I was assessing my political leanings the other day. Recently, I’ve been labeled a “Republican In Name Only” and compared to former New York Mayor Michael Bloomberg in letters to the editor in this newspaper. So I was wondering if perhaps my political sensibilities have changed over the years. I don’t think they have. I have always been more conservative than liberal. Mainly, because I have little faith in government, generally, to get things right. Plus, I think the U.S. Constitution makes it pretty clear the founders of our nation were wary about government overreach. But these days, government pretty much regulates everything from the temperature of your clothes dryer to how you shut off your lawnmower. I think that’s wrong on a philosophical level, but I also think it’s wrong on a practical level. When I look at any given government policy, I try not to assess it in terms of right or left. I try to assess it in terms or right or wrong. Is it the right policy? Does it achieve its goals? Is it working relatively well? Both parties are quite capable of enacting bad policy. No Child Left Behind, the prescription drug benefit and warrantless wiretapping during the Bush administration come to mind. All government policy is well-intended. I don’t believe lawmakers set out to write bad policy. But many times when these policies are enacted, things don’t go so well. Here’s a current example. The New York Times ran a story this week about health insurance rates. Here is the lede of the story: Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back. The story says Blue Cross and Blue Shield plans are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee, 51 percent in New Mexico and 54 percent in Minnesota. The Geisinger Health Plan in Pennsylvania, held up as a national model of coordinated care, has requested an increase of 40 percent in rates for its HMO, the Times reported. The NYT reports: It is far from certain how many of the rate increases will hold up on review, or how much they might change. But already the proposals, buttressed with reams of actuarial data, are fueling fierce debate about the effectiveness of the health law. A study of 11 cities in different states by the Kaiser Family Foundation found that consumers would see relatively modest increases in premiums if they were willing to switch plans. But if they switch plans, consumers would have no guarantee that they can keep their doctors. And to get low premiums, they sometimes need to accept a more limited choice of doctors and hospitals. Insurers say healthier people kept their existing plans and sicker people bought insurance on the exchanges, driving up the cost of claims. One health plan CFO from Utah said enrollees generated far more claims than expected. His company collected premiums of $39.7 million and paid claims of $56.3 million during 2014. Of course, the concern here is the so-called “death spiral” of insurance rates. As rates rise, healthier people drop out of the system, making the claims-to-premium ratio even more out of whack. This, of course, causes rates to rise even more. It’s not that I am against everyone having health care. I think everyone – especially in an advanced nation like the USA – should have access to affordable health care. But here’s the thing. Five years after President Obama signed the Affordable Care Act into law, there still are 37 million people in America uninsured. The good news is that approximately 11 million more people have health insurance today than five years ago. But let’s do some math. The cost of the ACA over 10 years is estimated to be about $3 trillion, which is three times higher than the $1 trillion that was originally advertised. Since we’re only halfway through the first 10 years of the program, let’s divide $1.5 trillion by 11 million to see how much it cost the government to get those folks some health insurance. The answer? $136,363 each. Dividing that number by five gives us the per-year cost to insure each person – $27,272. That comes out to about $2,272 per month. You can buy some serious health insurance for $2,272 a month, can’t you? Color me skeptical here, but if the government would have just passed the revenue side of the ACA, means tested each uninsured person and gave them up to $12,000 in annual health insurance stipends, they would have saved more than half the cost of the program so far. What we have is a very expensive program that – so far – is falling far short of insuring everybody and is threatening to put insurance premiums into a death spiral. And aside from these obvious foibles, one must wonder about the impact this legislation has had on U.S. economic growth. I know the ACA has helped a lot of people, but is it truly sound health care policy for the long term? Maybe so. Maybe over time things will shake out as more people enter the health insurance market. Maybe everybody will be insured and insurance rates will fall. I truly hope that’s the case, but at this point, I’m not overly optimistic.
