State run healthcare redux...... [Archive] - RetrieverTraining.Net - the RTF

: State run healthcare redux......

10-08-2009, 11:31 AM
Individual states have already tried much of what's in the health care package....with dubious results. od=djemEditorialPage

Here's a few examples:

New York is exhibit A. In 1993, the state prohibited insurers from declining to cover individuals with pre-existing health conditions ("guaranteed issue"). New York also required insurers to charge those enrolled in their plans the same premium, regardless of health status, age or sex ("community rating"). The goal was to reduce the number of uninsured by making health insurance more accessible, particularly to those who don't have employer-provided insurance.

It hasn't worked out very well, according to a Manhattan Institute study released last month by Stephen T. Parente, a professor of finance at the University of Minnesota and Tarren Bragdon, CEO of the Maine Heritage Policy Center. In 1994, there were just under 752,000 individuals enrolled in individual insurance plans, or about 4.7% of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today, that percentage has dropped to just 0.2% of the state's nonelderly. In contrast, between 1994 and 2007, the total number of people insured in the individual market across the U.S. rose to 5.5% from 4.5%.

The decline in the number of people enrolled in individual insurance plans, the authors say, is "attributable largely to a steep increase in premiums" because of the state's regulations. Messrs. Parente and Bragdon estimate that repeal of community rating and guaranteed issue could reduce the price of individual coverage by 42%.

A 2008 analysis by Kaiser Permanente's Patricia Lynch published by Health Affairs noted that in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey and Vermont "deteriorated" after the enactment of guaranteed issue. Individual insurance became significantly more expensive and there was no significant decrease in the number of uninsured.

Supporters of federal health-care reform argue that the problems associated with these regulations can be addressed with the addition of an individual mandate, which is part of every ObamaCare bill in Congress. This would require every individual to purchase health insurance.

So to solve the drop in government run plans due to cost increases is to FORCE PEOPLE TO PARTICIPATE.


10-08-2009, 11:52 AM
Actually, it is irrational to prevent pre-existing condition exclusions and individually rated premiums without universal coverage. With universal coverage, there is no "moral hazard" risk -- that is, there is no risk that people will only buy coverage when they are ill or have health risks that make them likely to become ill.

If you do not have universal coverage, but impose restrictions on ratings and exclusions anyway, there is almost no reason for an otherwise healthy person to buy insurance except for catastrophic coverage for accidents. They know that if they become ill or develop a high risk condition, they can buy insurance when the need it. In that situation, fewer people buy insurance and the people who do are likely to have claim experience far higher than average.

This is a fundamental weakness with the Senate plan and the fallacy behind Republican claims that they can address exclusion and rating problems through regulation without requiring broader coverage.

EDIT: My personal belief is that, in the absence of universal coverage, that insurance companies should have even fewer restrictions on allowing coverage and that requirements for open enrollment periods should be eliminated. People should understand that if they elect not to buy insurance when they are healthy that they will probably not be able to purchase it later. This is already the situation for life insurance where, by the time people are in their 40's and 50's, a fairly large percentage find that they are no longer insurable without paying very high premiums.