Wednesday, August 12, 2009

Bursting the Obamacare Balloon [UPDATED & BUMPED]

The WSJ commenting on health insurance and health care/insurance reform, get's it right. Here are some of their observations.

nine out of 10 people under 65 are covered by their employers, most of which cover all employees and charge everyone the same rate. President Obama's horror stories are about the individual insurance market, where some 15 million people buy coverage outside of the workplace.
Horror stories is a bit dramatic.

Individuals don't "buy" insurance in the workplace per se, but rather they rely on their employer to buy it for them. Coverage in the workplace isn't always "affordable", it depends on how much of the premium is subsidized by the employer.

On many occasions I help individuals and families find more affordable coverage that is tailored to their needs and do so for less money than they are paying through their paycheck.

The individual health insurance market isn't the morass many would have you believe. Something in the area of 10 - 15% of individuals have health problems so severe they are denied coverage. Many of those have conditions that only temporarily knock you out of the market.

Yesterday I had a woman who was 5 months pregnant call, looking for health insurance. In 4 more months she shouldn't have any problem buying health insurance. For others with conditions such as hypertension, it is simply a matter of taking medication on a regular basis to the point your blood pressure has stabilized.

If you develop an expensive condition such as cancer or heart disease, and then get fired or divorced or your employer goes out of business—then individual insurance is going to be very expensive if it's available.
This is true but it ignores COBRA, conversion and HIPAA laws which provide a transition to individually owned health insurance. There are 36 states that have risk pools for those with severe medical problems and most of the remaining states have other provisions such as open enrollment to accommodate high risk individuals.

Mr. Obama wants to wave away this reality with new regulations that prohibit "discrimination against the sick"—specifically, by forcing insurers to cover anyone at any time and at nearly uniform rates. But if insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care. This raises the cost of insurance for everyone else, in particular those who are responsible enough to buy insurance before they need it; they end up paying even higher premiums. And the more expensive the insurance, the less likely people will buy it before they need it.
Well duh!

Government mandates raise premiums.

If the government wants carriers to offer more coverage it is illogical to claim that bigger benefits will cost less. They claim their goal is to make health insurance affordable for everyone but all of their proposals run contrary to that campaign sound bite.

That's one reason that only five states—Maine, Massachusetts, New Jersey, New York and Vermont—have Mr. Obama's proposal for "guaranteed issue" on the books today. New Hampshire and Kentucky repealed such laws after finding that they soon had an even smaller individual insurance market as companies fled the state.

Another proposed reform known as "community rating" imposes uniform premiums regardless of health condition. This also blows up the individual insurance market, by making it far more expensive for young, healthy or low-risk consumers to join pools—if they join at all. And if the healthy don't join risk pools, then premiums go up for everyone and insurers have little choice but to reduce their risk by refusing to cover those who have a high chance of getting sick, such as people with a history of cancer.
Guarantee issue and community rating, both key provisions and talking points in HR 3200, are designed to REDUCE competition and RAISE premiums . . . for EVERYONE, not just those with health issues.

New York, New Jersey and Massachusetts have both community rating and guaranteed issue. And, no surprise, they have the three most expensive individual insurance markets among all 50 states, with premiums roughly two to three times higher than the rest of the country. In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively. ObamaCare would impose New York-type rates nationwide.
It doesn't take a rocket surgeon to figure out that community rating and guarantee issue results in rates that are double the national average.

It really makes you wonder if the folks in Obamington are doing their homework. We already know they don't bother to read the legislation they vote on. Apparently they never bother to even check how over-regulation impacts the cost of health insurance by looking at real life examples. No need to ask the CBO to run numbers, which they have not done, just look how rates are impacted in states that have their own version of Obamacare.

ObamaCare would impose on all 50 states rules that have already proven to be failures in numerous states. Because these mandates would raise the cost of insurance, ObamaCare would then turn around and subsidize individuals to buy the insurance that the politicians made more expensive. Only in government could such irrationality be sold as "reform."
Smaller cars, bigger health insurance, Poppa Washington.

UPDATE [HGS]: For those right-brained folks who prefer visual proof, the Heritage Foundation has produced this handy graph, based on their analysis of the current proposal:

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