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October 31st, 2013 1:44 pm
What the Government Giveth …
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We’ve spent virtually the entire month of October hearing about the practical defects of Obamacare—everything from the failures of the exchange website to the widespread cancellation of insurance plans that don’t comply with the health mandates. Apart from those functional considerations, however, there’s another major drawback to the law: it places America’s health care providers into a Faustian bargain with Washington.

Recall that in order to get many health insurance companies onboard to support Obamacare, the White House made what was essentially a quid pro quo deal: in order to cover the increased costs of covering the chronically ill that the plan would bring into the system, the individual mandate would ensure that young, healthy, actuarially sound Americans would be swept into the system too (the failure of the exchanges, however, is already steering this arrangement towards being upside down financially).

One of the downsides, however, of putting the industry at the government’s mercy is that the feds hold the whip hand when they fail to follow the party line. From CNN:

White House officials have pressured insurance industry executives to keep quiet amid mounting criticism over Obamacare’s rollout, insurance industry sources told CNN.

After insurance officials publicly criticized the implementation, White House staffers contacted insurers to express their displeasure, industry insiders said.

Multiple sources declined to speak publicly about the push back because they fear retribution.

But Bob Laszewski, who heads a consulting firm for big insurance companies, did talk on the record.

“The White House is exerting massive pressure on the industry, including the trade associations, to keep quiet,” he said.

Laszewski, who’s been a vocal critic of Obamacare, said he’s been asked by insurance executives to speak out because they feel defenseless against an administration that is regulating their business — and a big customer.

Government-backed plans accounted for about half of health care policies last year, a number that is expected to grow over the years.

He who has the gold makes the rules, as the saying goes. It turns out there was an additional cost to Obamacare that the insurance companies didn’t factor in: their autonomy.

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