The First Wave
As NBC and nearly every other news organization has revealed in recent weeks, the fact that millions in the individual insurance markets are losing their insurance plans is something Democrats in general, and the President in particular, have known for years would happen. Worse, they intentionally made sure this would happen, even while continuing to promise that “if you like your health plan, you can keep your health plan.” Why? Because, as pointed out this weekend by White House spokesperson Ezekiel Emanuel, Americans aren’t smart enough to make their own healthcare decisions. Of course, the president and his supporters seek to argue now that, what is really happening is that the old “junk” insurance plans once offered are being eliminated and replaced with better plans. Never mind whether or not you can afford the plan; it’s better! But what the administration is going to argue, as can already be seen, is that this process of “out with the old, in with the new” is a good one and should be welcomed. It’s the concept of “Creative Destruction.”
Creative Destruction is an economic concept which denotes the continual destruction of old processes, methods, services, and products in favor of that which is newer and better. In particular, it’s a concept closely associated with the Capitalist system and, ironically, often derided by so-called “progressives.”
A relevant example is the way the Internet and Internet-based services revolutionized the way people operate. Not only has the Internet had a global impact upon the everyday lives of people, it has also helped to create and destroy many new businesses. That said, the Internet has helped to create vastly more in the way of new opportunities and new wealth than it has destroyed.
Yes, the destructive aspect of this process can be difficult for those whose livelihood is impinged upon by new technologies. That said, how many (including those who have lost jobs because of it) would wish to go back to the way things were before the Internet appeared? It’s likely the number would be vanishingly small.
The Obamacare Argument
Lo and behold, Garance Franke-Ruta of The Atlantic is attempting to argue that the millions who have lost the affordable plans they once had is creative destruction in action.
Franke-Ruta, having titled her article “The New Problem With Obamacare Isn’t Socialism, It’s Creative Destruction,” does little to explain what the concept is and how Obamacare really is creating something better. What she does explain is that…
From a consumer perspective, however, this looks very different. For those with junk plans who were healthy and never had to use them for anything beyond routine care, the plans seemed like a great deal. And while it’s being presented as breaking news that ACA gets rid of these plans, the provisions of the law that do this have been well-known in health-care circles since 2010. During a background briefing this summer, the White House specifically mentioned the individually insured and the uninsured as the two categories of people who would be using the new exchanges.
So, the new term for “plans that consumers actually want” is “junk plan.” Here’s what the president had to say in this regard…
You were getting ripped off by insurance companies. We’re putting an end to that. Instead, we’re going to rip you off!
Obviously the president did not say this. What he is saying, in so many words, is that consumers in the individual markets have bad judgement and need help from the government in order to make good choices. But is it a good choice for a 60-year-old single male to have maternity coverage?
This illustrates the difference between real creative destruction and Obamacare, which, currently, is mostly just destruction. In a real market environment, service providers found out what consumers want and need and offer them just those services. If someone needs more, they can get it. If they find out they need less, they can remove it. We live in the age of “Apps,” where you can find highly-targeted, low-cost solutions. It’s a time when simple services can bring on massive waves of change, and consumers have more choices than ever before.
With Obamacare, we see choice eliminated, rationing implemented, and massive bureaucracy plugged in to an already struggling industry. Why was the industry already struggling? Because there was already too much government interference. Obamacare is not creative destruction; it is, instead, simply destruction.
The Second Wave
The proof of that will come next year, when the employer mandate kicks in and businesses all over the country begin eliminating health coverage and sending employees to the exchanges for coverage. This year the nation will see at least ten million people who have health plans they like lose their coverage because of Obamacare mandates. Yes, insurance companies are offering alternatives in most cases, but in nearly every case it will cost consumers more money. In many cases, it will cost them much more, even with government subsidies. This current mess was unforseen by most, primarily because we had the absolute assurance of our president who we now know was lying to the American people in order to get himself re-elected.
Next year we will see the loss of insurance coverage problem grow far worse. If there are ten million losing coverage this year (there are), it means thirty million will see their employer-sponsored coverage disappear next year. Conservatives have been saying this since 2009 and were, at best, ignored and, at worst, accused of racism. Not it’s clear that even conservatives were too generous in their assessment of the train wreck known as Obamacare.
Obamacare was originally intended to insure those coverage in the first place. Now it’s making a problem much worse by introducing new complications, new costs, and fewer choices. The incentives for those who must enter the market are few and the penalties and complications for everyone involved are greater than ever. Think on this; can the IRS really be trusted to make healthcare enrollment and management simple?
The first wave of Obamacare-related losses will negatively effect millions. The second wave next years will negatively effect tens of millions. Will there be other waves? Whether they are larger or smaller, that is almost certain. Obamacare is the federal bureaucracy, in all its glorious inefficiency writ large upon the lives of every American. This disaster, brought to you by your friendly neighborhood progressives.