The US Supreme Court is expected to issue its ruling in King v. Burwell soon. At issue in the case is whether or not the Affordable Care Act, better known as “ObamaCare,” entitles people in states which have not established their own “exchanges” to federally subsidized health coverage.
Writing for the Associated Press, Ricardo Alonso-Zaldivar worries that the court’s ruling “could wipe out health insurance for millions of people.”
Let me lay that fear to rest. No such outcome is possible, for the simple reason that the health plans addressed by ObamaCare are not insurance.
In fact, one effect of ObamaCare, as explained by Warren C. Gibson at the Foundation for Economic Education, was to outlaw health insurance entirely.
Insurance is a “hedged” bet. When you buy insurance – — on your car, your home, your life or your health — you place a small bet (your monthly premium) that something really bad (a wreck, a fire, death or sickness) will happen. The insurance company places a large bet (the prospective payout on a claim) that no, that really bad thing will not happen.
You don’t want to win that bet. You pay $50 a month for car insurance so that IF you win your bet by having a wreck, you’re off the hook for a lot more than $50. The insurance company makes its money by carefully setting the odds such that it takes in more in small wins than it pays out in big losses.
ObamaCare is not a hedged bet against catastrophe. It’s a national system of mandatory pre-paid health care. You make a monthly payment in return for which you expect your every health need to be provided for.
We’ve been moving away from real insurance and toward pre-paid care since the early 1970s with Health Maintenance Organizations and Preferred Provider Organizations. ObamaCare brought three important new elements in:
First, you no longer have a choice. You have to subscribe to a pre-paid health service whether you want to or not. “Insurance” companies love that part. ObamaCare is a gigantic corporate welfare program.
Second, if you are a low-income American and your state has an exchange, you get a government subsidy to help cover your subscription payment (the Supreme Court is set to decide whether or not this also applies to federal exchanges in states that didn’t set up their own). The “insurance” companies love that, too (more money for them!).
Third, the “insurance” companies can’t turn anyone down. With real insurance, a pre-existing condition would be the equivalent of betting at blackjack after seeing the dealer’s hand. They don’t like that part nearly as much. It raises their costs. Which, in turn, raises yours.
If the Court rules against the Obama administration in King v. Burwell, millions of Americans will stop receiving health care subsidies. But not a single American will lose “insurance,” because that’s not what we’re getting in the first place.
What are we getting? Two things: Screwed and robbed. Or: Government as usual.
Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.