In yesterday’s debate, some of the candidates addressed what they might do after repealing the ACA. The most often answer I heard was to make sure that people who had chronic conditions, but who had insurance, could not be denied insurance if they decided to switch jobs or lost theirs.
I get why this sounds good. It avoids the free rider problem by making sure people don’t wait until they are sick to get insurance. It also solves the problem of penalizing people who have gotten ill by trapping them at dead end jobs, or denying them the chance for future care. But there are so many holes here:
1) What about the guy who gets cancer while at his job and then loses it? The average employer plan is about $15,000 for a family. If he’s laid off, there’s no way he could afford that, let alone COBRA, which is usually more expensive. Now he’s unemployed, and he has to drop his health insurance. Under this legislation, he can’t get it back. Notice, you don’t need cancer for this to happen. Tons of people have been laid off, and many of them have chronic conditions.
2) What about the kid who gets diabetes when he’s 15, before he ever gets a job? There’s no real way to get grandfathered into this plan until we mandate that his parents keep him on insurance until he’s old enough to get it for himself. Surely we can’t penalize children whose parents couldn’t afford that? Tons of kids have chronic conditions.
3) What about the woman whose job doesn’t provide insurance, and who doesn’t make enough to buy it? This isn’t that uncommon. Those people do get sick. What is she to do?
4) What about when any of these people go to get new insurance and are told it will be $50,000 a year? After all, the candidates seemed to support limited guaranteed issue, but I didn’t hear anyone support community ratings.
The problem here is that they all recognize the need to make healthy people buy insurance to avoid free riders and adverse selection, but they want to avoid the use of the mandate. That’s incredibly hard. They also ignore the fact that individual ratings will still make the cost of policies unobtainable for people with chronic conditions. In fact, they also ignore the fact that insurance is just too expensive for a significant number of people, period.
Fixing how insurance is provided will mean regulations. Fixing how insurance is paid for will require spending. Given the candidates’ aversion to these things, I’m curious to know how improvements will be made.
[Cross-posted at The Incidental Economist]