AARP Enters the Private Insurance Market

AARP ENTERS THE PRIVATE INSURANCE MARKET….Via Matt, AARP has announced that it will begin selling health insurance to people aged 50-64:

Dawn M. Sweeney, president of AARP Services Inc., the tax-paying business unit of AARP, said, “We will use our collective market power to negotiate” competitive prices for the new health insurance products.

….People ages 50 to 64 often find that health insurance is unavailable or unaffordable when they try to buy it on their own. AARP said its underwriting practices would be less stringent than those of many commercial insurers, but it reserved the right to deny coverage to some sick people ages 50 to 64.

To guarantee issuance of a policy to every applicant in that age group is “just not economically feasible,” Ms. Sweeney said.

Great. Yet another powerful group with a vested interest in experience-rated private healthcare that works for everyone except, you know, the people who actually need it. That’s just peachy.

One of the great arguments among universal healthcare advocates is whether to press for a system that continues to make use of private insurance companies or to press for a purer single-payer system that gets rid of insurance companies altogether. The argument for working with the insurance industry is a political one: if we try to eliminate a role for insurance companies they’ll fight us tooth and nail, and that’s the last thing we need. Universal healthcare has enough powerful enemies as it is. The argument for pure single-payer is mostly (though not exclusively) economic: in our current system, healthcare administration uses up about 30% of all healthcare dollars, compared to 10% or less in countries with national systems.

I waver sometimes, but basically I’m on the side of pressing for a pure national healthcare system that does away with private insurance except at the margins (i.e., filling in gaps that the national system doesn’t address, or providing coverage above and beyond the basics). There are plenty of policy reasons for preferring this, of course, but the main reason is that I don’t really believe the political argument for compromising with private insurers. I think they’ll fight national healthcare just as hard no matter what the plan is, because the private health insurance industry is so big that even a reduced role means an enormous loss of revenue for them. What’s more, I think they’ll also judge (correctly) that even a reduced role is just the camel’s nose under the tent that will eventually lead to the end of private insurance entirely.

So trying to make nice with the insurance industry is a mug’s game. They just aren’t ever going to be on our side, and frankly, I don’t blame them. All that said, however, the fight against the entrenched interests of the insurance industry gets a lot harder when an organization that might have provided significant lobbying muscle for a single-payer system is depending on a private insurance business line for a big chunk of its revenue. It’s definitely not pleasant news for the good guys.