From The Wall Street Journal:
Rule Change on Health Insurance Rattles Industry
Consumers Rush to Sign Up for Coverage to Take Effect in New Year
By Elizabeth Williamson and Louise Radnofsky | Updated Dec. 22, 2013 9:01 p.m. ET
Monday is the final day for consumers to get new health coverage that takes effect when the new year arrives, leaving thousands of people racing to sign up in time—and health insurers trying to figure out whether the federal health law will work in the way they had hoped.The number of Americans enrolling continues to fall short of the goals the Obama administration has laid out, which is a problem for the White House.
It also represents a problem for the insurance industry, which calculated that the prospect of millions of new customers brought their way by the Affordable Care Act and its coverage requirements would make up for any disruption that came along with the law. Karen Ignagni, the industry’s top representative in Washington, spent the weekend managing the fallout after the administration overhauled its approach to people who buy coverage on the individual market.
The insurers Ms. Ignagni represents as head of the industry’s main lobbying group, America’s Health Insurance Plans, got late notice Thursday night of the new rules: People dumped by their insurers could buy bare-bones “catastrophic” plans or get a hardship exemption from having to buy health insurance at all. Those were customers Ms. Ignagni’s members were counting on to buy fuller coverage.
More at the link.
Make no mistake about it: the private health insurance industry loves the Patient Protection and Affordable Care Act. They are having some difficulties with implementation during the initial start-up period, but the PP&ACA should guarantee them an increase in business, as millions of people who did not have health insurance previously will be forced to buy health insurance. More, since most of the people who did not have health insurance previously were uninsured because they couldn’t afford insurance, and the federal government is not going to subsidize their premiums, the insurance industry isn’t as concerned as it might otherwise have been about people not paying for their health insurance. From the industry’s perspective, there are problems which need to be solved with the roll-out, and some help from the government in easing the transition would be useful, but they believe that the problems are all solvable. The article continued to note the industry’s real concern:
In an interview Friday at AHIP’s offices, Ms. Ignagni expressed concern about any erosion of the “individual mandate” requiring most Americans to carry health insurance or pay a penalty.
That is the rock to which Ms. Ignagni’s members have clung these past four years because it would bring new customers to her industry’s product.
Well, of course they are concerned about the individual mandate. The supporters of the PP&ACA made the conservative-sounding argument that the addition of thirty to forty million new customers would lead to increased competition among insurance companies for those customers, pushing premiums lower. But it was always a specious argument, made by people who either did not or chose not to understand competition. Everything offered for sale has a limiting factor to its price: the ability of the potential buyer to choose not to buy at all, the ability of the customer to say, “I might want this, but I am unwilling to pay this much for it.” Once the customer has no choice but to buy, competition may occur between different suppliers, but there is no competition with choosing not to buy at all; look at the ridiculous rates charged for automobile insurance — a mandatory purchase for automobile owners — and ask yourself if competition has held down prices there.1 And when you underpin that requirement with government subsidies to buy what is otherwise beyond your ability to pay, there is little reason for insurance companies to compete at all.2
The article in the Journal is primarily about the insurance industry itself, and Mrs Ignagni personally. Your Editor, on the other hand, believes that the real problems with the PP&ACA are not on the insurance industry end, but on the consumers’ side. Allow me to be blunt here: the people who previously lacked health insurance are heavily skewed to the less educated and less intelligent segment of our population. They lacked insurance because they had fewer skills which won them employment in better paying jobs, jobs which were with employers who provided health insurance. In an environment in which individuals are being required to search for and purchase health insurance on their own, we are putting the greatest burdens on the people least equipped to bear such burdens. What could possibly go wrong?
This is a common problem for the left. They decide that there is a problem which needs to be solved, and design what they believe is a solution to the problem. But, quite naturally, they are all highly educated people who work for a living — normally, a pretty good living — and they are simply unable to understand the culture and the problems of people who are not like themselves, not educated, often not terribly intelligent, and who don’t have the same work ethic. What they design would (often) work absolutely fine for people like themselves, who might be temporarily down on their luck, but is completely unsuited to dealing with people not like themselves. In a country where a huge number of people have to go to H&R Block just to file a Form 1040EZ,3 how can we expect every citizen to be able to go to a (poorly functioning) government website, be able to sort through various health insurance possibilities, and take a reasoned decision, in a time-limited manner, with the possibility of a government penalty looming for those who are unable to complete the task?
It isn’t amazing that this whole thing is FUBAR; it would be amazing if it were not.
- There are a few discount automobile insurers, who provide the absolute least coverage required by law. The recent decision by the federal government to allow people to carry only “catastrophic” might allow some low-end competition. ↩
- Ask any MBA: price is normally a far larger component to profit than is volume. ↩
- I have known, personally, several people who are just unable, partially due to fear, to do their taxes themselves, even though they are 1040EZ filers. ↩