From the Associated Press:
The health insurance industry offered Tuesday for the first time to curb its controversial practice of charging higher premiums to people with a history of medical problems. The offer from America’s Health Insurance Plans and the Blue Cross and Blue Shield Association is a potentially significant shift in the debate over reforming the nation’s health care system …
…the two insurance industry groups said their members are willing to “phase out the practice of varying premiums based on health status in the individual market” if all Americans are required to get coverage.
Insurers are trying to head off the creation of a government insurance plan that would compete with them, something that liberals and many Democrats are pressing for.
So instead of a government insurance plan competing with insurance companies, insurance companies will simply offer government-approved insurance. This happens now to some extent. But when government requires you to buy insurance, politicians get even more power to define what legal insurance is.
As in Massachusetts, special interests will clamor for mandated benefits, which will drive up costs and decrease availablilty of health care. It’s not hard to imagine that when this fails politcians will again claim that the (non-existent) free-market in medical insurance has failed, and that government must step in. For an excellent article on this, see this one by Dr. Paul Hsieh.
Is there any relevant difference between having a few choices of
(a) government-run “insurance” (or pre-paid health care) plans that you must buy, or face punishment from the state
(b) plans from nominally “private” insurance companies that you must buy, or face punishment from the state?
Not much, as I can see. Maybe the nominally “private” insurance companies would compete with each other. But the regulations on types of plans offered very much limits how the products could vary. Hence the term “managed competition.”
In any case, ending the “controversial” practice of risk rating is a form of community rating, which has shown to increase premium costs and drive up the number of uninsured. As Nathan Benefield notes, high-risk pools are a better way to address the pre-existing condition issue, as they are more targeted and hence have fewer “bad side effects” as it were. Health-status insurance is also a much better way, if only government stopped subsidizing employer-based insurance.
