In case the health insurance industry is too complicated, consider a simpler analogy: Suppose the Obama Administration passed the “Affordable Snacking Act,” and required movie theaters to limit the price of a large popcorn to only 25% of the price for an adult matinee ticket. Does anyone really think the outcome of this would be merely a massive reduction in popcorn prices across the country? Or, is it more likely that theaters would do a combination of the following? (a) Reduce popcorn prices, (b) slightly increase ticket prices, (c) cut back on expenses at the snack counter, by laying off workers (leading to longer snack lines) and reducing the size of a “large popcorn,” in order to compensate for the loss in profitability of that portion of the business.
The same holds in health care insurance. In reality, there is a whole spectrum of customer service that a company can provide; this is partly what the “administrative expenses” cover. If the federal government forces a particular insurer to cut back on this spending, the outcome isn’t merely going to be lower salaries for the fatcats. There may also be layoffs in clerical positions, fewer people manning the phones to deal with inquiries about coverage or understanding a recent bill, and so forth. In short, people will become even more exasperated with the quality of “free market” health care, and will be that much more receptive to total federal control down the road.
Come to think of it, maybe these consequences weren’t so “unintended” after all.
Sometimes the starkest way to see the insidious and destructive effects of government meddling in the healthcare market is to apply the same ideas to an unrelated industry.
I’ve honestly always believed that instituting a bad compromise has been central to the larger plan.