November 19 2010

Health insurers like that we are forced to do business with them

Hadley Heath

In a shocking stance, health insurance companies say they support the individual mandate!  This is hardly a headline.  Can you imagine how happy Christmas tree vendors would be if every household in the U.S. were required to buy a Christmas tree this winter?

From Bloomberg news:

When the White House and Democratic lawmakers wrote the health-care overhaul bill, they concocted a sweet coating for the bitter medicine the health industry would have to swallow. In exchange for tighter regulation and numerous new directives, insurers, drugmakers, hospitals, and physicians got some 30 million new paying customers under the individual mandate requiring almost everyone to buy insurance starting in 2014 or pay a fine.

The individual mandate is now under attack in the courts and on Capitol Hill by Republicans, libertarians, and Tea Party enthusiasts who call it an affront to personal liberty. The industry, however, views it as the bedrock supporting the entire health reform law and is lobbying to keep it. The prospect of a vastly bigger market has helped spark a 7.4 percent rise since Jan. 1 in the Standard & Poor's 500 Managed Health Care Index of publicly traded health-care companies.

For insurers, eliminating millions of potential customers while keeping other aspects of the overhaul would be a "nuclear nightmare," says Robert Laszewski, president of Health Policy and Strategy Associates, a consulting firm that works with insurers. It would leave insurers without the extra revenue to cover higher costs from the law's ban on the denial of coverage to people with pre-existing conditions or charging sicker patients higher premiums. "It's the No. 1 lobby issue in the insurance industry right now," says Laszewski.

Maybe at IWF we can get a sweet deal with the government too.  Everyone should be forced to donate to us! 

As IWF's Sabrina Schaeffer has written before, interference from the government in any industry leaves some people better off and some people worse off.  In the case of the health insurance mandate, clearly insurance companies are the winners.  Who are the losers?  Well, we could say the people who don't want to buy health insurance and who have previously opted out of that market are the losers.  They will have to get money together for the additional cost.  Or, if they can't afford it, taxpayers will have to pick up the tab ("taxpayers" are a group of people who commonly fall in the "losers" category).  

But from the standpoint of constitutional rights and personal freedoms, we are all losers.  This mandate opens an unprecedented can of federal government worms.  Of course the idea of a Christmas-tree mandate is far-out.  But certainly, as Americans we value the right to choose what to do with our own money and resources.  A government mandate to buy something or be punished (for inactivity!) is new to us.  But unless the mandate is repealed, voided, or otherwise thrown out, we're standing to lose a lot.

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