In my chapter on health care in my The Joy of Freedom: An Economist's Odyssey, I had an extensive discussion of government regulations that drive up the price of insurance and . At the end of that discussion I wrote:
One insurance agent I spoke to speculated that politicians and other government officials who support these regulations not only understand these effects, but also like them. Why? Because they cause more people to go without insurance and thus create a demand for government-provided insurance. His speculation may be warranted.
That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers' premium dollars they collect--85% for large group insurers--on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.
This is the true 'bomb' contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we've seen in quite some time. Indeed, it is this aspect of the law that represents the true 'death panel' found in Obamacare--but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.
Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know - we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.
So much for Obama's endlessly repeated promise that if you like the health insurance you have, you can keep it.
UPDATE: Although, as I note in my comment below, my post is about motives, not about the policy issue per se, Tim Worstall weighs in on the policy issue here and here.