You didn’t really think that I could resist weighing in on this health care debacle, did you? With my 35-plus year background in the insurance business, I think I can bring some unique perspective to the table.
First, this law has a name already: The Patient Protection and Affordable Care Act. But, on the day that President Obama signed the bill, Vice President Joe Biden whispered in Obama’s ear that this was a “Big F**king Deal,” which was picked up by microphones and broadcast around the world. So, from now on, I will refer to this bill as the BFD.
The premise of my article is that American Health Insurance has now been assassinated by Washington, and the insurance companies are complicit in their own demise.
FDR and His Disciples Began The “Insurance” Scam
President Franklin D. Roosevelt capitalized on the nation’s understanding of the concept of insurance when he rolled out the Social Security program. Remember, the concept of insurance requires risk…future issues that can be avoided or mitigated. But old age cannot be avoided by anything but an early death. Poverty and disability may be avoided or mitigated, but the insurance companies don’t sell Poverty Insurance. They do sell Disability insurance, since there is a risk that can be managed.
Social Security is a pure wealth transfer program, not any kind of insurance. FDR liked to call Social Security “insurance,” which was a blatant lie. And his disciples ever since love the reference to “insurance,” since Americans like insurance.
But Social Security is actually the largest Ponzi scheme in the history of mankind. The money taken from the newest suckers goes to pay the benefits to the old suckers.
Karl Marx said “from each according to his ability, to each according to his need.” Perhaps Social Security should be correctly named “Socialist Security.” In the 1980s, Henry Fairlie said “from each according to his gullibility, to each according to his greed.” Fairlie’s phrase accurately describes the new Universal Healthcare welfare program.
Health Insurance Is Over, Universal Healthcare Welfare Begins
Insurance of any kind is the transfer of risk to another party. In essence, you pay a small loss…your premium…so that in the event of a larger loss, your loss is covered and paid. The insurer spreads the risk over a large group of persons, therefore minimizing the risk of loss to any one person. If the insurer is correct in his calculations of risk, there is more premium income than claims expense, and the insurer makes a profit.
Calculating risk is a complicated business, requiring lots of data and the passage of time. Consequently, insurers charge premiums based upon the risk, the hazards and the probability of a loss. Low probability means low premium. High probability of loss means high premium.
If your house was already on fire, and you trotted down to your local agent and tried to buy fire insurance, you would be denied coverage. You had a pre-existing condition and a 100% certainty of loss and claim.
In health insurance, the concept of pre-existing conditions is a crucial underwriting consideration. For example, if the risks insured include cancer, and you already have cancer, the insurer is certain that you will make a claim. Insurers do not like to accept customers for which there is a certainty of loss.
Insurance companies do not accept risks and write insurance policies for risks that they cannot calculate. They must be able to accurately determine the upper limits of their loss exposures on any risk. Otherwise, they would be unable to know how much premium to charge for any risk. The very future of the insurer would be in jeopardy, being unaware of future losses and future income.
In group health plans, the insurers customarily accept new employees and family members with pre-existing conditions. But the insurer has enough historical data to accurately calculate the premium to be charged among the whole group. If the group has an unacceptable loss ratio (premium income to claim expenses), the insurer will either charge higher premiums or cancel the policy. The insurer has no other choice if it wants to remain profitable.
One of the features of the BFD is that pre-existing conditions will no longer be considered in underwriting a health insurance policy. In practice, this will mean that I could wait until my doctor diagnoses me with terminal cancer before I buy an insurance policy. Then, I pay my co-pays and stick it to the insurance company.
Another feature is that there will be no lifetime cap on benefits. Underwriting and actuarial considerations are worthless when an insurance company cannot calculate the limits of their loss exposures. Insurance ceases to be insurance…a transfer of risk…when there ceases to be any risk to avoid or mitigate. Under the BFD, health insurance becomes a universal healthcare welfare system.
No insurance company would ever agree to this…unless underwriting and actuarial decisions don’t matter anymore. That would only occur if there was some entity above the insurance company that was going to pay all the benefits. Guess who? The Federal Government will now be the premium collector, and the American taxpayer will ultimately pay ALL the costs for this new plan.
The agenda hidden in plain sight
The BFD is not about providing health insurance coverage for the 32-40 million ESTIMATED Americans without health insurance. It’s about a government takeover of a giant portion of this nation’s economy, and fascism.
How do I know for sure?
Well, let’s use the low end of the estimates, 32 million. I’m only using that because the government always lies, and the true number is probably a lot lower. And let’s say that the annual premium for the best health insurance policy you can buy is $5,000 per year per person regardless of age. Then do the math. 32 million uninsured people times a $5,000 annual premium per person is only $160 Billion per year.
Congress and President Obama could have bought every uninsured person in America a deluxe insurance plan for only $160 Billion. But that’s not what they did.
This bill is estimated to cost over 900 Billion dollars…and they ALWAYS underestimate on the low side.
So, as I said, this ain’t about insuring the uninsured.
