Friday, November 15, 2013

McArdle on the Obamacare Misery

The insurers are predictably furious. And it’s hard to blame them. One thing I haven’t seen anyone point out is that if insurers do go along with this, we’re talking about a massive cash transfer from the insurers to the customers in those grandfathered plans. Some of the left-wing commentators I’ve seen seem to be under the impression that health insurers make fabulous profits, and canceling plans was a venal move to further line their overflowing pockets with your hard-earned dollars. In fact, health insurance profits are quite modest(though relatively steady). Their business and rates are very heavily regulated, and never more so than post-Obamacare, when insurers with excess profits in the individual market have to contribute half their overage to a reinsurance fund. Those people suggested that insurers would decline to renew the policies so that they could keep all that extra cash.

This part makes me sick - you knew the insurance companies were going to crony right up to government to make sure that they can still get theirs, and the crony/govt fiasco's are the worst:  "It’s a pretty bold move for Obama to hang the insurers out to dry like this, considering that he reportedly needs their technical help to get the exchanges working and some cooperation to keep rates low prior to next year’s midterm elections."
Can they afford to take the risk of rebellion?

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