A week or more ago, I provided a forecast of a particular economic outcome of Obamacare (http://uberthoughtsusa.blogspot.com/2014/10/a-giant-sucking-sound-no-one-mentions.html)
that has gotten some interesting response from those who have read through it. In essence (well, read it anyway), I was estimating the huge amount that would be pulled out of the retail economy due to the hikes in insurance premiums that Obamacare would trigger on January 1st, as well as the severe depression of wages, hiring and raises needed to offset its impact on business premium hikes.
So the "supply" half of the curve is heavily affected; although it isn't much of a topic for the airwaves, it is nonetheless worth pondering. But the "demand" part of the equation is perhaps far more impactful, and certainly harder to predict. By that, I mean that demand for physician and hospital care is liable to soar after New Year's Day, again as a result of the law and its amazing power to create unintended consequences.
Let's again look at the part of the law causing my consternation. An astonishing number of previously adequate health insurance policies become illegal on January 1st, my own included. This has nothing to do with insuring the previously uninsured; it is simply a Nanny State removal of the citizens' right to decide how much risk for health care costs we are willing to shoulder ourselves. In my family's case, our insurance premiums will almost precisely double, costing us well over $6,000 in additional premiums in 2015.
But I'm not paying all that extra for nothing. I am getting a much more expensive policy that covers, along with things a 63-year-old man does not normally need to insure against (like pregnancy), doctor and hospital costs, after a small copayment.
Well, kiddies, if I'm paying for all that extra care, I'd be stupid not to use it, right? At the very least, my resistance to going to the doctor for certain afflictions will be much lower. Right now, there's a stabilizing brace on my thumb for a strained ligament or tendon, and I'm simply immobilizing it so it will heal by itself, without ever seeing a physician. At the moment, I don't need surgery, and hopefully in a few weeks it will have taken care of itself.
But if this were 2015 and not 2014, and I had this awesome policy, you're darn sure that I would be at least thinking about getting an MRI and maybe a quick surgical fix, something I'd never consider now. Multiply that decreased reluctance by millions and millions of Americans who now have to pay for way higher premiums, and pay for a lot more coverage than they wanted. I'll wait ...
Yep, you got it. The mandated increase in premiums and associated coverage will drive demand for treatment -- and therefore its basic cost -- through the roof. In fact, I might even go a lot quicker to the doctor for things I wouldn't even have gone for at all this year, precisely because I'm forced to pay the insurance for it, and millions more will, too.
Higher demand for treatment means higher costs, simple as that; it's simply supply and demand. It means longer waits for treatment, and it means we start adopting all of those attributes of the countries with socialized medicine that we most dislike -- particularly the availability of the type of care that we feel compelled to seek because, well, we're already paying for it.
Obamacare is the gift that just keeps giving, and this New Years that gift is going to be one fat lump of coal for the economy.
Copyright 2014 by Robert Sutton
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