Walgreen’s is the latest firm to drop an in-house health insurance plan. It will pay workers a flat rate. Workers will then have to find a decent plan. Workers will soon find how slim the pickings are.
This may make insurance companies more competitive. But there is a huge problem. Large companies got low rates because everyone was insured. The law of large numbers took over. High-risk employees were offset by all the low-risk employees. Now each person will be considered as a separate applicant. High-risk people will be identifiable.
Obamacare says that they must get coverage. But will they? We don’t know yet. The health care insurance exchanges are not ready for prime time yet. They are supposed to be ready to enroll people on October 1. The chaos has not yet become visible. It will soon enough.
Insurance companies will do what they can to get around the law. The idea of insurance is to make use of the law of large numbers. By mandating that high-risk people be covered — people with pre-existing conditions — Obamacare destroys the very concept of insurance. It is like allowing people whose homes are on fire to sign up for fire insurance while the fire department is at the scene of the fire.
If these people must be accepted, then the rest of the public will face higher premiums. They won’t like it one bit.
It is politically imperative that Republicans spell out the reasons for these higher premiums if they plan to make political hay out of Obamacare. They have to produce easily understood campaign materials on “How Obamacare has raised your health insurance costs. Obama never mentioned this. Neither did Nancy Pelosi.” But they may not do this fast enough. The solution is repeal, but this has risks. Millions of voters want the subsidy. The longer the program continues, the more fans it will have. It will gain voting bloc support.
Obamacare looks politically permanent to me. Not until January 20, 2017, is there a possibility of repeal. But Senate Republicans have already caved in. They are willing to live with Obamacare. They will not be ready in November of 2014 to run on a platform of repeal. Obama will have until November of 2016 to solidify support for his legacy program — his only legacy program. That will be fairly easy. The defection among Republicans has already begun.
The welfare state is alive and well. Republicans in Congress did not repeal Bush’s prescription drug program. They passed it. They are not going to “get religion” at this late date on rolling back the welfare state.