If we don't like the current health care legislation, the question is, What would be better? Nearly everyone, as far as I can tell, agrees that insurance companies should not be able to block people who have preexisting conditions from buying insurance. People often lose insurance through no fault of their own. If such people then get sick, they are doomed to bankruptcy or even death. This is a big problem. So, what to do? Let's imagine a system.
First, let's say we simply pass a law saying the insurance companies are required to accept people regardless of any preexisting conditions. This solves the problem. And, suddenly, you've also created a sweet deal for people. They can wait until they get sick and then buy insurance! Yippee! If this were to happen, though, insurance rates would skyrocket since only sick people would be getting insurance. Money would be going out to the sick people, but none would be coming in from the healthy people. It would be like letting people buy car insurance after they got into crashes. So, what to do?
Well, the answer is a law which says that everyone needs to buy insurance -- no free riders! This mandates that healthy people buy into the insurance market. With this, the pool of insurance buyers expands, and, with healthy people putting money into the system but not (yet) taking it out, insurance costs are reduced for everyone. Yippee! But wait, not everyone can afford to buy insurance. People shouldn't be forced to buy something they can't afford. So, what to do?
The answer is to help people buy insurance. First, you give them something of a "voucher" (subsidy) that they can use to help purchase insurance. The subsidy exists on a sliding scale, so that, as your income increases and you are more able to buy your own insurance, the amount you receive decreases. Second, you create an "exchange" that will allow people without insurance, and small businesses, to comparison shop for insurance in an easy and efficient way. In the exchange, people can compare costs, benefits, and consumer feedback, all in one place. This increases competition and reduces health care costs.
Suppose, then, that we want to help people with preexisting conditions to get covered. We have imagined a proposal that would seem to work: (1) insurance companies are banned from denying affordable coverage to customers based on preexisting conditions, (2) individuals must buy insurance to increase the insurance pool and guarantee that healthy people are paying in, and (3) government provides help for people to then buy insurance with subsidies and an exchange.
Wouldn't it be great if we had this proposal instead of the crappy legislation that Obama and the Democrats have proposed? Oh wait, I guess that is the plan. Maybe it is not so bad, after all.
Notice that if we do something that everyone thinks we should do (help people with preexisting conditions get coverage), and if we want to preserve a system of private health insurance, then it seems we have little choice but to accept something like the proposal made by Obama and the Democrats. Of course, we could also solve this problem by a single-payer system (like Canada and France), where the government takes over health care costs as a public service. There is much to be said for that, but this option may be too disruptive, and it is politically impossible anyway. So, again, if we want to preserve private health insurance, and if we want preexisting conditions covered, we don't really have much of a choice. This is what has to be done.
If somebody wants to send me a different, workable proposal, I'm all ears!
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