Last night Gov Palin convincingly demonstrated her total ignorance of the health insurance market. The woman who, according to her, once went without health insurance (fact check please) said once again that eliminating state regulation of health insurers (the real world impact of allowing interstate sale of individual policies) would solve the health insurance crisis.
Not.
Deregulating health insurance would have the opposite effect. Sure, the market would ‘work’; insurers would get licensed in the most insurance-friendly state, the one with the least regulation, the fewest regulations, the lowest requirements for benefits and capital reserves. States with higher standards for insurers – like prohibitions against retroactive cancelation of policies, requirements that insurers have enough cash on hand to pay claims, and an appeals process so physicians and patients can quickly resolve disputes, would find themselves with no insurers to regulate. The free market would force all insurers to offer the cheapest policies, the ones with the lowest benefits. Any insurer that tried to offer richer benefits or covered folks with pre-existing conditions would sign up older and sicker people – you know, the folks who actually need health insurance. And be bankrupt soon after.
Supporters of McCain’s plan claim there would not be problems as insurance companies operate across state lines today. What they don’t tell you is the plans they use as examples are employer-based. Under McCain, these would go away, to be replaced by individual policies. There would be nothing to prevent the cancellation of policies by insurers suddenly deciding they didn’t want to pay bills for cancer treatment, a new pregnancy, or a special-needs child. Nothing, no appeal process, no regulator forcing the insurance company to pay claims or reconsider a policy cancellation.
Palin also said that McCain’s proposed health insurance tax credit would help families buy insurance. What kind of policy would $5000 buy a family? Perhaps a ‘mini-med’ without coverage for hospital stays and a $5000 deductible. Family plans cost more than $12,000 on the employer market; although they are cheaper in the individual market that’s only because the benefits are so much lower; individual plans typically have higher deductibles and copays, no coverage for drugs or pre-existing conditions and onerous pre-certification requirements.
Palin’s lack of understanding of the world of health insurance conflicts with her claim to speak for Joe Sixpack and his bride Hockey Mom. McCain’s plan would leave them with lousy coverage and no recourse, at the mercy of unregulated insurers.
Oct
3
Joe, I see you making comments often regarding backing up what you say. Where is your back up to all your thoughts (besides McCain’s website etc..) You know how this works. The President puts a plan on the table and every senator and congressman will add into it for a compromise bill. Your concerns would be addressed in a comprehensive bill.
Keep government out of healthcare, except as a means for a fair playing field. To me, that includes making sure that the sick do get insured.
As an employer, it is still not that big of a deal to offer insurance to employees. Yet, many don’t. But in the end, offering insurance to individuals all across the country would at least put competition in the insurance industry, allowing individuals to decide if they want a MiniMed. Is it your job to say if a person wants a MiniMed that is not good enough for that individual or their family? It sounds like the Nanny state to me if we control those kind of choices as a federal government. Let people choose, we just need to make sure the sick can actually have and keep insurance at an affordable rate.
By the way, why do you want that fact check on Sara Palin for her own helath insurance? I didn’t have it either at one point in my life, and made a conscious choice to let it go for a year while I got my finances together. Why would she lie, and more important, why would you take the position or somewhat suggest that she lied?
I am not sure you understand health insurance? Maybe you should lose your group policy and have to desperately beg for an individual policy and then be denied. Insurers are insulated by regulations in the free market. A loosening up of the regulations would only benefit individuals.
@Brian Sharp
What you seem to be forgetting is that in ‘letting people choose’, you have to have options to choose from.
The irony of the McCain plan is that HE HIMSELF cannot purchase a health insurance plan in the open market since he has a past history of cancer. The individual market won’t touch people like him with a ten foot pole. There is no seller and thus no market, period.
I’m as free market as the next guy. But like police and fire protection, health does not work like a regular market. That’s why we’ve ended up with the system we have.
My intent is not to pile on to Mr Sharp. Honest.
That said, what state are you in? My company is in Florida, and our premiums are through the roof.
And as an employer, I have to ask what are the tax implications of the $5,000 credit? Does this mean the employee gets the tax credit but I have to pay FICA, unemployment, etc. on heretofore untaxed income? Do I pay it on the whole value of the income (which as Joe rightly says is closer to $12,000) or do I pay it on the cost over $5,000? Either way, I can tell you that as generous and compassionate an employer as I am trying to be, it’s a deal killer for me to continue to provide our group with health insurance. I can’t afford an extra 8% FICA tax INCREASE on top of other expenses.
We haven’t even addressed whether this includes other employer insurance benefits, such as life and disability. Put those in the taxable column and I think the number of uninsured will explode.
Or maybe I’m not seeing the issue clearly.
