Totally Inconsistent

Two excerpts from Obama's speech:

That's why under my plan, individuals will be required to carry basic health insurance "“ just as most states require you to carry auto insurance.

Oh, jeez, I sure wish that were true.  Auto insurance covers only catastrophic damages, such as totaling your car or incurring serious liability by hurting someone.   It does not cover regular repairs, preventative maintenance, etc.  Also, state-mandated auto insurance has a range of coverage caps -- if you want a higher cap, you can pay for it.  No one expects their company to pay their auto insurance, and if a company were to provide it it would be considered a taxable benefit.  Compared to our current health insurance system, auto insurance-like health insurance would be a brilliant improvement.  Despite his making this analogy, this is absolutely NOT what he is suggesting.  Also from his speech:

Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition. As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most. They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime. We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies

Update: OK, here is another good pairing, from the same source -- first, he says that a public option will not be subsidized:

They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects.

But then he makes this comparison:

It would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.

See?  The public option will not be subsidized and will work just like public universities which are highly subsidized.

By the way, it is almost impossible for government NOT to subsidize such an entity, in part because of the way government accounting differs from private accounting.  Government accounting is on a cash basis, so large up front investments show as a first year loss with no future expense implications.  In operation, it means capital spending is pretty much free.  And numerous charges that private firms take on, such as liability insurance, are not charged for on government books.   I compete with the government a lot, and have investigated this dynamic in depth.  Even why my costs are lower, the government, because of the way it accounts for things, often thinks its costs are much lower than mine and they under-price us.


  1. Sol:

    What I want to know is how much this sweeping reform in what insurance companies must cover going to cost me? If my already ridiculous monthly payment got raised to New York state levels, I'd either have to drop the insurance or I'd lose my house...

  2. Sol:

    Just in case people don't know what I'm talking about, here's a page grabbed at random from a county by county survey in New York:

    The cost for a family plan there is over twice what it costs for ours here in Michigan, and our plan is on the expensive side here! Most notably, the cost of going from husband/wife to family last year was about a 10% increase for us, but appears to be a 50% increase in New York.

  3. Quincy:

    Long story short, the contradiction is this:

    Insurance is outlawed, long live insurance!

    The reforms Obama wants to put on insurance will turn insurance companies into no-limit ATMs for patients. They'll be stripped of all techniques they use to control costs, and it will be impossible for them to pool risks.

    The price of the product formerly known as insurance will be going *way* up under Obama's plan, but people will be required to carry it. They will be forced, by budgets, on to the public option. But remember, the plan won't force people to change their plan.

    If you want a complete (and long) beating of Obama's speech, visit:

  4. Tim:

    Both last night and this morning Obama rationalized the cost of his healthcare plan by pointing out that it is estimated to cost less than the wars in Iraq and Afghanistan, and the Bush tax cuts (I contest the latter since it is impossible to calculate). This rational would be funny if it weren't seriously being used by the President of the United States. How does something costing less than a fiscal monstrousity justify its cost?

  5. survivalist:

    When you hear someone from the government say "everyone in America will have to buy health insurance" - that statement was bought and paid for by the insurance organizations.

    Think about the massive amount of profit if "everyone" in America had to buy a product. Having to buy insurance is about like saying - "everyone has to buy either a ford, gm, dodge or toyota truck." The sales and profits of those companies would skyrocket.

    The insurance companies want to ensure future profits. The only way to do that is to block a government funded public option and to make everyone buy insurance from one of the big companies.

    Lets say that coverage cost $400 a month for a family of 4 - that is $100 per person, per month. There are over 300 million people in the USA. Take 300 million, multiple it by 100, then divide that number between the insurance companies.

  6. me:

    So true. If only the plan was catastrophic health insurance combined with nursing clinics (ie 'let's draw some blood and if this machine shows elevated t-cell count we'll have a Dr proscribe some antibiotics via the phone'). Then again, from a politicians perspective, any plan that would actually work would be detrimental because it'd prevent reelection to fix what was broken by design.

  7. EscapedWestOfTheBigMuddy:

    Are there any states where you are required to cover your own automobile or injuries?

    All the ones I'm familiar with only require you to hold liability insurance: i.e. to be able to pay the cost that your negligence might impose on others.

  8. Tim (the other Tim):

    Escaped -

    Michigan's auto insurance requirement requires you to hold no-fault insurance. You basically are insuring yourself against the negligence of yourself or others. Insurance companies can file claims against the insurance of the at-fault party; but this would only be to cover your deductible. You can also make a small-claims action, but you are limited to recovering $400.

    Michigan, by the way, has the highest auto insurance rates in the country. We pay ~$3k/yr on a mid-size sedan and mid-size crossover.

    One other note. There is, in the Michigan auto insurance market, a public option. If you accumulate enough traffic points (~9), insurance companies are allowed to drop you from coverage and force you into the high risk pool. That, speaking from experience, almost doubles your insurance costs.

  9. Nate:

    Illegal aliens will now not be allowed to by policies in the exchange.

    They can putchase plans sold outside the exchange, those plans are not allowed to have pre-ex limits or lifetime caps

    Any sick non US citizen anywhere in the world could then sneak into the US and be guaranteed the right to buy a non exchange policy that will give them unlimited coverage form day one.

    He just killed all non exchanges polcies, so much for choice