The letter below was published by the Pittsburgh Post-Gazette on Tuesday, April 14th, in the “Letter to the Business Editor” section.
We wrote it in response to this letter from an insurance industry spokeswoman.
You recently published a letter from a former health insurance spokeswoman lauding the industry’s proposal to reduce premiums for sick Americans, in exchange for a federal mandate requiring that all uninsured folks buy coverage.
On the surface, this seems like a reasonable request. The letter argues that by increasing the number of young and healthy people with insurance, the cost– and risk– of covering sick and elderly patients will be spread amongst a wider pool and premiums for everyone will be reduced as a result.
In reality, such a deal will not reduce the cost, or improve the quality, of private insurance unless other concrete steps are taken to do so.
Let’s look at Massachusetts as an example. Private insurers there promised to sell policies to all applicants once the state mandated that the uninsured buy coverage in 2006. Currently, MA insurers cannot deny coverage or charge higher premiums to folks with pre-existing conditions, although they do charge more based on a person’s age.
Now, with 97% of the population insured, the cost of private insurance in MA is still RISING. Premiums are growing at a rate of 10% per year. The state, and its small businesses, cannot keep up with the cost of subsidizing coverage for low-income folks, and some middle-income earners have been exempted from the mandate so that they are not forced to break the bank buying coverage.
At the same time, insurers there are increasing co-pays, reducing benefits and offering “bare-bones” plans to keep costs down. So as the price continues to rise, the quality of many of the plans is sinking.
Mandating that all Americans buy insurance from for-profit companies won’t reduce the cost of our health care system. To address these costs, we need greater oversight of the private insurance industry, physician payment reform or a new approach entirely such as a national single-payer insurance plan.
The mandate will, however, deliver another 47 million customers to the open arms of the private insurance industry. It’s no wonder that industry spokespeople are encouraging Congress to pass this legislation quickly.