Pelosi's Villainy
By INVESTOR'S BUSINESS DAILY | Posted Friday, July 31, 2009 4:20 PM PT
Demagoguery: The speaker of the House says insurers are "villains" for opposing Democratic plans for overhauling the health care system. Nancy Pelosi needs to rethink who the bad guys really are.
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IBD Exclusive Series: Government-Run Healthcare: A Prescription For Failure
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It would be more understandable if health insurers considered elected officials the villains.
After all, it's the 50 state legislatures and Congress that have twisted the industry into a regulatory pretzel subject to an exhaustive list of can't-do's and must-do's.
It is Congress, not the industry, for example, that passed the Health Insurance Portability and Accountability Act in 1996 that drove up health insurance premiums in the small-group market.
The law requires insurers to offer plans to any small employer that applies no matter what the group's health status might be. This provision, called guaranteed issue, gives healthy groups an incentive to wait until they've developed high-cost conditions before they buy insurance. Such a practice increases carriers' costs significantly, which in turn causes premiums to escalate.
In addition to the higher costs, guaranteed issue actually forced small businesses that couldn't afford the larger premiums to drop their plans. It also caused providers to quit the small-group market, which diminished competition, yet another factor in growing costs.
It's also Congress, not the industry, that has mandated that legislatures require insurance providers in their states to cover various conditions. These requirements run up the cost of premiums.
And it's Congress, not the industry, that's done its best to ensure that health savings accounts never become a workable option. It has refused to give HSAs the same favorable tax treatment it gives job-based coverage — which just happens to be provided by the "villains."
This has effectively killed a market-based solution that would give patients control over their health care decisions and, just as importantly, keep costs down.
Finally, it is Congress, not the insurance industry, that will not allow Americans to buy individual plans without a tax penalty.
If possible, state lawmakers might be even more villainous than Congress. Legislatures have enacted a staggering 2,133 coverage mandates on insurance carriers. The Council for Affordable Health Insurance figures the mandates increase the cost of premiums by almost 20% in some states and as much as 50% in others.
The mandates are particularly unfair to those who will never use the benefits but have no choice but to be a part of the pool because the coverage is mandated.
For instance, teetotalers in 45 states have to pay for plans that include coverage for alcoholism even though they'll never use the benefit. In 23 states, a single man has to be a part of a plan that includes maternity coverage. Non-drug users in 45 states have to be in pools that include drug-abuse treatment. The list goes on.
Banning the sale of individual health care plans across state lines is another poor practice at the state level. Residents in one state where mandates force premiums higher are unable to shop for a less-costly plan in other states where mandates are less onerous.
This is a hardship that Congress could remove. Lawmakers have the authority to lift what is clearly an unconstitutional restraint of trade. Yet they leave the barrier in place, year after year.
So who are the villains in this story? The facts say they're not who Pelosi says, and the right answer is much closer than she thinks.
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100% correct. The govt, in the name of "fairness" is the real culprit for higher costs.
