Topics: Obamacare

Obamacare protects insurers from competition

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Beltway Confidential,Timothy P. Carney,Barack Obama,Obamacare,American Enterprise Institute

It's no longer novel to point out that President Obama sold Obamacare on a falsehoods, but it's still worth pointing out.

Obama repeatedly claimed the fight to pass Obamacare was a fight against "the special interests." Behind the scenes, he quietly reassured the special interests that this was empty populist bluster.

As the law has gone into effect, the emptiness of this populist bluster has become more obvious.

Big hospitals are getting bigger while small healthcare practices are going out of business. Drug-company lobbying is helping to kill more affordable insurance plans while enriching drug companies.

And insurers, who don't like the price controls and many of the regulations of Obamacare, at least get protection from competition. That's what Scott Gottlieb at AEI (where I am a visiting fellow) argued at an event today. AEI's Natalie Scholl put it this way in a memo on the event:

By capping the medical loss ratio, you guarantee that only the incumbent players are in the marketplace. New insurers can’t launch without losing a lot of money in the initial years.

Gottlieb's article in Forbes spells out nicely the very complicated relationship between insurers and the Obama White House:

Nobody should feel overly sorry for the nation’s big insurers. So far, they’ve been able to pass most of their new costs to consumers. They also made a Faustian bargain in supporting Obamcare’s passage in the first place (on the premise that it would boost their business) only to find that the Obama team was a bad partner. Their early and obsequious support now looks naïve.

The fiery speech that President Obama gave in Boston’s Faneuil Hall last week, reprising some of the same anti-insurance-industry demagoguery that he used in the run-up to passage of Obamacare, is likely to be standard fare going forward.

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