Tuesday, September 8, 2009

Should Health Insurance Be Voluntary

I would not be surprised if many of you who read my first post were not comfortable with the idea of mandatory health insurance even if made affordable.   Of course this would be impossible under current circumstances.  It would be just too expensive for too many people especially without the benefit of a tax exemption.  What makes matters worse, you can have health insurance through your employer  for decades but if you lose your job any pre existing condition is held against you if you have to get individual insurance.  Universal health care insurance means we must make it universally affordable.  That is why creating the dual system of Major Medical Insurance and Health Savings Accounts can work, if accompanied by the needed tax exemptions and credits.

Even if made affordable, though  many still see this is a matter of rights.  No one should be forced to buy something they don't want to buy.  But that presents a long term problem.  Health insurance will be very expensive if you can wait until you need it before you buy it.   Insurance executives are businessmen, not martyrs.  They won't drive 1997 Fords and live in apartment houses for your right to wait until you have diabetes before you get health insurance.   If health insurance can be made affordable as described in the first two posts, and Americans want to preserve the right to choose whether or not they purchase it, then we must accept that people may be unable to pay for their care once it is needed and may lose their homes, go bankrupt, etc. (It is very rare for care to be denied when needed, but you get the bill.  You can make payments, negotiate cost reductions, etc, but in the end you can lose all you own).

As long as health insurance is voluntary  insurers make the assumption that any individual who is buying it must know he needs it.  This is called "assumed risk," and is one reason why health insurance is so expensive for everyone and prohibitively expensive for those with pre-existing conditions.   That being said cost can be greatly reduced based on the concept of shared risk which results from forming large groups, the larger the better.   What no one seems to mention is that allowing only large employers to form the groups that  reduce cost is an absolute contrivance that has nothing to do with risk.  Any conglomerate of individuals or small businesses allows for the benefit of shared risk (unless maybe it's a group of people currently hospitalized for heart attacks) and should be allowed to buy group insurance without undue regulation.  That should have happened decades ago.  Government regulation has caused the problems and only deregulation can resolve them. The only reason that health insurance for small businesses and individuals is so much higher than for large companies is because government made it that way.  The same goes for why employers but not individuals get a tax break on health insurance.

In the short term the number of uninsured could be  greatly reduced by one act of Congress today allowing 1) the large groups that support greatly decreased premiums to be formed by any conglomerate of individuals and small businesses and rated by insurers similarly to the current groups, 2) the same tax deduction as given to employers ( tax credit to low income workers who don’t qualify for Medicaid),   3) choice for limited benefits, including major medical care only, and 4) a six month open enrollment without any penalty for pre-existing conditions. 

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