By: Health Insurance
Submitted: 2010-01-05 08:54:30 | Word Count: 1108
Last week, Democratic leaders in the Senate caved to Sen. Joseph Lieberman's demands and stripped away some major provisions from their health reform legislation, including the public option and a plan that would have allowed middle-age Americans to "buy in" to Medicare. With Connecticut independent Lieberman's support seemingly secured -- for the time being -- the president announced that Congress was "on the precipice" of passing comprehensive reform.
But even without these controversial components, the Democrats' bill would still put government in charge of nearly all Americans' health care. Patients would have fewer choices in the insurance marketplace, and taxpayers would be on the hook for a multibillion-dollar expansion of the public health care system.
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Ultimately, these moves will dramatically drive up the cost and worsen the quality of health care in America.
A key element of the Democrats' reform bill is an individual mandate, which would legally require people to purchase insurance. Starting in 2013, everyone would have to own a plan that met government specifications or pay a fine.
Proponents of such a mandate claim that it will broaden the insurance risk pool to include those who may not currently have insurance, which would eventually lead to lower premiums for everyone. Previously uninsured younger, healthy Americans would effectively subsidize older and less healthy patients.
Mandating everyone to dive into the insurance pool may seem like a good idea, but it represents a profound assault on individual freedom.
The federal government will decide what constitutes an acceptable benefit plan and what people pay for it. Government will also control how doctors are paid by insurance companies and, ultimately, how they practice medicine.
Congress does not legally force Americans to spend their own money on any other particular good or service -- why should health insurance be any different?
In fact, for some Americans, health insurance isn't a wise use of funds. Young people and health fanatics, for instance, might well shell out premiums for medical services they likely won't use.
And those premiums can be hugely expensive. The average premium for family coverage is a whopping $12,300 a year. That rate is only going to go up if the Democrats' plan passes.
The nonpartisan Congressional Budget Office recently estimated that individual insurance premiums under reform would be 10 percent to 13 percent higher by 2016 than they would in the absence of reform. In certain states, the increase in premiums would be even higher.
In California, for instance, the average healthy 25-year-old man would see his premiums rise 106 percent thanks to the Democrats' reform plan. Premiums for a typical Virginia family with two children would increase 82 percent.
Some folks might be best served by paying for routine health expenses out of their own pockets rather than relying on expensive and inconsistent insurance policies.
These increases in the cost of insurance are largely the result of the reform plan's array of new controls on insurers. Paramount among these controls is a requirement that insurers issue a policy to any customer who requests one, regardless of one's medical history or health status.
In those states that mandate "guaranteed issue," the regulation has induced patients to wait until they actually need medical care before purchasing coverage. In order to cover the cost of an insurance pool filled exclusively with sick people, premiums must be sky-high. Indeed, guaranteed issue has driven health premiums up by as much as 200 percent in some states.
In those states that mandate "guaranteed issue," the regulation has induced patients to wait until they actually need medical care before purchasing coverage. In order to cover the cost of an insurance pool filled exclusively with sick people, premiums must be sky-high. Indeed, guaranteed issue has driven health premiums up by as much as 200 percent in some states.
The Democrats' reform package would also install a national "community rating" ordinance, which would restrict insurers' ability to charge different prices to different enrollees according to their health status. It would also impose new limits on out-of-pocket spending and require all insurance plans to include certain benefits, like maternity leave and newborn care, even if a patient didn't want them.
These rules are meant to make health coverage more affordable and robust for more Americans. But they'll do just the opposite.
Mandated benefits can increase the cost of a basic insurance policy by up to 50 percent. And by forcing insurers to charge both the sick and the healthy similar rates, community-rating regulations virtually guarantee that everyone pays more.
Instead, we need low-cost, pragmatic policies that drive down health prices without impinging on individual freedoms.
A great first step in that direction would be for Congress to allow people to buy insurance policies across state lines.
States regulate insurance differently. Some require policies to cover a long list of procedures. Others effectively prevent competition among carriers. As a result, the price of a basic insurance plan varies dramatically from state to state.
For instance, a 25-year-old male in New Jersey has to shell out about $5,600 for a basic insurance policy. His counterpart in Kentucky can get a similar policy for just $1,000.
Currently, Americans can only purchase policies approved for sale in the state where they live. Allowing them to shop around for the best deal would instill competition and drive down prices.
Lawmakers could take a second step in the right direction by enacting major medical malpractice reform. One in eight doctors gets sued for malpractice every year.
These suits cost about $100,000 on average to defend, even though doctors are found innocent 90 percent of the time.
To avoid getting dragged into expensive legal proceedings, many doctors engage in "defensive medicine," ordering more tests and procedures than necessary. This practice added $124 billion to national health costs in 2006 and drove more than 3 million Americans into the ranks of the uninsured.
Implementing some commonsense tort reforms -- like a $250,000 cap on noneconomic damages -- could reduce these costs without compromising patient care.
Congressional Democrats have been forced to trim some of their more grandiose ambitions for health reform. But the bill remains a bloated, big-government monstrosity. American taxpayers and patients alike simply can't afford the Democrats' vision for health reform.
