Sick system

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.

In the wake of the VA scandal, the swap of five Taliban members for U.S. Army Sgt. Bowe Bergdahl, the collapse of Iraq and the disappearance of years’ worth of IRS emails, it seems Obamacare has vanished from the headlines.

Unfortunately, it hasn’t vanished from our lives. It still exists, and it’s still causing serious problems for state budgets, individuals and families. And it stands to continue to cause those problems for most Americans in the years to come.

This week, The Manhattan Institute released an interactive Obamacare rate map revealing that Nevada is one of only a handful of states where health insurance rates have increased by more than 80 percent since the adoption of the Affordable Care Act.

In the Silver State, 27-year-old self-insured males have seen a 289 percent increase in the cost to remain insured, while 40-year-old men have seen their rates go up by 183 percent. At the age of 64, a Nevada male will have seen his rates increase by 124 percent. For 27-, 40- and 64-year-old self-insured women in Nevada, rates have gone up 106, 94 and 130 percent, respectively, from their pre-Obamacare levels.

Though President Obama and other Obamacare supporters promised Americans that passage of the ACA would save families $2,500 per year in insurance costs, we know now that the exact opposite has happened. As Cato Institute Senior Fellow Michael Tanner told radio host Dan Mason last week: “Almost everything we were told about [Obamacare] by the president turns out to be wrong.”

Tanner expanded on that comment during his keynote speech at NPRI’s Spring Celebration, which was held Wednesday night at the Eldorado Resort Hotel in Reno. The fundamental premise of Obamacare is that young, healthy people will overpay for insurance in order to offset the costs of insuring the older and sicker. That premise has turned out to be false, and it’s not just the young and healthy who will suffer the consequences.

In its current form, Tanner explained, Obamacare is in a “death spiral.” Because not enough young, healthy individuals have signed up for insurance (that demographic accounts for only about 27 percent of enrollees, far short of the 40 percent that even the Obama administration admits is needed to make the plan viable), premiums for all will be forced upward. In turn, the young, healthy people who’ve signed up for insurance, faced with those higher premiums, will drop coverage, leaving the insurance pool sicker.

This again, in turn, will cause premiums to rise further, forcing even more healthy individuals out of the pool, until Obamacare eventually collapses. The likely result? We may well see the entire insurance market — public and private — implode.

As Tanner put it: “We’re on the cusp of something that could be very, very bad in terms of the insurance market.”

The real problem with health care, which Obamacare does nothing to address, is that consumers are barely involved in the health insurance equation. Somebody else — the government or, through what is essentially government subsidization, an employer — is paying. And because consumers are so far removed from the actual costs of health care, those competitive dynamics that push costs down in other markets are missing.

As Tanner explained, shifting to a market-based system in which individuals shop and pay for insurance themselves would drive costs lower. That’s because consumers, as they do with most purchases in their lives, would be able to demand better quality at a lower price, instead of having to settle for the reverse.

Government intervention is what prevents the improvement in goods and services that otherwise occurs in a free-market system. And the case of Obamacare is no different. The question of “how to fix Obamacare” misses the point. The way to improve our health care system is to get government out of it.

If you weren’t able to attend our Spring Celebration and hear Tanner’s speech — or if you’d just like to learn more of his insights — I encourage you to pick up a copy of his book: Healthy Competition: What’s Holding Back Health Care and How to Free It.

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On a completely unrelated, but nevertheless important, note: If you’re planning to stop by next month’s FreedomFest— the event that bills itself as "the world’s largest gathering of free minds”— make sure to stop by the 2:30 panel in Melrose 3 on Friday, July 11. The panel —“Stateside Success: Can State Think Tanks Make a Difference?”— will feature NPRI’s own Geoffrey Lawrence along with leaders of other state-focused, free-market think tanks across the country.

Also, John Stossel will be doing a live filming of his Fox Business show, “Stossel,” at Freedom Fest on Thursday, July 10 at 7 p.m., and Las Vegas locals can get tickets to participate in the audience for FREE! If you wish to attend the Stossel taping, email a request for tickets to Stosseltix@foxbusiness.com. Reference FreedomFest, provide your contact information, and you’ll get your tickets at no cost.

Thanks for reading!

Andy Matthews
NPRI President

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