Friday, January 22, 2010

IBD: Why 'Scaled-Down' Health Reform Won’t Work

Given that there's little political will in Congress to pass the blockbuster ObamaCare bill, the most likely next tactic will be attempting to pass the various provisions in a piecemeal or scaled-down fashion.

One proposed scaled-back version is a law requiring insurers to accept patients regardless of pre-existing conditions.

But the January 20, 2010 Investor's Business Daily explains why this won't work:
...[F]orcing insurers to accept all comers without an individual mandate could destroy the economics of the industry. The young and healthy could simply choose not to get coverage until they get sick. States with guaranteed coverage but no mandates are among those with the highest premiums in the nation.

If there's an individual mandate, the government would likely feel compelled to provide major subsidies to help lower- and middle-class Americans afford care. And financing such a bill would require big spending and/or tax hikes. And that would bring Democrats back to where they were before Tuesday.
Amanda Teresi explains the key issue as follows:
It would be the equivalent of not having any car insurance, hitting a tree, and then calling Geico and saying you want to sign up. It doesn't make sense.
Instead of more government controls over insurance, we need a free market. Insurers should be able to offer policies on terms based on their own best judgement and prospective customers should be free to purchase (or not purchase) those policies based on their own best judgment.

Furthermore, if patients were unhappy with current insurance offerings, a free market would permit them to form their own risk pool and essentially self-insure. It is only onerous government regulations that prevent willing individuals from voluntarily forming their own insurance companies as they see fit. Instead, they have to abide by all the regulations and restrictions of their state insurance commissioner.

A fully free market would protect individuals' ability to purchase insurance, whereas imposing still more restrictions on whom insurers must cover and what benefits they must offer would actually destroy it.

For more information on this, please see my article from the Fall 2009 issue of The Objective Standard:

"How the Freedom to Contract Protects Insurability"