Outlawing affordable health insurance

A few months ago Jon Caldara and others at the Independence Institute put together a great video about how Obama Care would outlaw affordable insurance. In All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover, Michael Cannon of the Cato Institute explains this in detail. That is, how mandatory insurance proposed by the President, House and Senate will outlaw affordable insurance policies.  Here’s an excerpt:

Prohibiting Low-Cost Coverage

When government makes health insurance compulsory, it must define a level of coverage that satisfies the mandate, so that people will know if they are complying with the law. The necessity of specifying what constitutes “qualified” coverage gives politicians the power to dictate the terms of every American’s health insurance policy—a power that health care providers inevitably capture and use to increase the required level of insurance. …

A study by Massachusetts’ Division of Health Care Finance and Policy estimated that such requirements can increase the cost of insurance by 14 percent,12 or nearly $1,700 per year for family coverage. …

Obama said he would require employers to offer “meaningful” coverage to their workers, which he defined as coverage at least as good as what members of Congress get through the Federal Employees Health Benefits Program. …

The mean and median premiums for employersponsored family coverage in the same year (2008) were just over $12,000,16 which suggests that Obama’s definition of “meaningful” coverage could eliminate the health plans that now cover as many as half of the 163 million Americans with employer-sponsored insurance as well as more than half of the roughly 18 million Americans who obtain health insurance on the individual market,17 where coverage is typically 30 percent less comprehensive. 18 Any politically plausible mandate could therefore compel close to 100 million Americans to switch to a more comprehensive health plan with higher premiums, whether they value the added coverage or not. If history is any guide, the mandatory level of coverage would continue to rise, prohibiting even more low-cost health plans over time.

The legislation before Congress would do the same. For example, the House Democrats’ legislation specifies several types of coverage that all individuals must purchase. …

The House legislation would empower unelected bureaucrats to add to the mandatory level of coverage; emphasize copayments over coinsurance “to the maximum extent possible”; and define such terms as “other health professionals,” “incident,” and “appropriate.” The Senate Democrats’ bill would prohibit health plans with actuarial values below 76 percent. …

Like the president’s proposed standard, the House and Senate bills would outlaw the low-cost health plans that cover tens of millions of Americans. According to the Congressional Budget Office:

For employment-based plans, actuarial values—expressed as the share of a given population’s medical claims that would be covered by the plan—are typically between 65 percent and 95 percent, with an average value that is between 80 percent and 85 percent. Deductibles and other cost-sharing requirements are typically larger for policies purchased in the individual insurance market, where actuarial values generally range from 40 percent to 80 percent, with an average value that is between 55 percent and 60 percent.

If forced to purchase coverage with an actuarial value of 70 percent or 76 percent, tens of millions of Americans with employer-sponsored insurance, and nearly all those with individual-market coverage, would be forced to switch to a more expensive health plan.

Bye-Bye, HSAs?

One affordable coverage option that the House and Senate bills could eliminate is health savings accounts (HSAs). Congress created HSAs in 2003 to enable consumers to control a greater share of their health care dollars. HSAs allow individuals covered by a qualified health plan to save about $3,000 tax-free for their out-of-pocket medical expenses. …

Since neither the House nor the Senate bill would count HSA contributions toward an HSA plan’s actuarial value, those bills could effectively eliminate HSAs and oust an estimated 8 million Americans from those plans. In a sign that Democrats intend to curtail HSAs, the House Ways and Means Committee voted to prohibit the use of HSA funds for over-the-counter medications. Congressional Democrats have waged similar campaigns against HSAs in the past.

Read the whole policy brief (which includes references) on how Obama Care would prohibit affordable insurance,


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One response to “Outlawing affordable health insurance

  1. Pingback: Introduction « Black Ribbon Project

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