Daily Archives: 23 January 2013

Progressive Policies and the Poor

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Thomas Sowell, writing in the National Review, had some thoughts on the impact of modern Liberalism on the welfare of blacks in the US.  I think they apply to all minorities, to whites, to our poor generally.

Severe restrictions on building housing in San Francisco have driven rents and home prices so high that blacks and other people with low or moderate incomes have been driven out of the city. The same thing has happened in a number of other California communities dominated by liberals.

And

Liberals try to show their concern for the poor by raising the minimum wage.  Yet they show no interest in hard evidence that minimum-wage laws create disastrous levels of unemployment….

And

The black family survived centuries of slavery and generations of Jim Crow, but it has disintegrated in the wake of the liberals’ expansion of the welfare state.  Most black children grew up in homes with two parents during all that time, but most grow up with only one parent today.

And

Liberals have pushed affirmative action, supposedly for the benefit of blacks and other minorities.  But two recent factual studies show that affirmative action in college admissions has led to black students with every qualification for success being artificially turned into failures by being mismatched with colleges for the sake of racial body count.

Sowell summarizes the matter starkly:

In all these cases, and many others, liberals take positions that make them look good and feel good—and show very little interest in the actual consequences for others, even when liberal policies are leaving havoc in their wake.

The party of Jim Crow may be attempting to correct its past.  It is, in fact, failing miserably.  Modern Liberals give so little thought to the 50 years of empirical evidence defining the consequences of their actions that I have to conclude that they’re well aware of those consequences.  One of those consequences, flowing from the poverty enforced maintained by their actions, is the continued dependency of our poor on the largesse of the Modern Liberals in government.

That’s not just petty ego stroke, that’s political power.

Obamacare and Insurance Costs

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Here are some of those costs.

No less a light than The New York Times reports that

…health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.  Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.  In California, Aetna is proposing rate increases of as much as 22%, Anthem Blue Cross 26%, and Blue Shield of California 20% for some of those policy holders.

OpenMarket notes that

Obamacare resulted in hikes of 41%-47% in health insurance premiums for some policyholders in Connecticut.  …in other states, like Florida and Ohio, insurers have been able to raise rates by at least 20% for some policy holders.

Ricardo Alonso-Zaldivar, writing in Huff Post Business, says

Your medical plan is facing an unexpected expense, so you probably are, too.  It’s a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama’s health care overhaul.  The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies….

On top of this, The Washington Post reminds us that President Barack Obama slid into his Obamacare a 3.5% surtax on those insurers that participate in Obamacare’s Federal health insurance exchanges.  Of course, this fee will be passed through to their customers in the form of higher health insurance premiums.

There are causes for these sharp increases, as we might expect.  Merrill Matthews and Mark Litow, in The Wall Street Journal, have some ideas on this.  They point out, for instance, some costs that Obamacare imposes, willy-nilly, on insurers—transforming them from companies that accept risk for a fee into Federally mandated, privately funded welfare programs:

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

There is no risk-based fee allowed here.  Just take all comers, and don’t “overcharge” them—HHS’ definition of “overcharge.”  Folks won’t need to buy insurance until they’re actually sick—the risk has been realized—but the insurers won’t be able to charge a premium commensurate with the empirical fact of illness; they can only charge the premium in effect for a low risk, healthy population that hasn’t gotten sick yet.

Matthews and Litow also note that this outcome was well-known long before Obamacare was dreamed up post-2008:

Eight states—New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts—enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets.  Premiums increased so much that Kentucky largely repealed its law in 2000 and some of the other states eventually modified their community-rating provisions.

They also note that, based on empirical evidence—i.e., facts already known to the authors of Obamacare—states with currently low insurance rates will be the most punished by Obamacare:

We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York, and Vermont already pay well over twice what citizens in many other states pay.  Consumers in Maine and Massachusetts aren’t far behind.  Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming, and Virginia will likely see the largest increases—somewhere between 65% and 100% [a different estimate than the lower one of OpenMarket].  Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

Finally,

Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher—a spread of about $5,500 per family.

It’s the Progressive New Math, from the Orwell School of High Finance: cost increases are premium cuts.