Thursday, January 07, 2010

More on The Health Care Reform: The Individual Mandate.

If you have ever tried to change the fit of a piece of clothing which has darts and curved seams and so on you might know that taking in material at one seam changes everything else, and you might end up having to take the shirt or whatever apart and to re-sew it completely.

The health care reform is a little bit like that. Ending with a compromise is like ending with a shirt which has humongous breast bags and too tight a waist. And that's why I'm not very happy with what we have so far. The proposal does have good things in it, even great things, but most of those will help people who are unlikely to vote. The bits which have had the seams re-sewn will now chafe people who do vote, and that is bad news for the Democrats.

Take the "individual mandate" bit: The rule that everybody must buy insurance or get fined. That's something both conservatives and liberals hate, though its inclusion may have been the price to pay to get the insurance industry to agree to any reform.

Now, the individual mandate made excellent sense at the beginning of this re-sewing process, because if people were allowed not to buy insurance at all then the low-risk young people would do exactly that. This would have had two bad consequences: First, they would still need charity care if they got sick or hurt in an accident. Second, the average price of insurance would be higher because the lower-risk people would not be contributing towards it.

All this would have been relevant for only those who don't get their insurance through their employment. (That insurance, by the way, is already community-rated which means that the lower-risk people are already subsidizing the higher-risk people. But as ultimately the lower-risk people will turn into higher-risk people the subsidies tend to cancel out.) It is the markets for individual insurance which are affected by the individual mandate, and in the initial stages the insurance exchange was supposed to have a public option, one with carefully created policies, and those policies would have been available for any buyer.

Now the public options have gone down the drain of conservatism. And thus consumers are mandated to buy a policy, however crappy, however full of holes, from private companies only. Add to that the proposal that policies could be sold across state borders (another concession to conservatives), and it's not impossible that the whole industry would relocate into states with the lowest quality controls and the least amount of regulations. Yet consumers must be consumers.

Countries which use the individual mandate also regulate their health insurance industries heavily. The policies offered are scrutinized and only good policies can be sold. I don't see enough of such regulations in the U.S. proposals to protect the consumers.