Insurance Companies: Without a Mandate We Are Going to Get Creamed
AHIP today released the first in a series of four state case studies examining states’ experiences with implementing market reforms without getting everyone covered. The first case study examines Washington State’s experience and shows that consumers experienced higher premiums and loss of choice following the enactment of guarantee issue without an individual mandate in the 1990’s. The full study can be viewed here and an accompanying press release can be found here. We will be releasing the next three state case studies over the course of the next several weeks.
This is from AHIP.
Of course insurers would get creamed if the mandate is thrown out but the rest of the Affordable Care Act is upheld. The federal health care law requires that everyone have insurance. It also requires that insurers must accept all applicants at rates that are not adjusted for risk. This suggests that if individuals are not required to have coverage, they are free to wait until they become sick before applying for insurance. That’s like waiting until your house catches fire (or burns down) before purchasing home owners insurance to repair fire damage. No insurance market can survive this gaming of the system.
I’m having a hard time feeling sorry for the insurance companies. Maybe it is because they are partly responsible for forcing Obamacare on the rest of us.
It is entirely possible that the highest level of the Obamacare proponents have known this and are willing to move to plan B, which is to accept a watered-down version of the ACA and wait for the time, years from now, when it all fails at which point they will make the push for a single-payer system.
This is hard to believe.
Right. Insurance companies are interchangeable widgets. Some health plans can do ok without a mandate. Look at what happened in the Northeastern states that adopted guaranteed issue in the 1990s.
ObamaCare contains a bunch of price controls. If the individual mandate goes away and guaranteed issue and price controls remain the situation will be better, but not as good as if the mandate goes away, guaranteed issue remains, and the price controls are repealed with the mandate.