White House Suspends Laws of Supply and Demand
I'm a little late to the party on this one--I must have missed this item while I was traveling. Apparently, the White House has warned insurers against rate hikes.
The Wall Street Journal reported Wednesday that some carriers are asking for total premium hikes topping 20% starting this month, and the carriers are attributing one to nine percentage points of the increases to new benefit mandates in the law.
"There will be zero tolerance for this type of misinformation and unjustified rate increases," Ms. Sebelius wrote. "We will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections."
Adam Freeman has already noted the creepiness of Kathleen Sebelius's threat to put insurers who criticize this law out of business, as has Peter Robinson. But the implications of the policy are even more appalling. Has no one explained to the Obama Administration what happens when you impose price caps? It leads--every first-year economics student knows this--to rationing.
It's not so much the indifference to the basic laws of economics as the proud flouting of the indifference that pushes me over the edge.
Ah well, let's try to make the best of it. Welcome, rationing! I love neo-revisionist communist revival chic. Bring on the bread lines!
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May '10
Re: White House Suspends Laws of Supply and Demand
You're waaay late to this one, Claire :) Supply and demand were superseded the day Obamacare passed, and they're just now getting around to implementing it!
Saying, "but don't things cost money?" is a sign of greed and indifference to the health of the proletaria-- er, the middle class.
Aug '10
Re: White House Suspends Laws of Supply and Demand
Though I truly believe that most of the ordinary Joes who supported ObamaCare thought ObamaCare would help fix our health insurance system, I can't help but come to the conclusion that the ultimate purpose of ObamaCare is to break the health insurance market even more, until the people beg to be relieved by a single-payer system.
They also flaunted the fact that healthy and sick people can't be charged at different rates under ObamaCare. But insurance can't work if the riskier clients don't pay proportionally more into the pool. And I say that as one of those riskier clients.
I can't imagine an insurance company being able to support very many clients like me if we paid as little as the healthy crowd. Therefore, they must raise premiums for the healthy people so they're closer to the premiums paid by us sickos. Which of course prices the poorer healthy folks out of the market.
So, insurance companies must raise overall premiums to compensate for new mandated benefits and for not billing high-risk clients differently. But they also must not, because the government, whose requirements impelled these premium hikes, said so.
Brilliant.
May '10
Re: White House Suspends Laws of Supply and Demand
Sebelius didn't say that insurance companies couldn't raise rates, just that when you justify the rate increase you can't blame ObamaCare - even if it is to blame. Start looking for the blame to fall other places like fast foods or global warming.
Jul '10
Re: White House Suspends Laws of Supply and Demand
Not to quibble, but were not free market principles killed when Obama, without a peep from the board of directors, took over GM, fired its CEO, and shafted corporate bondholders in favour of unions?
Can we be surprised that a president who thinks it is his business to tell corporations how much their employees should earn would set limits on insurance companies' rate increases? Do we really expect this president and his minions to give a monkey's bum about the rule of law?
Edited on Sep 18, 2010 at 3:56pmAug '10
Re: White House Suspends Laws of Supply and Demand
What Sebelius said is, ""There will be zero tolerance for this type of misinformation and unjustified rate increases... We will not stand idly by..."
"Zero tolerance for this type of misinformation and unjustified rate increases" most likely means zero tolerance for "misinformation" AND zero tolerance for "unjustified" rate increases ("zero tolerance" is most likely distributive, meaning neither will be tolerated, not that you can get away with one or the other, but not both).
Call me crazier than a cockeyed coot, but when big-government types say that there will be zero tolerance for "unjustified rate increases" and also says "we will not stand idly by", I think it's not unreasonable to suspect that they may be entertaining the notion of "doing something" about those "unjustified" rate increases.
Nor do I think it's that unreasonable to suspect that "unjustified rate increases" means "any rate increases we don't like for whatever reason".
Edited on Sep 18, 2010 at 8:51pmMay '10
Re: White House Suspends Laws of Supply and Demand
Claire Berlinski, Ed.:
Has no one explained to the Obama Administration what happens when you impose price caps? It leads--every first-year economics student knows this--to rationing.
It's not so much the indifference to the basic laws of economics as the proud flouting of the indifference that pushes me over the edge.
Ah well, let's try to make the best of it. Welcome, rationing! I love neo-revisionist communist revival chic. Bring on the bread lines! ·
Claire, no joke, I was once arguing this same point with my friend. He told me that I was guilty of using only capitalist economics, and that I had never tested my assumptions about supply and demand, I had just accepted the economics I was taught by our broader American culture. If I actually put my mind to it and studied some socialist economics I would then come to understand his arguments.
Aug '10
Re: White House Suspends Laws of Supply and Demand
After all, if rate increases due to providing mandated extra services (which can't be provided for nothing) are called "unjustified", what rate increase isn't going to be "unjustified"?
Edited on Sep 18, 2010 at 8:51pmMay '10
Re: White House Suspends Laws of Supply and Demand
Midget Faded Rattlesnake
I don't think it's unreasonable to suspect that the big-government type may be entertaining the notion of "doing something" about those "unjustified" rate increases.
