Tuesday, June 8, 2010


No one has ever said that Barak Obama was or is a champion for entrepeneurship.  He fails to follow the path of legislative changes and the consequential secondary impact of sweeping reform.

Change itself is expensive. Nowhere in the legislation does he allow for the expensive overhead of change.

The Patient Protection and  Affordable Care Act mostly presents edicts and commands about what the Secretary of Health and Human Services "shall do".  There is not much room for discussion or input from anyone else. (hard to believe our legislators would sign off on this. (Unless they had more important things to do and just did not want to be bothered.)

My friend Greg Scandlen in  Consumer Power Report # 225 elaborates:

"The impact of ObamaCare is already showing up in some pretty disturbing ways. A new insurance company founded by our friend Paul Kitchen in Virginia has announced it will close its doors. This is a pity because we need more competition, not less in the insurance market. The company, nHealth, was off to a great start. The original idea was to replicate the original Blue Cross model and provide coverage only for hospital inpatient care. It was able to offer substantially lower premiums than other carriers in Virginia.
But innovation is now officially dead in health insurance. And not just innovation, but new competition of any sort. It is impossible for a start-up company to comply with the loss ratio standards in ObamaCare. There are substantial costs in building and promoting a new company and it takes a while before claims start coming in. A start-up company will collect premiums today, but not have any claims to pay for a year or so. It will not be paying out 80% of its premiums for some time.
Indeed, the federal government will not hold itself to the same standard. Part of ObamaCare is creation of "The Class (Community Living Assistance Services and Supports) Act" which establishes a new federal insurance company to pay for long term care. This company will begin collecting premiums of about $150/month per worker, probably in 2012, but it won't start paying claims for five years after that. So, for five years its "medical loss ratio" will be zero.
One standard for the federal government, another standard for everyone else."

Much of Obamacare is based upon Evidence Based Medicine, and the Dartmouth Health Atlas Study, a study regarding difference in medicare expenses in different regions of the country. No attribution was given to the quality of care or the outcomes.  It is now widely regarded as seriously flawed.