Families USA has found itself a great line of business: make up a quick and easy number to demonstrate how awful private health care is, and then replicate the made-up number for each state. We’ve already learned that 3,100 Californians supposedly die every year because of uninsurance; and that Medicaid “cuts” (well, not actually “cuts”, but slightly slower rate of growth) will cost 25,000 jobs in New York, etc.
But in its latest attack on private health care, Families USA doesn’t even bother to make up any numbers: it simply asserts that a less regulated market for individually purchased health insurance is miserable, and calls on states to increase regulation. Failing Grades calls specifically for allowing people to get sick before they buy health insurance, outlawing carriers’ ability to charge preferential premiums to people who don’t smoke or otherwise stay fit, and letting accountants decide from which insurer you can buy a health plan (a.k.a: guaranteed issue, community rating, and a minimum Medical Loss Ratio of 75%).
Basically, Families USA scores states exactly the opposite way that I did in the U.S. Index of Health Ownership! There is plenty of evidence about how the regulations trumpeted by Families USA drive up health insurance premiums – and contribute to the problem of the uninsured that Families USA complained about a few weeks ago. One good source is a book published in 2004: Destroying Insurance Markets: How Guaranteed Issue and Community Rating Destroyed Individual Health Insurance in Eight States.
Because it cannot use data to support its claims that the so-called “consumer protections” that it advocates make health insurance more affordable, Families USA relies on a couple of anecdotes, and the opinions of insurance regulators who simply say “it is so”. Indeed, the whole effort looks to have been prompted by government agents – or at least one, Connecticut Attorney General Blumenthal, who endorsed the study in a press release.
OK, so politicians and regulators claim that more regulation is good – big surprise, huh?
Strangely, Families USA’s Failing Grades seeks to prevent the transformation of U.S. private health insurance from employer-sponsored to individually purchased. They must have missed Mark Pauly’s latest study (of actual data) showing that people in poor health in group insurance are more likely to lose health insurance than those in the individual market.
But wait a minute: Families USA is not really a fan of the group market either. According to another Families USA statement:”Unfortunately, there are serious (and growing) problems with private insurance. Prices are spiraling upwards, leading employers to raise the share paid by workers, cut back on benefits, or drop coverage altogether.”
Quite right: because the “protections” that Families USA advocates for the individual market have prevailed in most states’ group markets for about 15 years, driving up insurance premiums, as I discussed in a recent study of Gov. Schwarzenegger’s proposed California reforms. (I discuss the absurdity of a regulated Medical Loss Ratio there, too!)
And, just in case you still think that insurers’ profits and paperwork are what’s driving up the cost of health care: These two factors, plus taxes, have accounted for between 10% and 15% of premiums for the last forty years.
The cost of health care is going up because the cost of health care is going up, largely due to regulation. But don’t tell that to Families USA. It would just spoil their story.