03.16.2017 2

CBO: 8 million will choose to leave private insurance market without fines

By Natalia Castro

The Congressional Budget Office is absolutely correct, millions of Americans may not be getting insurance once Obamacare is no longer in affect. However, mainstream media has already made a critical error as to why so many people will be leaving the system.

Rather than being forced to have insurance that does not satisfy individual needs, Americans are begging for insurance in the private sector that is competitive and adequate. Solving the healthcare crisis will require legislators to return to economic basics; when the market is competitive, costs will lower, and people will once again desire the product.

Until this occurs Americans will continue removing themselves from the insurance industry. That’s right, when given the choice, millions of Americans will opt out of purchasing health insurance.

The Congressional Budget Office (CBO) explains, “in 2018, 14 million more people would be uninsured under the legislation than under current law. Most of that increase would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties…”

While the Obamacare plan forced the public to pay for insurance in order to evade a federal fine, now Americans will have the choice to decide if that is something that they want.

With 8 million opting out coverage, per CBO, due to individual and employer mandate removals alone, crying about the millions of people who would lose insurance is the left’s way of ignoring the reality that a significant portion of those losing coverage never wanted it in the first place.

The left creates a “problem” with individuals not having insurance in order to create a demand for a government solution, but as Americans for Limited Government President Rick Manning noted in a statement, “People choosing not to buy health insurance is a non-problem. And the solution to a non-problem is to do nothing.”

The federal government should not force people to buy insurance; government should hear the warnings of the market telling them that insurance is not practical for many right now, and only loosen its regulation.

Going completely unaddressed in both Obamacare and the American Health Care Act, one of the biggest drivers of health care costs is the cost of doctors due to the American Medical Association’s monopoly on licensing. In 2009, Forbes columnist and Reason Foundation senior analyst Shikha Dalmia, explains that by convincing lawmakers to shut down “deficient” medical schools and place caps the number of funded residency programs, the AMA has stunted the supply of doctors by 30 percent over the last 30 years.

While few question the cost of doctors because of the high level of malpractice risk involved in the career, Dalmia Forbes reports that “excessive physician salaries contribute nearly three times more to wasteful health care spending than the $20 billion or so that defensive medicine does.”

When doctors are too expensive and federal healthcare plans do little to nothing to curb this cost, it is no surprise millions of Americans are excited to remove themselves from the system.

Similarly, the Food and Drug Administration’s (FDA) control over the pharmaceutical industry has produced expensive inefficiency in the health care sector.

As a government monopoly, the FDA imposes regulations on drug companies that make drug approval a long and costly venture only the most wealthy companies can embark on. The FDA only further fuels “Big Pharma” by removing small, generic drug companies with the opportunity to compete.

The Competitive Enterprise Institute argues in a study that the entire premise for the FDA’s creation and implementation is misguided, as writer Michael Krauss explains, “The market failure argument supposes that private corporations have insufficient incentives to produce information, but that government incentives to inform consumers are somehow not distorted. But FDA is subject to its own set of perverse incentives. For the agency, the political consequences of mistakenly approving a bad drug or device are far worse than those of mistakenly delaying or disapproving a needed therapy. As a result, FDA is inherently overcautious — an approach which serves its interests but not those of the public.”

While protecting its political stature, the FDA prevents critical experimental drugs from reaching the American people and empowers large drug companies to hike up prices. Not only do people not get the drugs they need, but what we do receive comes at an excessive cost.

Finally, by refusing to make health care plans available across state lines the government fails to allow competition in the industry to appeal to consumers.

In a joint study between Georgetown University and the O’Neill Institute for National and Global Health Law, the groups explained “a New Jersey resident has no choice but to purchase a policy from a carrier licensed in that state and that carrier can only sell that resident a policy compliant with all the state’s mandates as well as its guaranteed issue and community rating requirements. But because of the variation in state requirements regarding guaranteed issue, mandates, and rating rules, as well as state demographics, there is a tremendously wide price variation in individual policies.”

This means for an insurance buyer in Alaska the average annual cost will be about $5,112, but for a resident in Utah the average annual cost will only be about $2,160. It is no surprise the Alaskan resident might opt to not have health insurance than pay nearly three times the cost of insurance in another state.

The federal government has removed competition and thus, driven up the price of insurance dramatically. With medical school monopolies, FDA monopolies, and state restrictions on plans it is no surprise millions of Americans would rather choose not to have overpriced insurance the moment penalties are removed.

The people do not need another subsidy to lower health costs when the system is providing them is flawed and the left does not need to complain about people losing coverage; the federal government must realize that until they give the American people a reason to choose to have insurance — in a free market — without government intervention, fewer will and high costs will continue to prevail.

Natalia Castro is a contributing editor at Americans for Limited Government.

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