STOCK MARKET WATCH -- Friday, 6 July 2012

[Demeter]

70. Did John Roberts Give Mitt Romney A Gift? MUST READ

http://www.huffingtonpost.com/marcia-angell-md/roberts-romney-health-care_b_1637397.html?utm_hp_ref=politics

The Supreme Court's decision to uphold the Affordable Care Act, aka Obamacare, puts me in mind of the old proverb: Be careful what you wish for. Democrats on a victory lap should watch their step, because John Roberts may have given Mitt Romney a gift. The impact on the health system will be much smaller than the political fallout, because with or without Obamacare, the American health system will continue to unravel -- quickly if Romney is elected, slowly if Obama is re-elected.

First the policy, then the politics:

Obamacare is simply incapable of doing what it is supposed to do -- provide nearly universal care at an affordable and sustainable cost. The problem is that three years ago, in his futile efforts to win over Republicans (remember the embarrassing courtship of Olympia Snowe?), Obama gutted the law before it was even passed. He made the private insurance companies the linchpin of the new system, and promised them millions of additional customers and billions of taxpayer dollars. He also did nothing to rein in the profit-oriented delivery system that rewards providers on a piecework basis for doing tests and procedures. So with all the new dollars flowing into the system and no restraints on the way medicine is practiced, the law is inherently inflationary.

Although there are some provisions to curb the worst abuses of the insurance companies, such as excluding people with preexisting conditions, there is nothing in the law that would stop insurers from raising premiums. A senior executive of the industry's trade association, America's Health Insurance Plans, told me privately that that's exactly what the companies will do if regulations cut into their profits. Thus, costs under Obamacare will almost certainly rise even faster than at present. No reform can work well or very long if its costs are unsustainable.

In fact, it is unlikely that Obamacare will ever be fully implemented as it stands. If Romney is elected, with a Republican Congress, it will be quickly overturned. If Obama is re-elected (and I hope he is, despite my disappointment in his health plan), it will come apart more slowly. But unravel it will, as costs rise and it becomes clear that there are still tens of millions of Americans priced out of the system...

BUT WAIT! THERE'S MORE!