Patient Power

Health care bill: fewer insured, higher premiums

Obama Care - more uninsured, higher premiums, writes economist Martin Feldstein in the Washington Post:

A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual’s health condition.

This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums.  …

The higher premium level would cause others who are currently insured to drop coverage, pushing premiums even higher. The result would be a spiral of rising premiums and shrinking numbers of insured.

In an attempt to prevent this, the draft legislation provides penalties for individuals who choose not to buy insurance and for employers that do not offer health insurance. But the levels of these fines are generally too low to cause a rational individual to insure.

The answer is not to increase the penalty for not buying insurance.  Just ask those in Massachusetts, where insurance premiums are increasing at nearly twice the national rate.  (Family premiums are also most expensive.) It’s time for free-market health care reforms.

(via John Goodman)

• Health reform bill and preexisting conditions
• Obama Care: higher taxes & premiums, poverty trap for low-wage workers
• Obama’s health care proposal: death spiral, huge implicit tax rates, mandatory insurance
• Compulsory Insurance is Collective Punishment
• Obama Care: encourage insurers to avoid the sick, cater to healthy