Tuesday, September 29, 2009

The unholy trinity of health care reform

I actually think we are going to get a reform that is both worse than the status quo and worse than a pure single payer system. 

Kudos to our Congress!

As I understand it, insurance companies will not be able to refuse to cover some one, nor will they be able to charge high risk people a premium that reflects their risk. The price won't be uniform, but the maximum variation will be well below what it would take to correctly price the variation in risks.

As I noted before, this will make premiums for healthy people extra high. And as the WSJ pointed out yesterday, at least on the margin, it will make healthy people want to hold off from getting any insurance until they are actually sick. 

Problem solved, you say?

Ahh, but now it appears that the third leg of the trinity will be rule that it will be illegal to not have insurance!

So young healthy people will be forced to buy way overpriced (relative to their risk) insurance. Plus if said young healthy people make good money, they can look forward to paying more taxes to subsidize the purchase of said insurance by others.

Guaranteed Issue, Community Rating, Individual Mandate.  They sound so reasonable and innocuous, but they are freakin' lethal.


2 comments:

Brian Moore said...

It is kind of weird that "reform" is solidifying some of the worst aspects of the current system.

silly girl said...

Will this drive even more people into the cash only economy? The already avoid most taxes. This would be one more tax they could avoid.