Health Insurance Options: Worse and Worser
TUESDAY'S REPORT from the Census Bureau adds to the fear that the employer-based insurance system is in long-term decline. The share of people without medical insurance edged up from 15.6 percent in 2004 to 15.9 percent last year, bringing the number of uninsured to a record 46.6 million. That increase is particularly striking because it took place despite a strong economy. It cries out for an imaginative policy remedy.
...Poor Americans remain far more likely than rich ones to be without insurance. But the decline of insurance coverage among the middle class reflects pressures that weaken the system for everyone, and that are likely to get stronger. As health care has grown more sophisticated, health spending per American has doubled since 1975 in inflation-adjusted terms, driving up insurance premiums correspondingly. As a result, small companies and self-employed people think twice before buying insurance; companies that hire mainly young and healthy workers, or self-employed people who are young and healthy, frequently decide that insurance is not worth paying for. This exit of inexpensive patients from insurance pools drives up premiums for patients who remain, forcing yet more exits. Because of this vicious cycle, insurance for small firms or individuals grows prohibitively expensive. Add in the trend toward self-employment and the outsourcing of work to small contracting firms, and you can see why the traditional health insurance market is allowing a growing number of workers to fall through the cracks.
Congressional Republicans offer one reasonable idea to make health insurance more affordable: reduce the number of mandates requiring insurers to cover particular medical conditions. ...
A second option, which has been tried successfully in New York state and is being considered in Vermont and Massachusetts, is for government to backstop private insurers that sell coverage to small firms and individuals. To get around the problem that the customers who have not exited these markets are sicker than average, government can promise to reimburse insurers when the bills generated by a patient rise above, say, $50,000 in one year. [Emphasis added]
The first suggested solution is a dangerous one, not a "reasonable" one. It's clear that the first exclusion insurance companies would invoke is coverage for mental illness. Since we now know that mental illness is just that, an illness not unlike cancer, diabetes, or hypertension, allowing this exclusion from coverage simply opens the door for the exclusion of the other expensive to treat diseases. It is these kinds of costs that drive people into what used to be an accessible bankruptcy system. That was the whole point to health insurance in the first place.
The second solution is simply another patch on a structurally weak system. Employer provided health insurance was a benefit fought for after World War II when there were plenty of jobs and employers had to compete with each other to fill them. Those jobs are simply not there at this time, and unions are simply not as strong as they were then. In the fifty years since that drive, the costs of health care have risen to the point that GM, Ford, and Chrysler tell us that they have to add from $1500 to $2000 to each new vehicle just to cover health insurance costs for their employees and retirees, which blunts the American auto makers competitiveness in the world market.
Sooner or later businesses of all sizes are going to have to come to the same conclusion that many progressives reached a long time ago. A single payer system akin to those of Canada and Great Britain is simply the best way to go. As soon as business leaders realize this, then perhaps real improvement on health insurance and health care costs can be made.
Hopefully the realization comes quickly.