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Townhall...
Just Say No to Health
Insurance
by Rachel Alexander
Feb 24, 2012
Everyone talks about reforming health insurance while ignoring a better
alternative: healthcare risk pools. Powerful lobbyists for the
healthcare insurance industry have convinced politicians to perpetuate
the current system of health insurance, hoping that minor tweaks will
solve the escalating crisis. Conservative think tanks have even bought
into the system due to heavy funding by insurance companies.
Risk pools allow people to buy into health plans of their choosing
instead of obtaining health insurance coverage through employers.
Health insurance is not a free market creation. It came into existence
as the result of President Franklin D. Roosevelt’s socialist policies.
Roosevelt mandated income caps during World War II, which caused
employers to offer health insurance in order to keep jobs attractive.
Now the government requires businesses to provide health coverage to
employees, giving insurance companies a monopoly on healthcare coverage
and ensuring their existence.
Risk pools offer healthcare coverage much like insurance, but have much
more flexibility and less bureaucracy. Funding comes from premiums. A
variety of risk pools are set up based upon various health needs or
non-medical criteria such as location and age, although the larger the
risk pool, the lower the premiums would be. The administrators of the
risk pool could be anyone; a doctor’s office, a church, a nonprofit
entity. The administrators would determine what levels of coverage
would be offered and what types of individuals fit into each pool.
Opponents of risk pools claim that risk pools are too costly, pointing
to existing risk pools at the state and federal level that are managed
primarily by the government. This is comparing apples and oranges. Most
of those risk pools are only high-risk pools. The people in those plans
have expensive illnesses like cancer, circulatory diseases (such as
coronary artery disease), post-surgical care (such as chemotherapy) and
degenerative joint diseases, and have been denied coverage or have
limitations like a pre-existing condition. These are people who make
too much money to qualify for Medicaid, but not enough to pay for
traditional health insurance; typically the self-employed. Around
207,000 Americans nationwide are enrolled in one of these pools.
Premiums for the existing high-risk pools average several hundred
dollars a month, higher than health coverage for healthy individuals.
However, if risk pools are broadened to include more than just
high-risk people, costs will decrease. Currently government provides
part of the funding for high-risk pools.
Healthcare risk pools can be managed with very little government
involvement, and for optimal efficiency should be administered at the
local level. Several of the 35 state-level high-risk pools are managed
by nonprofits, not the government. Federal high-risk insurance pools,
which were started under the Obama administration in July 2010 through
the Pre-Existing Condition Insurance Program, have proven to be twice
as costly as state-level pools. 18 states have opted to have the
federal government run their high-risk pools.
Risk pools should be combined with high co-pays, like $50 or so per
visit. This would create a disincentive for the type of people who run
to the doctor for every little thing. There are some risk pools already
in place in the private sector. Tellingly, some of them are managed by
doctors.
Requiring employers to provide healthcare coverage is driving companies
out of business in this dismal economy. It creates a disincentive for
Americans to run their own small businesses. Even if small businesses
do not have to provide healthcare for their employees, they still need
healthcare for themselves. If employers were no longer required to
provide healthcare insurance, everyone would buy into a risk pool
instead.
ObamaCare is expected to terminate healthcare risk pools. In 2014, the
ObamaCare provision making insurance mandatory for everyone goes into
effect. Sadly, a real system of risk pools will have never been given a
chance. Insurance companies will claim victory, confusing the public
into thinking that costly high-risk insurance pools were the same thing
as insurance pools for everyone. Yet as high as costs are for high-risk
insurance pools, even they are lower than we will see under ObamaCare
when the inefficient federal government bureaucracy takes over.
Read this and other columns at Townhall
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