What To Do About The Obamacare Death Spiral?

It was back in January 2015 that I first wrote about the phenomenon of the socialist death spiral.  (Not that I was the first person ever to notice this phenomenon.)  The basic idea is that, in a private property/free exchange system (aka "capitalism"), people apply their ingenuity to get ahead, leading to constantly increasing productivity, and every year the economy grows some; but in a world of government giveaways based on demonstrated need, many people apply their ingenuity to appear needy, thus productivity starts to decline, and then faster, and you enter an economic death spiral.  The Soviet Union is the classic case.  Today it's happening in Venezuela.

And it doesn't have to be the whole economy.  The New York City Housing Authority sits on some of the most valuable real estate in the world.  But with socialist-model public ownership, the rents fail to cover operating expenses, there is nothing for property taxes, capital needs go unmet, and the buildings deteriorate.  The need for subsidies goes up every year, already in many cases $50,000 and even $100,000 annually per family, even as the residents live out their lives in deepening poverty.  Higher and higher costs pay for a situation that only gets worse.  The socialist death spiral!

And then, my friends, there is Obamacare.  "To each according to his needs."  Don't worry, this time it's going to work!  We'll "bend the cost curve" downward!  (By what hubris do government functionaries think that they have an ability to do such a thing?)  In this post back in April I reported on new so-called "short term plans" by which healthy people were avoiding all the Obamacare mandates and leaving the federal exchanges to deal with the sickest of the sick.  Why wouldn't they?  And of course the most recent news is that the next round of premium increases will be well into the double digits in most places -- for that small number of suckers who actually pay the full freight.  The New York Times has a roundup last month that projects average increases of 11% even for people who are "savvy" shoppers and make optimal changes to get the cheapest plans.  Of course, that doesn't apply if you are "needy" and can qualify for a government subsidy: 

Most current customers will be insulated from the full increases. To help people afford insurance, the law offers sliding-scale subsidies to people earning less than 400 percent of the federal poverty level, which at $11,880 for a single person means just under $48,000 to qualify.

These things move slowly, but all the classic trappings of an incipient death spiral are here.

So, to get to the $64,000 question, what do our presidential candidates plan to do about this?  Hillary has some so-called "detailed proposals."  Actually, they all consist of exactly the same thing:  transfer more and yet more of the taxpayer money to paper over the problem and pretend that this is all free.  Here is her site on the issue.  It's too long to put it all here, but here are the first five:

  • Defend and expand the Affordable Care Act, which covers 20 million people. Hillary will stand up to Republican-led attacks on this landmark law—and build on its success to bring the promise of affordable health care to more people and make a “public option” possible. She will also support letting people over 55 years old buy into Medicare.
  • Bring down out-of-pocket costs like copays and deductibles. American families are being squeezed by rising out-of-pocket health care costs. Hillary believes that workers should share in slower growth of national health care spending through lower costs.
  • Reduce the cost of prescription drugs. Prescription drug spending accelerated from 2.5 percent in 2013 to 12.6 percent in 2014. It’s no wonder that almost three-quarters of Americans believe prescription drug costs are unreasonable. Hillary believes we need to demand lower drug costs for hardworking families and seniors. Read more here
  • Protect consumers from unjustified prescription drug price increases from companies that market long-standing, life-saving treatments and face little or no competition. Hillary’s plan includes new enforcement tools that make drug alternatives available and increase competition, broaden emergency access to high-quality treatments from developed countries with strong safety standards, and hold drug companies accountable for unjustified price increases with new penalties. Read more here.
  • Fight for health insurance for the lowest-income Americans in every state by incentivizing states to expand Medicaid—and make enrollment through Medicaid and the Affordable Care Act easier.

Don't worry, it's all infinite free money.  Of course she gives no idea of how much it will cost, or whether that is of any concern. 

So, instead of Obamacare being in a death spiral, we'll put the burden on the general taxpayer, and put the whole government in a death spiral.  It will just move more slowly and last longer. 

Donald Trump?  He says he will "repeal and replace" Obamacare.  I haven't found any specifics, but hey, it's a start.