Paul Krugman, "Insurance and Freedom": California's Next Earthquake

In his latest New York Times op-ed entitled "Insurance and Freedom" (http://www.nytimes.com/2013/04/08/opinion/krugman-insurance-and-freedom.html?_r=0), Paul Krugman writes regarding Obamacare:

"In fact, it’s hard to think of a proposition that has been more thoroughly refuted by history than the notion that social insurance undermines a free society. Almost 70 years have passed since Friedrich Hayek predicted (or at any rate was understood by his admirers to predict) that Britain’s welfare state would put the nation on the slippery slope to Stalinism; 45 years have passed since Medicare went into effect; as far as most of us can tell, freedom hasn’t died on either side of the Atlantic."

I agree with Krugman: Social insurance in and of itself does not undermine a free society. On the other hand, social insurance that bankrupts state governments and causes the federal deficit to spiral out of control can result in collapse.

As reported by The Huffington Post in a recent article entitled "Obamacare Will Cause Medical Claims Costs To Jump 32 Percent: Study" (http://www.huffingtonpost.com/2013/03/26/obamacare-medical-claims-costs_n_2956986.html):

"Insurance companies will have to pay out an average of 32 percent more for medical claims on individual health policies under President Barack Obama's overhaul, the nation's leading group of financial risk analysts has estimated.

. . . .

The report by the Society of Actuaries could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act.

While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said."

A 62 percent increase for California? And only a week ago, Krugman was telling us that California was poised for a comeback (see: http://jgcaesarea.blogspot.co.il/2013/03/paul-krugman-lessons-from-comeback.html). Instead, it will be facing a different kind of earthquake, destined to put paid to any kind of would-be comeback.