Just In Case You Thought The Individual Health Insurance Market Was Working
All the current Health Policy proposals look to a future in which many, if not all of us purchase health insurance as individuals. Some plans like Obama's, want to encourage individuals who are not insured through their jobs to purchase insurance by making it cheaper and easier to get. Other plans like Clinton's, would require anyone who does not have job related insurance to buy individual insurance. John McCain would actively discourage employer provided health insurance through a massive tax increase - see a this blog.
Last week's NY Times had an interesting description of just how well the individual health insurance market is working for small business owners and the self employed. The details are fascinating. The basic conclusion is just what Wonks Anonymous expected: If you are older, or have pre-existing conditions, you can expect to pay a high price for your health coverage. If you have pre-existing conditions and your state does not have a program to assign high risk customers to insurance companies, you should consider moving to a state that does.
Indeed, when the State of California proposed reforms that would have required health insurers to issue policies to everyone, the reforms were opposed by Blue Cross because "Blue Cross is the best at risk selection. They would take a big hit to their profits.". For a full quotes for an unnamed source see Trudy Lieberman in the Nation. Risk selection, by the way, is a wonk term. It means avoiding sick people
To Mrs. Clinton's credit she has begun to recognize the high cost of individual health insurance and she now proposes a premium cap for health insurance based on family income. It is not clear if this will be accomplished by subsidies or price controls.
Subsidies are expensive but they may be the most effective way. Wonks Anonymous expects that insurance companies will respond to price controls by lowering the quality of policies that they offer to risky individuals: raising deductibles and adding restrictions to coverage. High risk individuals will avoid lower quality policies whenever possible so the insurance companies will get even more favorable risk selection.
For further discussion on this topic see the series on Health Insurance Profits in this blog.
John McCain does not appear to have even considered the idea of regulating health insurance markets.
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