Wednesday, July 11, 2007


Why I don't like the Republican UHC Plan

The "compassionate" Republican plan to provide health care to all Americans involves mandating that everyone buy health insurance, preferably from private, for-profit insurers. The Republican analysis seems to go like this: since forty million (or more) Americans don't have health insurance, make it a legal requirement that they get health insurance. Apply the same principle that works with auto insurance: require everyone to have insurance. Problem solved.

Of course, not all Republicans think like the late Milton Friedman, who once famously declared to his class of graduate students that there are no poor people in America. Governor Schwarzenegger (California) and former Governor Romney (Massachusetts) have both put forward health care plans in which the central ingredient is to require everyone to buy insurance. They recognize that some people are so poor that they can't afford the premiums. In their plans there are provisions to subsidize insurance for low-income people.

Governor Schwarzenegger also recognizes that insurance companies tend to charge high premiums or even refuse to provide insurance to individuals with expensive medical problems. He proposes to get around that plan by requiring that insurance companies insure everyone, or anyone who applies, regardless of any existing medical condition. I have not read his plan, so I do not know if insurance companies are required to charge the same premium to everyone, or whether, as they have from olden days, they first give you a physical examination and then determine the premium from the result of the exam.

If I were an insurance company and were required to sell health insurance to everyone, I would want to be able to charge a very high premium to a client who seems to be close to death. I would insist that it is my constitutional right to do so. No State, no Governor can require me to operate my business in a way to lose money. I'm sure the present Supreme Court would sympathize with me and decide the case in my favor.

So much for any legal requirement that insurance companies insure anyone who applies, regardless of his or her medical condition. More especially, so much for requiring that insurance companies apply the same premium to everyone. Insurance companies are going to tend to select the healthiest patients. Sick patients are going to tend to select insurance companies that charge the lowest premiums. The Supreme Court isn't going to allow States to mandate premiums or choice of patients that require insurance companies to operate at a loss.

The Republican plan for universal health insurance is an example of a solution to a very complex problem that is simple, inexpensive, and wrong.

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