HEALTH INSURANCE BUBBLE BROKEN BY ACA

The disastrous Affordable Care Act rollout revealed a buried surprise. What the rollout exposed was that the health care insurance industry structure was operating as a huge bubble similar to the mortgage bubble. The home loan industry sold faulty mortgages to millions of people; financial institutions packaged these “substandard products”; and paid rating agents to mark up these “packages” as good investments, which they were not. It was a conspiracy to make money, which they did.  It all came crashing down with devastating effects on the people who owned the substandard mortgages—the people with their ill-gotten gains walked away from the fiasco unscathed.

President Obama said, “If you like your health care plan you can keep it.” Republicans who wanted to destroy the ACA attacked him mercilessly. Their cry was thousands up on thousand of people are having their insurance policy cancelled. They gleefully awarded the President with “four Pinocchio’s”, or labeled him as an outright liar. The truth is that the ACA forced insurance companies to cancel substandard insurance plans, the thing that should have happened but never did with substandard mortgages. Think of how nice it would have been if President Bush had stopped mortgage companies and banks from selling substandard mortgages.

Obamacare caught insurance company selling what amount to fraudulent plans. The people who owned these plans had been deluded into thinking they had “good” health insurance. What they bought cost them little and was inadequate coverage, which means the insurance companies made millions.  This morning in during he congressional hearings someone said the people buying cheap insurance was like buying a car without a motor; Secretary Sibelius sarcastically added, “. . . to save on gas”.  The pleasant surprise is that because of ACA they can afford better coverage at slightly higher cost.

Against this background, the Republican cry that the Obamacare forced people to buy health insurance, thus eliminating the people’s God given right to chose what they wanted—or as Sen. Ted Cruz says, to be free in America. If people want to be stupid and let some highly educated MBA insurance company executive rip them off, they should have that right. The number of canceled insurance policies was in the neighborhood of 2,000,000; therefore, what the Republican Party is supporting is wide spread deceit, fraud, and abuse.  What the Democratic Party and the President Obama want is a “healthy” insurance industry and want 330,000,000 Americans to have affordable health care that is worth the money they pay for it.   

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