Okay, let's say that you have a choice of two insurance policies, policy A and policy B. Policy A charges $500 a month, and policy B charges $600 a month. Which one are you going to buy?
But wait. Obamacare caps profit margin that an insurer can make. So how can insurer A sell insurance for cheaper than insurer B? Well, either insurer A has healthier people -- but because Obamacare allows you to pick a cheaper policy regardless of pre-existing conditions, so why wouldn't the sicker people decide to go to insurer A? -- or insurer A is doing something nasty and evil -- they're arbitrarily denying claims.
So why would they arbitrarily deny claims? Because that's the only way to make more profit if you're required to take everybody and your profit margin is capped. The way to make more profit is to have more customers. The way to have more customers is to have lower rates. The way to have lower rates is to deny claims. It's a vicious cycle because insurer B will then decide that *they* have to arbitrarily deny claims too, in order to get back the customers they're losing to insurer A... repeat all over the industry, and you get denied claims galore.
But wait, I hear you say. There is a medical review panel mandated by Obamacare too, they can't just deny claims arbitrarily! Well, you show me a government regulation, I'll show you a dozen lawyers rubbing their hands with glee figuring out some way to get around it. My guess is that they'll either dump so many people on these medical review panels that there's no way to review all those denied claims, or drag out the proceedings for so long that people die before their claims get reviewed, or they may not even do any of that -- they may simply hope that a percentage of the people whose claims they deny don't know about the medical review panel and won't appeal the denial of the claim. And before I hear you say, "but... but... that's unethical..."... bwahaha! Ethics? These people have only one ethic: Making money. The Almighty Dollar is their God. Their notion of ethics is "greed is good".
So what's going to happen? Well, what eventually happened in *other* nations that have tried this scheme is that the insurance companies were eventually either nationalized and became branches of the federal government (see: Germany, prior to recent re-privitizations), or they became heavily regulated utilities with rates and profit margins both set by the government, meaning no incentive structure to deny claims beyond what's necessary to preserve their profit margin (since they can't reduce rates to steal customers from other insurers). Well, actually, there's a third possibility: Medicare For All, with the insurers relegated to the role of Medi-gap providers. This is what Taiwan did. But this is usually the end game of heavily regulated insurers deciding that health insurance isn't profitable enough to be worth their time -- that's why Taiwan's insurers didn't fight Medicare For All there, they were already so heavily regulated that they could make more money selling Medi-Gap on the unregulated market than by selling the core insurance as heavily regulated insurers.
Because one thing is certain: A continued spiraling downward of the services paid for by insurers won't be tolerated by either the general public or by regulators. If Republicans try to push that mule harder, they're gonna end up with the imprint of a horseshoe on their forehead. Just sayin'.
- Badtux the Health Care Economics Penguin