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How to Insure Americans with Pre-Existing Conditions

Like a hammer that sees every problem as a nail, many politicians think the solution to every problem is legislation that erodes our liberties.

by
Brian T. Schwartz

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February 24, 2011 - 12:03 am
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You might believe the ObamaCare offers the only way to cover people with pre-existing conditions — if you read only Colorado Public News’s misleading “fact check” on Colorado representatives and the contested health care bill. Actually, ObamaCare makes things worse, not better, for people with pre-existing conditions. Our representatives should support better alternatives.

ObamaCare requires insurers to offer a policy to any applicant, at pretty much the same price regardless of the applicant’s health or expected medical expenses. If such price controls sound wise, imagine if restaurants had to charge the same price for steaks and burgers.

Restaurants would make larger profits on burgers, but possibly lose money on steaks. They would cater to burger eaters and make lousy steaks to repel steak lovers. Some steakhouses would close. Others would become burger joints.

Sound far-fetched? Consider Colorado’s insurance market. The Denver Business Journal reports that insurers are “selling policies outside of the health realm” because ObamCare’s controls “cut into profit margins.” Because of new insurance price controls, six insurers have stopped selling child-only policies in Colorado, and Aetna has left Colorado’s individual market entirely.

Patients with pre-existing conditions would be better off without price controls. Insurers would actually want their business, and hence design products that appeal to such customers. Government should respect insurers’ right to price policies as they see fit. Instead of imposing damaging price controls, politicians could support subsidies — or better yet, private charities — that cover the increase in premium.

Such subsidies would not be as common or large as politicians let on. Very few of the uninsured are uninsurable: “less than 1 percent of the population,” writes health care economist Mark Pauly. A Department of Health and Human Services survey had similar conclusions. When last spring’s health control law created high-risk pools for the uninsurable, Medicare’s chief actuary predicted that 375,000 people would enroll. By December, only 8,000 had done so.

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