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The Simple Economics of the Latest ObamaCare Lie

Despite how complicated President Obama wants to make it, his woefully misleading, dishonest, untruthful, broken promise (pick your poison) about how millions of Americans who have insurance can keep it is really quite simple.

President Obama knowingly and intentionally gave what he now calls “bad apple” insurance companies (you know, disreputable companies like Blue Cross, Aetna, and Cigna) a choice between losing money and making money.

As is all too often the case in our free market economy, these insurance companies chose to stay in business.

It’s simple economics.

President Obama said if you like your health insurance you can keep it.  What he failed to say was that if your health insurance plan changed in the slightest – regardless of whether it was initiated by you or your insurance company – that plan would no longer be grandfathered in.  Insurance companies would legally no longer be able to offer it under ObamaCare.

Here’s how it works.

Health care costs (surprise, surprise) have gone up since 2010.  Insurance companies each year, almost without fail, change something about your insurance plan.  Now pretty much any change (I wrote about the regulations behind this here) made in the past three and a half years triggers the cancellation of the grandfather provision and thus the plan.

So insurance companies either keep the same exact plan that now costs it more because of increased health care costs, or it can dump that plan and offer a new more expensive plan that covers stuff you didn’t want and can’t afford and you are forced by law to take that plan (or a similar one some place else).

What do you think these insurance companies would choose?  Take the hit for the good name of the President or go ahead and take the increased cost.  If it was cheaper for the insurance company to keep the same plan over the past 3 years, they would have.

I may just be a caveman lawyer, but that’s simple economics.

 

Matthew Clark is Associate Counsel for Government Affairs and Media Advocacy with the ACLJ. A lifelong citizen of the Commonwealth of Virginia, he lives with his wife and three boys in Northern Virginia. Follow Matthew Clark: @_MatthewClark.

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