Free market begins responding to Obamacare

In 2008, I was interning at The Heritage Foundation. My job was to research TARP, which Heritage subsequently (and disappointingly) supported. As the crisis unfolded, I called a long-time businessman and entrepreneur to ask his opinion on the issue. He informed me that he opposed TARP, and, like water flowing downhill, the free market always gets its way in the long run, no matter how many regulations and government interventions are created.

America is beginning to see this in various reactions to Obamacare. The law’s many regulations and other market interventions (such as subsidies) are causing a ferocious backlash across the country, much like blocking a downhill trickle turns to a flood. Consider:

  1. A doctor in Maine has decided to only deal with patients, not government or private insurance middle-men. It’s dropped his cost-per-patient-visit by more than 50 percent. While Obamacare was not specifically listed as a reason for his decision, Yahoo! Finance notes Obamacare and the general bureaucracy are to blame for similar decisions by other doctors:

In a similar case in San Antonio, Texas, a pair of primary-care physicians made headlines when they stopped accepting third-party insurance a year ago. They told that they moved to a direct pay model because of the ” expensive and bloated bureaucracy that drives financial reimbursements.”

A 2012 survey of more than 13,500 doctors from around the country found that 26% have already cut services for Medicaid patients due to costs, and within the next two years more than 50% plan to cut some patient access to their services. About  7% plan to switch to cash-only practices, like Ciampi’s, or “concierge practices” in which patients pay doctors an annual retainer.

2. Many private insurance plans won’t meet the Obamacare standards:

Many people who buy their own health insurance could get surprises in the mail this fall: cancellation notices because their current policies aren’t up to the basic standards of President Barack Obama’s health care law.

They, and some small businesses, will have to find replacement plans — and that has some state insurance officials worried about consumer confusion.

Of course, supporters say the upgraded plans under Obamacare will please consumers. Except those who want a bare bones plan. This includes many young and healthy people.

3. Because government regulations consistently make things more complex, a significant aspect of the small business exchanges are being delayed by a year.

4. The health insurance industry’s leaders – not exactly a free market group themselves – expect premiums will skyrocket under Obamacare

The report found that individuals will face “premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent.”

One company said that new participants in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account, said the report. “The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 — a $1,812 cost increase,” it added.

The key reasons for the surge in premiums include providing wider services than people are now paying for and adding less healthy people to the rolls of insured, said the report.

Since before Obamacare became law, Tea Party activists and other fiscal conservatives have said the law will destroy America’s health care system. Combined with the other massive interventions in health care already in existence – regulations, Medicaid, SCHIP, and Medicare, among others – the allegedly “Affordable Care Act” is a textbook example of what happens when government interference in free markets reaches a breaking point.