Sunday, November 13, 2016

There are two key provisions of health-insurance regulation that destroy health insurance as health insurance

See Trump on Obamacare by David Henderson of EconLog. Excerpt:
"As I've written on Econlog before, there are two key provisions of health-insurance regulation that destroy health insurance as health insurance: the combination of guarantee issue and community rating. Either one of them on its own does not destroy insurance. Together they do, by taking the insurance out of insurance. With guaranteed issue alone, the part of Obamacare that Trump says he wants to keep, health insurance could still function as insurance. Insurers could say, "Sure, we'll insure you even though you have cancer. That will be $50,000 a year." That is what would happen if he didn't keep community rating. With community rating--that is, people being charged the same regardless of risk--insurance could still be insurance. Insurers could charge everyone the same but simply deny coverage to those who are too high-risk.

So it's guaranteed issue that Trump says he wants to keep; he has not addressed community rating. My fear, though, is that he meant he wants to keep both and that possibly he, or the reporters, didn't see the clear distinction. Both provisions are, unfortunately, enormously popular, with Republicans and Democrats. They're also popular with the general public. One data point: a self-employed guy I know who buys health insurance for him and his wife now pays approximately twice what he paid before Obamacare and it's for worse coverage. When I explained to him that it was due to these two provisions, he responded that he likes both provisions but he wants to pay less."

No comments:

Post a Comment