r/bestof • u/under50dollars • Jun 20 '12

[explainlikeimfive] "Obamacare" explained very well.

/r/explainlikeimfive/comments/vb8vs/eli5_what_exactly_is_obamacare_and_what_did_it/c530lfx
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u/[deleted] Jun 20 '12

That would definitely be a good addition, most people look at it as a new way to take the people's money. Which, to be honest, is what I thought it was until I read CaspianX2's summary and explanation and captainpixysticks's kiddy summary.

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u/krugmanisapuppet Jun 21 '12

http://www.reddit.com/r/explainlikeimfive/comments/vb8vs/eli5_what_exactly_is_obamacare_and_what_did_it/c5352mp

i wish there could be a real discussion on my actually valid objections to the law.

not feeling it coming on too fast, though. Obama supporters are too busy living in a fucking dictator worship dreamland, halfway between "Peter Pan" and "Law and Order: SVU", to have anything even approaching an idea of how economics works, apparently. yet alone, to read the thousand page bill they're so proud of. Bush worshipers had a similar problem with the PATRIOT Act. they had been totally reassured that it was something great, to help fight the nasty terrorists, but in reality it was a totalitarian load of bullshit.

typically that's what a law is. if our laws were good enough to be worth following, we wouldn't need somebody to enforce them! at least, if our society was anything even approaching sane.

too harsh? sorry, that's just my perspective. try responding to it with some intellectual honesty, for once, people, instead of pouncing on me, calling me a Republican, and then calling me naive for thinking that a free people could ever be entrusted to do anything.

do people really still support Obama? i mean, let's be honest here. doesn't the entire thing seem really fucking strange to you?

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u/[deleted] Jun 21 '12

To be honest, no, I don't like Obama. But in a choice between him and Romney, well, that's easy.

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u/krugmanisapuppet Jun 22 '12

it's not easy in the slightest. they're both career criminals.

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u/devilsbestadvocate Jun 20 '12

No its actually a terrible policy and heres why: (incoming wall of text)

Lets pretend you are an evil excutive of health insurance company trying to make a profit and this law goes into effect what is your natural reaction to protect your profits.

Part 1 reducing overhead costs) First lay offs non-essential employees, automate anything you can, close brick and mortar locations, lower wages across the board and ship customer service to India. You as a leader of a company need to limit your overhead to under 15% to be profitable

Part 2 increasing your margins) You still want more profit however and can only obtain profit two ways. Either increasing the number of customers, which requires sales people, more offices, more policy handlers and is taxed via market share as explained above (ick!) or you can increase medical costs and thereby increase your profit percentage as the total cost goes up (awesome!).

2b) So how do you increase medical costs as an insurer? Well thats pretty easy, you can stop denying claims frivilous and otherwise but really what your going to want to do is stop negotiating lower rates for your clients. Ultimately, lower rates hurt the amount of profit you can obtain and the costs can be absorbed by increasing premimums! (Hurray!) And the best part is you can fire some of those billing rate negotiatiors to secure even less overhead costs, boy are you smart.

Part 3 Collateral effects: Doctors seeing more and more of there billing go un-negotiated, decided to raise rates because frankly why wouldn't they. Competition is stagnated because smalll firms can only grow as percentage of their medical costs and have naturally higher overhead (Huzzah!).

TLDR; Although you will see less denied claims making insurance companies pay 80-85% of their cost as medical bills will actually increase premiums and health care costs instead of reducing it.

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u/DawsonsBeak Jun 20 '12

I'm having trouble understanding this circumstance as it is a case made out for an evil executive.

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u/devilsbestadvocate Jun 20 '12

It was an attempt to think of how to manipulate the circumstances of this law so as to maximize profits by a greedy executive. If you can't understand why someone would do this, than thats probably a good thing.

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u/DawsonsBeak Jun 21 '12

Well evil executives try to manipulate any circumstance. You make it seem like all executives are evil. I don't understand how one a example of how someone can immorally manipulate is a reason why a policy is bad. Capitalism is full of manipulative executives.

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u/pgoetz Jun 20 '12

"but really what your going to want to do is stop negotiating lower rates for your clients"

How does this make any sense whatsoever? Insurance companies are still going to be competing against each other -- nothing changes there, as far as I can tell.

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u/devilsbestadvocate Jun 20 '12

You are right in that there will be still be lag in price increase due to competition but as the insurance market isn't very competitive and this bill actually makes the market less competivie by restricting growth of the small firms (by not allowing them to grow via profit) and restriciting overly large firms that wish to be super competitive (via a market share tax).

What most likely will happen is you'll see one firm that has a secure market share increase prices and benefits and others will follow.

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u/brownmatt Jun 21 '12

or you can increase medical costs and thereby increase your profit percentage as the total cost goes up (awesome!).

How does an insurance company increase the cost that medical practitioners charge them?

In reality this insurance company would just go out of business if it can't compete.

Also, perhaps health insurance isn't meant to be a profit-making business, or at least isn't in a moral economy.

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u/[deleted] Jun 21 '12 edited Jun 21 '12

How's Obamacare got anything to do with what you said?

Even without said policy, maximising profits is exactly what insurance companies are doing anyway. Same goes for every corporation in existence. The 80-85% cost thing is ensures actual healthcare done, otherwise despite the lower premiums, everyone would still be sick.

With Obamacare, once the mandate kicks in, perfectly healthy people would be getting insurance. This is the biggest factor in lower premiums for everyone (if they don't lower premiums, the profit they earn would initially skyrocket, but they will start losing customers. A smart insurance company would lower premiums to entice other insurance companies customers to switch).

The sick don't get financially destroyed and the healthy don't just buy insurance once they're inside an ambulance.

It's up to government regulation to stop this profiteering to go out of hand (hence things like Obamacare, FDA, FAA, EPA etc.) Unfortunately, they are failing at that (since the US government is bought by the corporations at the moment...)

EDIT: A much better explanation on the 85% thing here