Obamacare: the public option lite
In the wake of opposition in the Senate to the public option, other than the “trigger” being proposed by Sen. Olympia Snowe (R. ME.), Sen. Tom Carper (D. De.) is floating another idea.
Here is how this one goes. The public option would be available initially only in states where insurance is deemed unaffordable. As this amendment has yet to see the light of day, it is any one’s guess who will make the “unaffordable” determination, but one thing is assured. Every state on the “unaffordable” list will be a state where the government has interfered with the insurance market by requiring that all insurance companies insure anyone who applies regardless of their health (guaranteed issue), and must charge the same rate for the sick as they charge the healthy (community rating).
Right now, some of the highest premiums in the country are paid by residents of New York, New Jersey, Maine and Massachusetts, all of which require guaranteed issue and community rating. When Maine mandated this, premiums rose by 74% in a five year period of time, and now, premiums in Maine are 350% higher than in neighboring New Hampshire where no such mandates exist.
The irony, of course, is that government (in this case, the states) intervention has caused insurance to become “unaffordable”. Now, the government (this time, the feds) thinks it can solve the problem by implementing a public option which will include the very same mandates of guaranteed issue and community rating that created the problem to begin with.
Beyond this, of course, once Obamacare is implemented, all insurance sold in this country will have to be guaranteed issue and community rated. So, any state where insurance is currently deemed “affordable” (and thus, not part of Sen. Carper’s public option plan) will soon become “unaffordable”, and thus thrown into the public option.
If this weren’t so tragic, it would be comical.
Then, you have to wonder, if the insurance exchanges created by Obamacare are supposed to create competition, thus reducing premiums and making insurance “affordable”, why do we need the public option at all?
Beyond that, wouldn’t it make more sense to simply let insurance companies do business across state lines free from the operation of the very state mandates that are the root of the “affordability” problem? This plan would certainly be deficit neutral. Not only would it cost the federal government nothing, but it would save most Americans a great deal.
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Though letting insurance companies offer plans across state lines may sound attractive, I wonder how dealing with potentially 50 Insurance Commissioners would work.
This proposal would operate just like ERISA does for large employer based insurance coverage. You would only have to deal with your state's insurance commissioner. But, your state's insurance commissioner would not be able to tell you what must be in your insurance policy, you would get to make that decision. The Congressional Budget Office estimates that such a plan would reduce premiums by 5-8% for individuals, and 7-10% for small businesses.
I would rather deal with one state commissioner, who presumably is accountable to only that state and may actually have some competence in the area of insurance, than the slackjawed stooges in the Congress, who have none of the aforementioned qualities.