Joe – I don’t think you understand the individual heath insurance market – Your statement = “Family plans cost more than $12,000 on the employer market; although they are cheaper in the individual market that’s only because the benefits are so much lower; individual plans typically have higher deductibles and copays, no coverage for drugs or pre-existing conditions and onerous pre-certification requirements.” The truth = Individual policies are cheaper (in 45 states) because they allow for medical underwriting (80%+ pass) and often have fewer mandated coverages (like maternity). For you to state that all individual policies have blanket pre-existing condition exclusions, high deductibles and no coverage for prescription drugs is flat out wrong. Once again, your political bias often undermines your otherwise thoughtful discourse.
Joe Balance: Why do you suppose 20% of policies do not pass underwriting? Could it be because many or most of those applicants have pre-existing conditions? And when you say individual plans often have “fewer mandated coverages (like maternity),” aren’t you saying they have fewer benefits?
Besides, I think there’s a bigger issue with Joe’s assertion that individual plans are “cheaper.” They may have lower overall premiums, but to the families that have to pay for them, they *seem* more expensive, since they’re paying the entire premium instead of their employer paying some portion of it.
My wife and I are in our late 50s and are self employed. We are paying $1250 a month for insurance that pays 80% of most things, but doesn’t cover devices like pacemakers, nor any form of counseling. If our meds cost more than $3000 a year for one of us, we pay it. In an unregulated environment we wouldn’t be able to buy any health insurance-even at the current $15,000 a year. I’m sorry Hillary isn’t going to be President, but I’ll settle for Obama.
Joe B
I did not say ‘all’ individual policies have those attributes- you did. I suggest you read the post more closely before writing a critique. Medical underwriting is indeed a key issue and the primary reason mccain’s unregulated market would be a disaster.
Brian
1. I don’t understand your point re citations. As you note the only citation relevant to my post is mccain’s published policy which MCM readers are certainly smart enough to understand.
2. I certainly do understand how the process works in DC. That is irrelevant in this instance. My post illustrates the lack of logic, ignorance of the workings of the health insurance market, and incoherence of mccain’s health reform platform. That IS the point as it shows McCain’s failings.
3.I did not say minimeds were or were not appropriate nor did I infer that.
4. Why did I ask for a fact check of palin? Because she has lied often throughout this campaign and with her track record one must be skeptical of anything she says.
5. It appears you agree that medical underwriting is a major problem and must be carefully regulated. If that is the case then we agree.
It sounds to me like McCain-Palin want/expect healthy people to be able to buy relatively inexpensive insurance wherever they can find it and they want insurance companies to profit from risk selection and cherry picking. People who are already sick or get sick later can be dumped into some state funded high risk pool. Swell.
As I understand it, only about 200,000 people NATIONWIDE get health insurance from a high risk pool and many of those pay an extremely high premium out of pocket for the privilege to supplement the required (also very high) state subsidy. McCain himself has said he doesn’t understand economics very well and his health insurance proposals certainly show that he doesn’t understand health insurance either.
Unfortunately, even if Obama wins, it will be hard to get to universal coverage anytime soon because of both the huge projected federal deficit and the near term cost of the financial system rescue package. There will be less money to be had from raising taxes on the interest, dividends and capital gains (and wages) earned by high income people while the middle class won’t be in much of a mood to pay higher taxes in order to pay to provide health insurance to the working poor and pre-Medicare eligible retirees who don’t receive coverage from an employer.
Reliance on the individual market to meet the nation’s health care needs in face of declining employer coverage is a disastrous idea and clearly shows that Palin has absolutely no idea about health insurance. The individual market, even with strong state regulation, excludes lots of people who need coverage and high risk pools are overpriced and limited ( California’s covers a max of $75K coverage and limits coverage to 3 years and is expensive, even with gov’t subsidy.) Taxing health benefits does no one any good. Individuals with employer coverage have no idea how expensive this will be- to have to pay taxes on the cost of their health benefits- This is a huge tax on the middle class who are the ones who tend to have some semblance of employer coverage left. there’s no way a $5000 tax credit will offset the additional taxation- on the margin.
McCain certainly has to come up with something more realistic- once again- no maverick here. only obvious lining the pockets of subprime health insurers at the expense of coverage and state funds used to pick up the soon to be uninsurable.
In Colorado, we have one of the best, most competitive markets in the country for health insurance. This is BECAUSE of regulations on insurers. The Colorado Division of Insurance has led the country keeping scam companies like MEGA Life and Health in check. Not ALL regulations are beneficial, and there are many I disagree with. But with McCain’s plan to get rid of group plans and remove consumer protections on individual plans, ForHealth would not have any better options because individual insurance companies would still not choose to insure somebody who has had past infertility treatments. Although, if the insurance companies all moved to a state with no consumer protections, ForHealth might find somebody to take her premiums for a while. Some time down the road though, she would have a claim, the company wouldn’t pay, and she would have no recourse for getting her premiums back. She should be thankful the insurance companies that declined her were required to be honest enough to not take her money in the first place.