The New York Post, August 25, 2009
PRESIDENT Obama and his allies in Congress seem to have decided that the best way to fix the private health-insurance market is to break it completely.
Polls have prompted them to shift from health-care reform to “health-insurance reform.” Combine this with a government-funded, -regulated and an ultimately -controlled “co-op” system, and the nation will arrive by local roads at the same destination that the public rejected via the expressway: an out-of-control health-care system dominated by federal bureaucrats and funded by increasingly high taxes.
The irony is that private insurance works well where it’s least regulated. To find the unaffordable disasters, you must head to states such as New York or New Jersey that have pioneered the reforms Obama is peddling for the entire country.
The health-care sector is complex and interwoven. What appears to be government might in fact be run by private insurance companies. Medicare, for example, has long contracted out its day-to-day operations to insurance companies, mostly Blue Cross and Blue Shield.
Most Americans receive the health coverage they cherish through their employer. Chances are, if it’s a large employer, it’s a self-funded plan, and (as with Medicare) the insurance company is merely administering the program.
It’s only smaller employers and people seeking policies in the individual market who actually buy insurance from carriers.
The individual market is where people face the most choices and have the most choice — except in those states with Obama-style regulations. People are spending their own money and so must confront directly the value of more insurance protection versus other uses of their cash. Not surprisingly, they often opt for less generous coverage with less onerous premiums.
To discover this world of choice, just go to ehealthinsurance.org. Pop in your state, age and gender, and then ponder a myriad of choices to secure protection from catastrophic health expenses, the proper function of insurance.
A 55-year-old man in Allentown, Pa., can choose from 99 plans starting as low as $141 a month for hospital coverage. A zero-deductible HMO plan costs $418 a month. Or he can pick a more flexible PPO, with a higher deductible and pay less monthly out-of-pocket for the premium.
Young people, “the invincibles,” often skip insurance, because they have few assets to protect and little fear of getting sick. The congressional Democrats’ solution is a tax increase by another name: Force employers to keep paying for them on their parents’ expensive plans until age 26.
Yet the market has responded with products targeted at the needs of the young, such as Wellpoint’s Tonik, which offers excellent protection, prescription drugs and preventive care for less than $100 a month for the under-30 set.
So if 50-somethings can get a plan at less than $200 a month and youngsters can sign up for less than $100 a month, where’s the problem? Why, it’s in New York and New Jersey — precisely the states that have adopted Obama-style reform — restricting insurers from charging rates based on age and preventing them from saying no due to poor health.
Change the zip code from Pennsylvania to neighboring New Jersey, and choice plummets even as the cost per plan skyrockets. In New York, our 55-year-old has only 12 plans to choose from.
The reason is simple: When people can buy fire insurance after their houses are burning, only those with a fire in the attic apply for insurance. Soon, only those who expect a blaze can afford the high premiums.
Massachusetts enacted such a system in April 2006. A CEO of a major health network reports exactly this problem: Despite the state mandate that everyone buy and keep insurance, his company is experiencing a drastic increase in people who purchase new coverage, run up big bills that are fully covered and then drop the plan.
People are simply gaming the system. Since they can acquire insurance any time, regardless of health, why pay the premium in times of good health?
This is the future of ObamaCare executed by a liberal Congress whose leaders long for a government-dominated system.
The current health-care environment offers all of the components that are touted as true reform — health co-operatives, health-insurance clearinghouses and tax subsidies for low-income Americans that ensure access to health care. But it doesn’t give Washington control of reimbursement rates or health plan design, or the power to force people into insurance plans.
That’s what politicians want — because it’s only when they have total control and have totally broken the system that they can recreate it in the image of “Medicare for All.”