NELSON, MD: ‘Paying With Other People’s Money.’

By Robert Nelson, MD  Direct Primary Care Physician, MyDocPPS | DPC Journal Contributor | Advocate for free-market healthcare & patient-centered reforms

MARCH 10, 2015 – 

I love money. I love money more than the things it can buy. There’s only one thing I love more than money. You know what that is? OTHER PEOPLE’S MONEY. Lawrence Garfield from the Movie Other People’s Money

An established principle of money management goes something like this: “No one cares about your money more than you do”. Evidently, the government doesn’t agree. The feds have adopted the Lawrence Garfield approach, because it is obvious that the government LOVES your money… A LOT! As is evident by how much of it that they spread around. Sharing the love, I guess.

Dr. Robert Nelson of Atlanta, GA

Dr. Robert Nelson of Atlanta, GA

But this is only because the government knows better than you how to spend your money. It is for your own good that they confiscate… collect taxes for the greater good. You might actually do something stupid with your own money if you keep too much of it; like save it or pay off debt or donate to a charity or give to your place of worship or invest for the future – or worse yet, spend it on something you want (greedy capitalists).

To prevent your reckless, dare I say selfish, use of your over-abundance the federal government has designed much better programs where your ill-gotten dollars can be put to better use. And it is easy to lose, I mean risk…. uh, to invest in these programs. You really don’t have to do anything… other than pay more taxes of course. But as Joe Biden has reminded the citizenry, it’s our patriotic duty to give up the green to our overseers , uh…pay our taxes.

With that fatherly guidance in mind, let’s examine one scheme… an investment opportunity brought to you by one of the many pork sandwichesspecial interest pay-days…. social infrastructure programs packed into the 2,700 pages of ObamaCare. Of course, being a non-profit kind of thing, your dividend is the satisfaction of knowing that you’re throwing good money after badyou are lining the pockets of aging insurance executives …reinforcing the social fabric of the country and helping to make us all more dependent on government bailouts and make the economy weaker… stronger as a nation!

Without further adieu, let me give you a prospectus on this sure bet investment in the future of America.

But first a word from our financial risk department:

If anyone is still not convinced of the flawed assumptions and faulty financing mechanisms that permeate the ACA (ObamaCare), then please read the article below. But to summarize, a good crony deal is a deal that socializes the losses while paying large salaries to retired insurance executives to mismanage the company. Nowhere is this more evident than the Non-profit ObamaCare co-ops.

Here are the highlighted excerpts with a link to the article at the end:

According to industry data only one of the 23 co-ops was profitable last year (a 24th co-op located in Vermont failed before it even got off the ground). While some of the remaining co-ops are losing money because of small size, others appear to have the strategy of losing money to gain market-share at taxpayers’ expense.

Taken together, these facts suggest CoOportunity executives purposely set rates low to gain market share — assuming taxpayers would bail-out their losses. The strategic plan was simple: 1) underprice premiums to gain market share; 2) Let taxpayers bailout the losses with emergency solvency loans and the risk-adjustment distributions; 3) increase premiums later once the dust settles. This seems to be a common theme among health insurance co-ops. This type of activity should not have been allowed. Most stakeholders — apparently including CoOportunity Health — expected taxpayers to bailout struggling co-ops indefinitely. It’s now clear that is no longer going to happen.

The spectacular failure of CoOportunity Health was a wakeup call to other health insurance cooperatives, state insurance regulators, HHS and taxpayers. But it won’t be the last co-op that goes broke owing taxpayers large sums of money. Going forward, state insurance regulators and other government regulatory bodies need to be on the lookout for co-ops that have strategic plans premised on losing taxpayers money while gaining market share — expecting taxpayers to bail out the insurer. I suspect it will happen again and again until most of the co-op health insurers lose all their taxpayer financing and go bankrupt.

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Invest with caution: Past incompetence and screw-ups does not guarantee future improvements by learning from history and the science of economics.


Categories: Cost, Op/Ed, Physician

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