Heath insurance

AP had a depressing story this week on the increase in "moderate to middle-income" Americans who were uninsured for at least a part of last year.  It's not particularly surprising, though, since fewer employers are providing insurance, and buying individual insurance is out of reach for most lower-income families.

A couple of people have asked me what I think of the new Massachusetts health insurance law, which requires everyone in the state to have health insurance (or face fiscal penalties) and provides subsidies for low-income individuals and families.  I'm a little dubious about whether it will work, but it's certainly worth trying.  No one else is even making a serious attempt at achieving universal coverage, and I have to admit that the Massachusetts model is a lot more politically feasible that my preferred choice of a single payer model.  And I've got a lot more confidence in this approach than in Health Savings Accounts as the solution to the uninsurance problem.

If you want to know the details of the argument for an individual mandate system, check out the New America Foundation, which has been pitching this approach for a while.  But in brief, the argument is that there are a significant number of young healthy people who could (theoretically) afford to pay for insurance, but gamble that they won't need it.  They know that if they really get sick, they can show up at a hospital, and won't be turned away for inability to pay.  An individual mandate therefore both makes them pay their fair share, and reduces the costs of uncompensated care, freeing up funds to pay for insurance for those who really can't afford to pay.

The reason I'm skeptical is that I haven't seen anything that explains how the Massachusetts approach deals with the problem of the small minority of people who have major health problems, people like Annika.  Unless you have some way of putting such people in a risk pool with a large number of mostly healthy people (as in the typical employer-provided plan), there's no way they can afford an insurance plan that charges their actuarial costs.  As soon as people are choosing their own plans, anyone who is healthy will keep their costs down by staying out of insurance plans that are attractive to very sick people.  And so the costs of those generous plans spiral up and up.  If anyone knows how Massachusetts is dealing with this problem, I'd love to hear about it.

Comments

[Rebecca]

I completely agree with your outlook on health insurance and I will be interested to watch how this Massachusetts law works out.

I've often wondered if it would be possible to start a no-frills, not-for-profit, low overhead "health insurance co-op" aimed at people who are working but unable to afford commercial health insurance, and small businesses that can't currently afford to offer health insurance benefits. In a way, it could be like a preview of how a single-payer system would work (although it would most certainly cost more than a single-payer system).

[Christine]

I just read the link to PunkAssBlog.com and must say that things are not that simple. Why don't people just carry hospital insurance and pay to see a doctor when need be. The entire health issue is ridiculous since we do not practice preventive medicine. And yes I am pissed if what I pay for in health insurance covers someone with none that eats junk, smokes, drinks and doesn't exercise. We all know the correct way to take care of ourselves and must get out of the mindset that we are 'young and invincible' or 'it will never happen to me.' Has anyone been to a doctor that has dropped insurance and only takes cash - it is damn expensive. People also think that everything should be so cheap (we can thank Walmart and other businesses of that ilk.) The reality is (for anyone who has ever worked at a hospital) there are many hospital workers to take of one patient. Besides physicians and nurses there are clerical staff, technicians, housekeeping, etc. As it is many hospitals are understaffed. What is most obnoxious is how people expect top service for low cost. Healthcare is going to move towards a more socialized system because businesses are not going to carry it anymore. I think everyone in Congress should not receive health insurance until everyone in this nation who pays taxes (i.e their salary and benefits) has some decent health coverage.

[amy]

It's not just a problem of being unable to pay for insurance; it's also a problem of being able to find insurers willing to sell you a policy. The state high-risk policies are expensive, yes, but there are also generally significant barriers to getting in, with waiting periods, residency requirements, and proof of uninsurability elsewhere. All that takes time, during which you have no coverage. There's also the question of being forced to buy useless insurance; if you've ever been in the individual insurance market, you know that you'll be ridered out of most of the coverage you actually need.

I haven't read the Mass law yet, though. Anybody know how it addresses those problems? Also, does it allow citizens to buy catastrophic coverage rather than major medical? At least that'd cap the damage from uninsured.

[Phantom Scribbler]

There is some excellent criticism of the new Mass. health care coverage here.

I haven't had a chance to read the legislation yet, but the main criticism that they offer is that the law fails to provide any way to contain medical costs, and will prove impossible to fund.