Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

21 March 2010

Reynolds on Obama Insurance Rate Increase Lie

Alan Reynolds, a senior fellow at the Cato Institute and the author of Income and Wealth has an interesting article that appeared in the Daily Caller on 15 March 2010 that looked into the Obama claim on 20 February that an evil insurance company in California was about to increase its premiums by 39%.  Obama has often repeated this claim since the 15th, including just yesterday in Congress, so he remains undeterred in his big fib, despite the corrective truth provided by Alan Reynolds.

As Reynolds noted, Bob Beckel, the Democrat political strategist, observed that Obama needed an enemy and the insurance companies were chosen.  Obama needed a for-profit insurance company to become the poster bad guy.  He picked Wellpoint's individual Anthem Blue Cross Blue Shield plan which had requested individual plan increases of from 20 to 35% from the insurance regulatory commission of California.  The total of individual plans is only 4% of the market, so few people are affected by rate changes for these plans.  If, and this is a very big if, the commission were to allow these requested increases, the only way anyone would have a 39% increase would have been to both choose a "gold-plated Cadillac plan" and move up into a higher age group.  These requests for rate increases are commonly denied or moderated.  Obama mentioned two that were denied in the same speech he claimed that a 39% rate increase was likely for the WellPoint individual plans in California.

A still more dramatic request for a 56% increase by a nonprofit insurance plan gained little attention.  Why is this?  Because Obama wants to put an onus on companies making profits.  He really dislikes the idea of companies making profits and he assumes that most other Americans do too.  So Obama griped that the $1.2  trillion health insurance industry had the five largest insurers make profits of $12 billion.  What he failed to note was that WellPoint had sold its pharmacy benefits management company NextRX to Express Scripts for $4.7 billion in April and this was included.  The real profit from ordinary sales of health insurance was then only $7.3 billion.

Mark Perry of the University of Michigan calculated that WellPoint's profit without the asset sale as 3.9%, which is hardly a great profit for any industry.  The industry average profit margin is 3% or about $100 per policy.  The Centers for Medicare and Medicaid Services (CMS) say that the cost of premiums minus the benefits paid fell by 2.8% in 2008.  It predicts that private health insurance will go up by 2.5% in 2010, but that medical goods and services will go up more, about 2.8%.  For the average purchaser of health insurance in 2008, premiums fell by 3.5%.  In 2009, they fell by a further 3.2%!

But no, Obama wants us to think that health insurance premiums will soon be out of everyone's reach unless the great socialist leader comes to our pathetic rescue. Reynold's concludes his article with:
The president's health insurance proposals hoped to use stern command-and-control techniques to run the health insurance system. It was all about minimizing free choice and maximizing brute force—forcing people to buy certain kinds of politically-designed insurance, forcing insurers to cover services many consumers do not want to pay for, and forcing insurers to curb or roll back premiums even as medical costs go up. The whole shaky apparatus was built upon even shakier statistics....
One would like to think that one should start with the assumption that a President of the United States is telling the truth, but that one should frequently check to be sure he is.  With our present illegitimate president, as demonstrated over and over with his incredible lies relating to the health insurance and jobs issues, it is only possible for a rational man to assume he is lying and check up on him just in case he has suddenly decided to live up to the responsibilities of his job.  There have been men who became better men once they became President, but there is no sign to date that Obama is now anything but the divide and conquer, lie and lie again rabble-rousing demagogue of the unskilled, uneducated, and unthinking.  It is amazing how many college-educated elitist-minded Americans agree with him and cheer him onward.

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