But it IS about demographics.
Demographics and Two Major Players
The health care providers didn’t fight this bill. That’s because right now there are a lot of uninsured people that use the hospital Emergency Room as a free clinic. But under the BFD, all of those people will either pay for coverage, or the Federal Government will pay for their coverage. The days of hospitals providing free health care to the poor and indigent will be gone. The health care providers see the tidal wave of health care benefit money that will hit their shores. All they have to do is soak it up.
The health insurance industry didn’t fight this bill, either. That’s because they see 32 million people (questionable estimate) that aren’t paying premiums that will begin buying insurance. And many of those people will get the DC crowd to pay their premiums for them through “low income” subsidies. In addition, the health insurance companies already have the trained staff to help DC roll out this health care law and administer it for the DC bureaucrats. More money for the insurers.
What pact did the big insurance companies make with the DC devils?
The insurance industry has not fought this BFD. They have not used their club in the closet. So, the logical conclusion is that the insurance industry has made a yet-to-be-discovered pact with the DC devils to enrich themselves at the public’s expense.
All of the insurance companies domiciled in the USA have investment portfolios. Part of their money is always invested in government securities. That means bonds and other debt instruments. These can be Federal, State or even municipal bonds. But they all hold a large percentage of US securities.
Their bond holdings are sufficiently large that if they suddenly sold even a small portion of the bonds, it would collapse the entire bond market. And with the volatility of the dollar, and the mind-boggling Federal debt that is constantly growing, the value of all government bonds is dropping like a stone.
The insurance companies know this. They already know that they could cause the bond market to meltdown any day that they began selling off government securities. The US Federal government would finally be proven to be bankrupt. So, in essence, they have created a government interference insurance policy for themselves that protects them from Washington’s meddling in their business. It’s the equivalent of the old “club in the closet”…the weapon you bring out when it’s needed. And NOTHING prevents them from threatening DC with that club.
Health Care Rationing is Inevitable
Here’s the way for Washington to screw up any economic activity:
1. Tax it
2. regulate supply and demand
3. impose price controls
4. impose wage controls
5. impose limits on profits, or “windfall profits” taxes
The DC bunch is going to do this with health care. The health care industry will naturally shrink in size as many people realize that it makes no economic sense for them to continue in this path.
As the BFD unfolds, and the regulations start to affect doctors, the number of doctors will diminish. Some will retire early, some will switch to other careers, premed students will switch majors, and most doctors will just sing “Nobody knows the trouble I’ve seen.”
Some doctors will opt out of the government benefits system and stop treating anyone covered by the BFD. But that brings up another possible scenario. If the number of participating doctors drops, and rationing inevitably begins, I can see Washington stepping in and forcing doctors to treat BFD patients. Think about it. Doctors are licensed in every state. Congress could easily pass a new law that mandates all licensed doctors to accept BFD patients and BFD benefits…or no license for the doctor. What’s to stop Congress from doing this? Nothing.
But some medical professionals will adapt and prosper.
Doctors are going to watch as their incomes shrink. But some will think of ways to escape the American healthcare system while still practicing medicine.
That means an escape from America.
Canadians have been coming to American doctors and hospitals for decades to escape the rationing in Canada. Now it’s America’s turn to run for the border.
Over the next ten years, thousand of doctors, nurses and other medical professionals will set up shop outside the USA. They will establish clinics and surgical practices “just across the border” with the most modern and advanced medical treatment facilities possible…free from Washington’s crushing burden of regulation.
Expect the offshore medical industry, or commonly called “Medical Tourism” to explode in Mexico, the Caribbean (and Cuba, once Castro dies) and Latin America, in places like Panama and Costa Rica. Read more about Medical Tourism HERE.
For example, the prestigious Johns Hopkins University’s Center for Global Health opened the Hospital Punta Pacifica in Panama City, Panama in 2006. It is the most advanced hospital in Panama and rivals any great American hospital. Medical tourism will be a huge cash cow for this facility as health care falls apart in America.
Big Pharma is Smiling
The pharmaceutical industry has entered in the Promised Land. More people in the new system means more drug consumption.They will negotiate their pricing with the government, and the government health care will promote and buy their products. All Big Pharma has to do is continue paying bribe money to Congress.
The Swami Predicts…
1. Health care rationing nationwide
2. Price controls on everything related to medical treatment
3. Hundreds of hospitals close their doors
4. Dozens of health insurance companies close their doors
5. Thousands of doctors stop practicing medicine in the US
6. Thousands of doctors and nurses become Federal employees
7. Pharmaceutical companies’ stock value soars
8. Mortality rates in America creep upward due to rationing
9. Hyperinflation must occur as DC monetizes debt with paper money
10. The US economy collapses and America enters a Dark Age
11. Courageous states of the United States secede and the United States dissolves into the ashbin of history.
Which will YOU choose?
Secession is the Hope for Mankind. Who will be first…and wisest?
DumpDC. Six Letters That Can Change History.
© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.