The Death Spiral of Health Care

I've been watching and waiting on what's going to happen with the health care legislation that is currently working it's way through congress. Along the way, here is what we've seen; town hall meetings gone awry, Speaker of the House, Nancy Pelosi calling protestors "un-American", right wing propganda, and left wingers firing back with a "tattle-tale" website.


The town hall dissidents have been entertaining, but at the same time shameful. The anti-Bush protests should have taught the Right one thing; if you are going to protest, do so with some respect. But then again, did the Bush protestors really think those years of nasty demonstrations wouldn't lead to the same type of demonstrations against President Obama? If anything, those protestors left such an impression on the Right, they began using the same tact and tactics against President Obama.

And really, Nancy Pelosi? Calling the protestors "un-American"? Did you forget how you were "energized" by the same unruly and disruptive protesting tactis used in 2006 to demonstrate against the Iraq War? But I have a name for you, Nancy. "Liar". How patriotic and American are you to accuse the CIA of lying to Congress about the use of waterboarding? Why should the American people believe a word you say now considering just two examples of you speaking out of both sides of you mouth? Don't call these people "un-American" for exercising their first amendment right. These people are yelling at the top of their lungs for their representatives in Congress to hear them and act on their demands! Isn't that the way the representative Congress is supposed to act anyways? Or do you believe you are above the demands of your constituents?

There is so much information floating around right now about the health care bill that the only way to get the actual information is to read the bill itself. I'm hesitant to trust the website President Obama created to dispell rumors about the health care bill, fearing that it contains the same propoganda the Right has been shelling out.

And really, President Obama? A tattle-tale website? I understand there is a lot of propoganda out there right now, but do you have to resort to 2nd grade tactics to make your point? How about a national address where you explain in detail what the health care bill is intended to do? Oh wait, you tried that already. How did that end, again? With a beer summit because you commented on a local matter you had no business commenting on? Fantastic.

So why is there so much drama surrounding the health care issue? Is it because no one wants people to have health coverage? I doubt that. This is a very complicated matter that will harm more people than it will help.

The economics behind this legislation are far reaching. Opponents feel that a public health option would be too competitive with private insurance companies and eventually run the private companies out. The "insurance exchange" as the Obama Administration puts it, provides "low-cost, high-quality" health insurance to families that cannot currently afford health insurance. But if this program is low-cost and high-quality, won't that result in some people switching from private or employer provided health-insurance to save some money? This is the classic death spiral taught in Economics 101 that leads to the destruction of insurance companies.

Let me explain. With a government option that costs less money than private or employer provided insurance, the healthiest individuals will switch to the government option to save money. This will decrease the "risk pool" the health insurance companies have (the non-sick subsidizing the health care costs of the sickly). When this happens, insurance premiums must go up since the healthiest have left the pool and there is less subsidized money available for the sickly in the insurance risk pool. When the premiums go up, more healthy people leave the risk pool to capitalize on the lower premiums from the government plan. This continues to happen until the insurance companies can no longer afford to provide insurance, resulting in everyone transferring to the government option; the end result being socialized medicine. Quite frankly I'm shocked the Obama administration missed this day in Economics 101 and to date has ignored this possibility.

And on top of that, is the Obama Administration anticipating a jump in the demand for the government run program? Republicans are correct to argue they didn't do such a great job with the "Cash for Clunkers" program and it's safe to assume they wouldn't with a government run health insurance program. A large increase in people joining the insurance exchange could further bog down the program and lead to long waiting times for benefit reimbursement. Government is inefficient enough as it is, let alone if program demand dramatically increases the benefit processing time.

Now I'm not saying that the Republican flow-chart detailing program benefits is necessarily correct, but I don't believe that the Democrats have taken all things into consideration. Am I saying that health care doesn't need reform? No. Health care desperately needs reform because it is entirely too expensive today. Do I think this particular plan is the best solution? Of course not. This alternative does more to harm health care today than it does to help it. Maybe with a little more work (and the Obama Administration backing off from deadlines to have the bill passed) Congress could come up with something that could minimize the death spiral of the insurance companies and at the same time provide health care to those who need it most and can't afford it.