November 01, 2009

Public Option

In a Wall Street Journal article, the CBO (Congressional Budget Office) estimates by the year 2019, 30 million will be insured through the new government run insurance exchange, while 6 million of which will have the public option. There is absolutely no way will this happen, look no further then the Commonwealth of Massachusetts' government insurance exchange, the Connector Authority, who had similar estimates. Lets look at what has happened here.

First, the private insurance sold through the Connector Authority has had very little success. Why? There simply is no savings for a person to go this route. Although alot of people complain about the cost of health insurance (including myself), the private carriers competing in the marketplace simply do not have the waste and extravagances that many allege. This begs the question why would anyone want to pay more to go through any of these government exchanges, if there is no savings? They will not and have not in Massachusetts unless of course it is the only place for them to get insurance which typically will lead to adverse selection, bad claims experience for the underlying exchange and even worse rates.

Second, the public option. The Commonwealth of Massachusetts offers a highly subsidized plan for people earning up to 300% of the Federal Poverty limit called Commonwealth Care, without any questions pertaining to a person's assets. An applicant can literally be worth millions of dollars, but if there income falls below the guidelines below, they can get Commonwealth Care.
  • 1 $32,496
  • 2 $43,716
  • 3 $54,936
  • 4 $66,156
  • 5 $77,376
  • 6 $88,596
  • 7 $99,816
  • 8 $111,036

A family of 4 earning under $66,156, even one of substantial wealth, qualifies for Commonwealth Care. These plans have good benefits and great rates, much less then the private marketplace. This has been wildly successful and far exceeded estimates with nearly 200,000 subscribers. The cost to the Commonwealth of Massachusetts, however, has been hundreds of millions per year now rumored to be close to 1 BILLION dollars in the read, also far beyond initial estimates.

The Federally run public option will even have a larger pool of applicants since it increase the guidelines to 400% of the Federal Poverty limit! If 200,000 members costs the Commonwealth of Massachusetts 1 BILLION, what will 6 million members cost the Federal Government. Now keep in mind that the 6 million will most likely be 20 million, since the rates are cheaper then the marketplace and a person earning up to 400% of the Federal Income limit, without any regards to net worth, can qualify.

The definition of insanity is doing the same thing over and over again but expecting different results. The public option will merely see a huge migration from the private marketplace to a tax-payer subsidized option costing the Federal Government hundreds of billions of dollars.

1 comment:

Jahn said...

Nobama care is going to be an unmitigated disaster.

Estimates are that it will 2019 before everything is fully implemented.

The baby boomers are going to be the guinea pigs for this boondoggle and they will flood the healthcare market and bring it to its knees with their healthcare needs about the time this is up & running 100%. That flood of Boomers will last 15 to 25years, depending on Bommers overall life expectancies.

The gubmint runs the post office, the RMV, the public schools, the Masspike, the fire dept, etc, etc. Need I say anymore about waste, fraud, abuse, dead wood employees, and the like...........

And dont forget how critical the healthcare industry is to Worc and Massachusetts. No More $103,000 annually for a 36 hr, 3 day work week for UMass nurses.......or $98,000 for a 40 hour, 4 day work week.

Anyone wanna buy some cheap real estate in Downttown Hartford about 10 yrs from now??