Reid: Hey, ObamaCare is only the first step toward killing the health-insurance industry

posted at 2:31 pm on August 10, 2013 by Ed Morrissey

Finally, Harry Reid and Tom Coburn agree — ObamaCare is designed to fail. John McCormack at The Weekly Standard notes the convergence after Reid’s appearance last night on PBS Las Vegas’ Nevada Week in Review, where Reid counseled patience for the panel fretting over the inept rollout of the Affordable Care Act.  Just keep in mind that no one thinks ObamaCare will actually solve the nation’s problems, or even last for a significant period of time:

In just about seven weeks, people will be able to start buying Obamacare-approved insurance plans through the new health care exchanges.

But already, Senate Majority Leader Harry Reid is predicting those plans, and the whole system of distributing them, will eventually be moot.

Reid said he thinks the country has to “work our way past” insurance-based health care during a Friday night appearance on Vegas PBS’ program “Nevada Week in Review.”

“What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever,” Reid said.

When then asked by panelist Steve Sebelius whether he meant ultimately the country would have to have a health care system that abandoned insurance as the means of accessing it, Reid said: “Yes, yes. Absolutely, yes.”

First, though, you have to kill the insurance industry, which is what the public option was intended to do.  The problem now for Reid and his cohorts is that insurance companies will get a little richer, at least in the short run.  The mandate forces everyone into the system, and more importantly, onto comprehensive policies that would make little sense otherwise for younger, healthier adults.

Even with the community-pricing “reforms” in the ACA, this becomes a treasure trove for the insurance companies, and a massive wealth transfer from younger and poorer Americans to older, wealthier Americans in two ways. First, the pricing limits on policies mean that those older Americans who access the system more will have their premiums subsidized by those who use it less.  Second, the investor class with stakes in insurance companies will benefit from the largesse, at least to some extent, that derives from the ACA’s picking of younger pockets.

That will last only as long as the fleeced don’t notice their predicament.  When prices skyrocket, services get restricted or delayed, and the federal red ink starts to flow in earnest, that’s when Phase II will have to begin, according to Coburn:

“More than two years after the passage of Obamacare, the data overwhelming show the law will fail to achieve its core objectives of lowering costs and improving access,” Coburn wrote in 2012. “That, ironically, may have been the design. By making private insurance unaffordable for everyone, it will become available to no one. All that will be left is government-centered, government-run, single-payer health care.”

As McCormack notes, this strategy isn’t exactly a secret anyway:

As liberal Washington Post blogger Ezra Klein said in 2008, organizations on the left pushing for health care reform were pursuing a “sneaky strategy” to “put in place something that over time the natural incentives … move it to single payer.”

So the big question on the left and right isn’t really whether or not Obamacare will eventually fail, but what comes after it fails.

What should come after its failure is a reliance on free-market forces, including the end of comprehensive insurance in most cases, replaced by hospitalization coverage and health-savings accounts (HSAs) for Americans to pay retail costs for routine care.  That will force price transparency, which then allows for normal pricing signals to reach the consumer rather than be blocked by third-party payers.  Providers will then compete on price and performance as they should — and as they do in the cosmetic surgery and Lasik markets now. Perhaps this experiment in big-government intervention and market distortion will make an even better argument for that path rather than a government takeover that follows government incompetence and rationing.  We can certainly hope so, anyway.


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