Medicaid, Medicare, Private Health Insurance, Obamacare


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When congress introduces a bill or government passes a law, by default, they are supposed to make sure that it is paid for, something, the history of government shows that they are not good at. Bill after bill, law after law, keeps raising the deficits, and overall federal government debt. When a bill comes to the floor, politicians and media tell us that it is paid for, and is not going add to the deficit. Under all that hype, created by politicians and media, bill passes and becomes a law. Soon after that we start finding out that it is not paid for, in spite of all those new taxes, and is going to add to the deficit.

This happens because most of the agenda in our government is not driven by what is good for the country or people of the country. It is mostly based on ideology, party loyalty, scoring points on big media and the guidelines provided by their bosses in lobbies. Sixteen trillion dollars debt, on the books of world’s richest government, is an undeniable proof of these repeatedly broken promises, and deception, going on for decades, after decades. People, who heavily depend on TV for news and information, if they are getting any information, have no clue, who is trustworthy and who is not.

There seem to be a similar trail of lies and deception, in Obama Care legislation. All the data and projections are skewed to make it look feasible, affordable and workable, although common sense, and a very basic knowledge of Economics and Finance, denies those. President Obama has been saying, since his 2008 election campaign that it is based on the idea of a larger and more regulated insurance pool. Now, question is, what is an insurance pool? An insurance pool is based and sold on the idea that there could be some catastrophic expenses which people may not be able to afford, and thus, are likely to be negatively affected by those events.

Insurance pool provides for a way to the people at risk to contribute money in a common pool, so that everyone paying, is covered in the times of need. Car insurance, health insurance, home insurance, business insurance, life insurance, flood insurance, all work in the same way, and on same principles. In an insurance pool, the intention of any person to join and contribute, commonly known as premiums, co-payments and deductibles, depends on his or her perception of personal risk, and the personal ability to pay for related expenses.

For example, if a person has six hundred thousand of disposable income, and his perceived expenses are not more than three hundred thousand, this person is very unlikely to purchase insurance. Compare this to a person who has hundred and fifty thousands in disposable income, and his perceived expenses may amount up to three hundred thousand dollars. This person is likely to purchase insurance. At this point, the people are divided into two main categories. One, the people who perceive a higher risk and purchase insurance. Two, the people who perceive higher risk, and still do not purchase insurance, due to the reasons like not affordable, no job or very low income.

On the other hand, insurance companies pay from the common pool. So, they have to make sure that all the premiums, co-payments and deductibles from their subscribers, are enough to pay the allowed and offered coverage, plus, overhead and administrative cost, and dividends and profits.

This is how they run the business, and that is how they set prices. Insurance company is a business. It is not going to pay the benefits from its own money, and incur losses. It always pays from the money from common pool of subscribers.
Every insurance model works on the fear of catastrophic events. That is why every insurance commercial does some level of fear mongering, one way or the other. What if you die? What if you get seriously ill? What if there is a flood? What if your home burns down? What if you are in a car accident? What if you get sued? Everyone perceives his or her own risk and ability to pay for catastrophic events versus the cost of insurance, and decides to buy or not buy insurance.
In every insurance pool there are low risk subscribers, and there are high risk subscribers. Generally speaking, low risk subscribers pay for high risk subscribers. Low risk subscribers still keep subscription, because, they believe that their ability to afford insurance payments is far better than their ability to afford a catastrophic event. Although, in long run, most subscribers end up paying more than they would have otherwise. But, this is how insurance model works, and that is why insurance companies are ridiculously profitable. In spite of very lucrative models and very attractive offerings, many smaller insurance companies fail because there are, still, lots of people who do not need insurance, who cannot afford insurance or who just prefer another company.
Now if you have big lobby in Washington, and you are paying for the presidential and legislative campaigns, and lobbying for court nominations and appointments, then you want a ROI on your investments in Washington lobbies. What should you do? You figure out that the best way to have a very good ROI on your investments on Washington lobbies is by having a legislation which forces everyone to have insurance. Why not make the people who cannot afford or who do not need, to pay through tax payers’ money or fines and penalties?
On the PR side of this conspiracy, they said that they want everyone to be covered by health insurance, for their own good, health, good life and wellbeing. They also said that through their new regulations, they can change this natural behaviors and attitudes towards insurance purchasing. They predicted that the young and healthy people, who usually do not care much about health insurance, will magically start buying health insurance through new government run health insurance marketplaces. That did not happen. One more time, government regulation cannot change the consumer behaviors and market forces. If current lower proportions of enrollments from young and healthy people continue, Obama care will have a well over a trillion dollar deficit, in next ten years. Of course, the bill is not paid for, in spite of all those new mandates and taxes, and tax payers are going to pick up the tab one more time. Federal deficits and debt will keep rising, even faster.
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