Is There a Health Insurance Bailout in our Future?
Now that Obama's health care plan has passed, he will be under pressure to produce results that look to most voters better than the past, or at least no worse. In the short run that should not be a problem, since most of the provisions of the plan are set well in the future. Most of the taxes to pay for it come into effect in 2013, the requirement that health insurance companies take anyone who applies, including those with pre-existing issues, in 2014, the tax on high end health plans in 2018. The fine for not having health insurance starts in 2014 at $95 or 1% of income, and reaches its full value in 2016. For the next few years, at least through the end of Obama's current term of office, the controversy over the plan will be mostly a war of words, without much evidence on its real consequences.
Eventually that will change. If, when most of the provisions of the plan are in effect, it appears to be working very badly, if health insurance is more expensive than it used to be, if many younger workers find they are being required to spend a lot of money for insurance they don't want, there will be two political consequences. One is that the Democratic party, strongly identified with the changes, will suffer a decline in its reputation. The other is that whatever politicians are in office will look bad, since voters will blame current problems on those currently in charge.
The obvious solution is to find ways of pushing the costs of the program into the future. Insurance companies take in money now in exchange for the promise of future payments. Under political pressure to charge less and promise more, they may adopt the policy followed by General Motors when it solved its labor problems by paying striking auto workers with the promise of future pensions: Make promises they cannot fulfill, in the belief that when the crunch comes the U.S. treasury will come to their rescue.