’t seem to understand incentives at all.
Secretary Kathleen Sebelius has been generous with exemptions so far, but now that the law is about to go into full force, multiemployer insurance plans which are run jointly by unions and employers found that federal regulators told the plans the lacked the authority to exclude them from the levy. SEIU is also squawking. “The funds would be bearing additional costs without gaining any additional protections,” said the director of the Benefit and Pension Funds.
Every time this kind of thing comes up, I always return to the vision of Nancy Pelosi announcing smugly “We’ll have to pass the law so we can find out what’s in it.” Uh huh. Surprise!