What HHS Secy Sebelius does not know....
Megan McArdle explains the utter confusion of HHS Secretary Kathleen Sebelius as to what insurance is:
"How can insurance make everyone better off? ....
[I]nsurance does make everyone better off, because it covers very large costs that most people would have trouble paying. Even most really good savers would have a hard time replacing the value of their house, or paying off a $250,000 judgement [sic] for an auto accident....
This is the magic of risk pooling. But notice that it's the catastrophe which makes insurance a good deal. You wouldn't get much value from buying "grocery insurance". At best, you'd be paying an extra administrative fee to route your routine expenses through an insurer, rather than paying them directly. At worst, you'll end up with bills skyrocketing as all sorts of perverse incentives appear. After all, if the insurer is paying all your grocery claims, why not load up on filet mignon instead of ground turkey?....
"This is why you should always have liability insurance, but should think twice about collision damage coverage. It's why high deductibles are a good idea--for small expenses, it's better to self insure. And it's why "catastrophic" health plans, which only cover the sort of extremely expensive events that most people would have difficulty financing, are a much better deal than the soup-to-nuts plans that most people get through their employers....
"But Kathleen Sebelius, the Secretary of HHS, thinks that catastrophic insurance isn't really insurance at all.
"At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. 'Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus. They're really mortgage protection, not health insurance.'
"She said this in response to a report from the American Society of Actuaries arguing that premiums are going to rise by 32% when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market. Sebelius' response is apparently that catastrophic insurance isn't really insurance at all--which is exactly backwards. Catastrophic coverage is "true insurance". Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan.....
"[Sebelius'] answer suggests [that] the Democratic opposition to castrophic plans was not strategic, or vengeful, but entirely heartfelt. The Secretary of Health and Human Services genuinely believes that health insurance should do more than just, well, protect your ability to keep paying the mortgage. Unfortunately, "more" is very expensive and inefficient."
Health care maven Betsy McCaughey notes that "one-size" policies are always inefficient: they force people to buy packages that cover more than they need. Worse, Obamacare's promised cuts almost surely will not materialize; as each cut is set to be made, politicans will back off, for fear of enraging constituents.
So what does Team Obama take aim at now? Part D, the prescription drug plan, which uses market incentives & actually is working as intended, bringing drug costs down: health-care maven Sally Pipes explains:
Today, the more than 27 million seniors enrolled in Part D can choose from about a thousand plans nationwide. Nearly 11 million people covered by Part D did not previously have prescription drug coverage. Ninety percent are satisfied with the program, according to KRC Research.
The competitive forces built into Part D have kept costs down. At an average of just $38 a month, premiums are 27 percent below where the government expected them to be. They’ve been essentially flat since 2009, according to the Kaiser Family Foundation.
Low premium costs, in turn, mean less taxpayer money is spent on subsidies. In fact, Part D costs are 40 percent below where the Congressional Budget Office (CBO) initially predicted. Over the past six years, the CBO has lowered its long-term cost projections for Part D by hundreds of billions of dollars.
Try to name one other federal program that can boast such results. Certainly not the rest of Medicare. At the dawn of the program in 1965, Medicare’s Part A hospital insurance program was projected to cost just $9 billion by 1990. The actual cost was more than seven times that—$67 billion.
Yet Big Pharma is in Obama's gunsight. A rebate shceme will extract money from other taxpayers to drive down profits. Expect higher prices and/or drug shorttages to result.
Democrats are awakening to the reality that ObamaCare was risibly oversold to voters and legislators. What prominent Democratic Sen. Max Caucus now calls a "train wreck" is unfolding: it will NOT cut health care costs; it will NOT improve health care services; it will NOT spur innovation; it will NOT reduce future deficits & debt.
Bottom Line. Yet another example of where blunder, not conspiracy, explains matters--a very expensive example, alas.
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