ICYMI: Fortune Magazine discusses the importance of structuring reform properly
Posted by The Campaign on February 03, 2010 at 9:41 AM
Fortune Magazine’s editor-at-large, Shawn Tully, takes a look at several of the health care reform provisions with broad support and how they need to be structured in order to work well.
A few excerpts:
In the battle over health care reform, two ideas seems to bridge the divide between Democrats and Republicans: Private insurers should be required to cover Americans with pre-existing conditions and be banned from charging older, sicker people much more. But where the two camps jibe could also cause the most damage to health care.
The two ideas: Guaranteed Issue and Community Rating.
Guaranteed Issue forces private insurers to accept any and all applicants, regardless of their medical condition. Community Rating bans carriers from charging a different rate, say, for someone with diabetes than a buff tri-athlete. It also imposes tight bands on premiums for customers of different ages, even though older patients cost far more to insure than younger ones.
The pool dries up: So what is the problem with obliging insurers to accept everyone and try to keep pricing uniform? First, the young and healthy -- the group whose premiums carriers count on to make insurance work -- will be less likely to buy in. Community Rating forces them to pay far more than their anticipated medical expenses. Shunning insurance actually makes sense: They can wait to sign up if they get diabetes, cancer or another chronic condition. Remember, under Guaranteed Issue, insurers can't turn them down.
Boosting penalties: A system mandating that insurers take all comers at close to the same premium can work -- but only if it also imposes a powerful "individual mandate" requiring that everyone buy insurance.
To read the full article, click here.
