07 February 2008

Agreeing with the WSJ

This is a bit scary.

There is a part of me that is pretty sure that if the Wall Street Journal's certifiably malicious editorial page is against it, I'm for it.

On the other hand, I know for certain that it's wrong to garnish someone's wages or impose liens on their mortgage to force them to pay for private insurance.

The WSJ's article, misleadingly titled "Saying No to CoerciveCare" (that should be "Saying No to Coercive Private Insurance") noted that labor unions launched the last minute revolt against the mandates in California Gov. Schwarzenegger's plan and caused its downfall -- 7-1 in committee.
This defeat has national political implications. Hillary Clinton, for example, has denounced Barack Obama for refusing to include an individual mandate in his health-care plan. Yet many California unions argued that a mandate would force uninsured, middle-income working families to divert money from more pressing needs toward coverage whose price and quality they cannot control.
I'm no economist (but I'm married to one, something that leads to many, many conversations on true costs and the need for marketplace transparency, as well as mini-lectures on fixed vs. variable costs, and other truly boring matters) but the WSJ author seems to be making a leap to claim that health insurance costs have gone up in Massachusetts mandates because of heavy regulation and increased demand. Insurance costs are supposed to go down when you increase the risk pool, as supposedly happens with mandates. That's because suddenly all the healthy free riders who before had gambled that they weren't going to get sick are paying into the system. More money in the system, fewer claims per capita (because those folks are indeed healthy) and voila, costs per capita go down. Except they didn't.

The author instead seems to be suggesting that costs for health insurance would go up with increased demand in the same way that costs for a rare but suddenly popular dog breed would go up after everyone realized they wanted one.

No surprise to hear that regulations are also blamed. Those are the regulations that say that health insurers have to actually give some value for the money -- that they have to give a percentage of the value, for instance, that people in France get for their health dollars spent.

It's also no surprise that the private insurance industry cannot in fact give that kind of value for the dollars we pay them. Unless you're a shareholder or CEO. Good value received per share in that case.

The cost of health insurance went up 12 percent last year in Massachusetts -- twice the national average.
No one is escaping the financial sting. The state health-care bill for fiscal 2008-2009 is expected to touch $400 million -- 85% more than originally projected. Still the state won't be able to fully shield those it subsidizes from the premium increases. But uninsured folks who don't qualify for government help really get pounded. Before the hike, the cheapest plan for uninsured couples in their 50s cost $8,200 annually. Now, unless government bureaucrats hand them an exemption, they might well find it cheaper to pay the penalty -- up to half the price of a standard policy -- than purchase insurance. That is, pay to remain uninsured. This is legalized extortion: TonySopranoCare.

The government response to rising premiums is, unsurprisingly, price controls. The Commonwealth Health Insurance Connector Authority -- the bureaucracy created to oversee RomneyCare -- is considering prohibiting underwriters from raising premiums more than 5% for unsubsidized plans, meanwhile requiring them to cover 40-odd benefits from hair prostheses to chiropractic services. If companies can't scale back coverage, they'll have to compromise care; and the Connector is perfectly willing to assist.

As reported in the Boston Globe, the Connector is encouraging insurance companies to include only a limited network of cheaper physicians and facilities in some plans to hold down premiums. Patients who wish to see more expensive providers will have to dig into their own pockets. Dr. Steffie Wollhandler, a professor of medicine at Harvard University, worries that the Connector will revive Gov. Romney's original idea of enrolling poor people in plans that only offer access to neighborhood health centers ill-equipped to treat anything beyond routine ailments. Forcing people to buy substandard care they cannot afford is not universal care, she says. "It is a hoax." And so Massachusetts is marching toward a system of two-tiered medicine -- the alleged market inequity that universal care is supposed to cure.
Imagine that. Steffie Wollhandler approvingly quoted in the Wall Street Journal.

1 comment:

E Melander said...

I have yet to see hard numbers that prove increasing the risk pool actually lowers premiums. Everyone says it is true, but where is the proof. Instead, we find the opposite is true in Massachusetts where people dropped their expensive private plan for a cheaper government plan.