Thats my point. Justification will become politically tuned to whatever it needs to be to get through. Just make something up that fits the power that be: "Sure you can raise rates because global warming is increasing water sports injuries".
Its not about the dollars. Its the politically astute justification that counts in getting the rate increases through.
Sep '10
Re: White House Suspends Laws of Supply and Demand
But, but, but... we have record wheat harvests and the five-year plan is on track.
The breathtaking naivete of some politicians never ceases to amaze me. Socialist and Keynesian thinking seem to be based on the notion that adjustments can be made around the edges to the economy without causing any reaction. In other words, people are stupid and can easily be duped. I believe economists have terms for this: forward-looking or rational vs. backward-looking or adaptive. Aside from the fact that this strategy is of decreasing viability in an information age, it always struck me as morally dubious. The idea that policy is based on deception and the denial of information is profoundly disturbing.
Sep '10
Re: White House Suspends Laws of Supply and Demand
It seems the great leader understands economics perfectly fine when it comes to his cap and trade proposal.
That comment is one of the strongest clues, as far as im concerned, supporting the idea that this guy knows exactly what he is doing. He knows exactly where his policies ultimately lead.
May '10
Re: White House Suspends Laws of Supply and Demand
Claire, at the risk of running afoul of the conspiracy theory rule -- I claim the Occam's Razor exception -- you are assuming that Obama doesn't want rationing. But, helloooo! Rationing is a primary characteristic of all the healthcare systems that we are routinely told offer so much better care than our own present system.
The simplest explanation that fits all the facts is that Obama knows exactly what he's doing and that he is intent on bringing about radical structural change by destroying what presently exists.
Or...he is simply breath-takingly, mind-bogglingly ignorant and incompetent, but so deviously clever that he fooled over half of the American electorate.
May '10
Re: White House Suspends Laws of Supply and Demand
"There will be zero tolerance for this type of misinformation and unjustified rate increases,"......
Did Ms. Sebelius lift this directly from a Rand novel? This is the third time I have read this quote, and it scares me more every time. I agree that Obama and his cabinet know precisely what they are doing. Equality of the masses is key, and if it means taking away from the "rich" rather than raising up the poor, at least the result is equality.
Again....scary.
Sep '10
Re: White House Suspends Laws of Supply and Demand
Claire,
I don't believe it's simple indifference to economics.
I had an interesting conversation this week with an actuary who works in the health insurance industry. She talked about the caps on insurance premiums and said, "Insurance companies go out of business very quickly when this happens... when they can't raise their premiums enough to cover their outlays."
She went on to say that among health care actuaries, the consensus is that this is all part of the administration's plan. They believe that the administration is intentionally doing all this--premium caps, demonizing the health insurance companies, and so on--in a campaign to drive them out of business and make the "public option" the only option.
Re: White House Suspends Laws of Supply and Demand
I have heard from several small- to medium-sized employers that their rate increases are reaching more than 30%. We all know why this is true; Sebelius is just forbidding us to mention the emperor has no clothes.
Michael Barone noted that only the Administration believes the price increases are unjustified -- Sebelius mentions no private studies supporting her claim. And not all insurance policies are alike. Some people are going to be mandated to receive care that is very expensive, and the Administration seems to think insurers should pay for it.
Meanwhile, Ed Morrissey reports that Connecticut just decided Obamacare means 20% premium hike for that state's Blues. Remember, one of the elements in Ocare is removal of any caps on medical spending per customer. Since you can't tell who will bust through the old cap, everybody pays a higher premium.
Thank you, emperor.
Aug '10
Re: White House Suspends Laws of Supply and Demand
MadBob
Midget Faded Rattlesnake
I don't think it's unreasonable to suspect that the big-government type may be entertaining the notion of "doing something" about those "unjustified" rate increases.
Thats my point. Justification will become politically tuned to whatever it needs to be to get through. Just make something up that fits the power that be: "Sure you can raise rates because global warming is increasing water sports injuries".
Its not about the dollars. Its the politically astute justification that counts in getting the rate increases through. · Sep 18 at 4:15pm
I see what you're saying, and I'm sorry I snipped at you earlier -- the issue gets me het up, is all.
However, I worry that no politically astute justification is safe in the end -- that whatever reason companies give for raising rates, no matter how PC, may be ultimately smacked down in order to render the health insurance business insolvent.
Jul '10
Re: White House Suspends Laws of Supply and Demand
To those who think that "the One" isn't trying to deliberatly destroy this county's econmic system let me ask you one question.
Pretend for just a minute that Obama actually does have the goal in mind of destroying the U.S. economy. He wants to bring down all industry, all financial institutions, to create chaos that will require the Federal Government to step in and take it all over.
If that were actually his goal, what would he do differently than he is right now?
May '10
Re: White House Suspends Laws of Supply and Demand
Speaking of government interference in supply and demand, an auto industry veteran told me yesterday that he knows many car dealers who have still not been paid for their "Cash for Clunkers" participation. Many smaller dealerships have been forced out of business, while the larger ones have simply had to absorb the hit. Meanwhile, industry sales are as dismal as they were before the government program.
Government contracts -- writing the words down doesn't make them true.