Obamacare Wins (Maybe)

By Jim McVeagh 08/11/2009


The House of Representatives has just approved Obama’s healthcare bill 220 -215. The bill will now go to the Senate where the Democrats may have the numbers to pass the bill – assuming all Democrats and the two independents vote for it. Obama needs to get everything passed before the mid-term elections. It is highly likely that the Democrats will either lose control of one or both houses or, at least seriously erode their margin. Obama can then kiss his healthcare bill goodbye. Effectively, he probably needs to have it enshrined in law by the end of the year as Congressmen and Senators become increasingly nervous as the mid-terms approach and don’t like being asked to vote on controversial issues.

Of course, if he gets it passed, there is no way that the Republicans will be able to do anything about it. History shows that engineering a perceived reduction in health care is a fine way of getting yourself voted out of office. Once Obamacare is in, it will be impossible to move and it will be practically impossible to prevent the inevitable socialisation of US healthcare.

This is how it will go down. Medicare will be greatly expanded and costs will be tightly constrained in order to price the policy as low as possible. In order to maintain some semblance of a profit margin, healthcare providers will attempt to charge private insurers higher fees. Only the larger insurance companies will have the size and clout to resist this. Private insurance fees will go up, forcing more and more companies (who are now being forced to provide insurance cover) to plump for the cheaper Medicare option, despite the benefits being a limited, one-size-fits-no-one, standardised plan.

  • Job losses are almost inevitable as companies struggle to cope with either new taxes or new healthcare costs.
  • Smaller insurance companies will go to the wall, reducing competition (the exact opposite of Obama’s claim to increase competition)
  • Larger insurance companies will haemorrhage clients, increasing costs

Eventually the system will stabilise with Medicare taking a sizable chunk of the market. This chunk will be too big for the providers to absorb, forcing many into liquidation. The crisis in health care created by this will force the government to buy out major hospital groups (bailouts, anyone?), effectively forming the hub of a new state health care system. Some bright spark in government will point out that owning the insurer and the provider is daft and Medicare will then probably implode, forming a true state health system. This last may not happen, as there may be some incentive for private insurers to buy healthcare from the government providers, if it is cheaper. Moderately well-off people will still be able to insure themselves and access private health care. The wealthy will pay for private health care directly. The poor and the elderly will by then be getting used to the rationing system the state will inevitably put in place.

I hope they don’t mind waiting for their healthcare. A long, long time.

We in New Zealand can tell them how that feels…

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