Sunday, September 21, 2008

The beauty of the free market

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
John McCain, "Contingencies" Sept/Oct 2008.

If you're lucky enough to get health insurance from your employer, you're probably also aware that your contribution to that insurance is taken out before you're taxed. In that article, McCain explains how, in addition to deregulating the health insurance market in the same way we've deregulated the mortgage market, he'd tax your contribution. Then he'd give you a $2,500 tax credit, regardless of your income, to offset your costs. A family could get up to a total of $5,000 in credits.
Individuals who currently don’t have access to employer sponsored insurance where they work can use the tax credit to purchase individual insurance coverage. Everyone purchasing health insurance would gain access to exactly the same tax benefits.
Think you can insure a family of four for $5000 a year? John McCain thinks so. In John McCain's happy world of friendly health insurance companies, "Consumer-friendly insurance policies will be more available and affordable when there is greater competition among insurers on a level playing field."

Just as with mortgages, however, the field will never be level. Not when the least among us will get whatever $5,000 pays for, while John McCain's base gets whatever they can afford. Or want.

Imagine a world where medical histories indicate "default risks" in health insurance. Imagine a world where those "default risks" are bundled and re-insured in the same way that mortgages are. Pools of people who have not yet become sick will be favored investments for these insurance companies. Pools of people with chronic or persistent illnesses (diabetes, depression, heart disease, Crohn's disease, e.g.) will become personae non grata. Hey--they're expensive! And you know they're going to cash in on their benefits. In fact, they're the very people that -- right now -- are costing you and me money!

If you have a history of breast cancer in your family, and your husband's father was diabetic, how much do you think it will cost to insure your children per year on John McCain's "open market?"

Do you think $5,000 will cover it?

I don't know how I can make this any simpler. John McCain says (and we all agree) that health insurance is too expensive to the government. His answer to that is not to find a less expensive way to insure people. His answer is to simply stop paying.

Well. That will certainly cost less. But don't worry. I'm sure that the "healthy competition" of a de-regulated health insurance market will guarantee you can afford coverage.

Right now, open market health insurance of the most basic variety (excluding Rx, hospital, or "critical illness" care) would cost $4,236 per year in my city, for a healthy family of three. Add one more kid, and the rate doubles. Add any "pre-existing conditions," and, well, it depends. And hey, who needs prescriptions anyway?

That plan is offered by a company that guarantees to cover you, as far as you are able to pay. Under McCain's plan, you'll be able to pay up to $5000 a year, plus whatever you can contribute on your own. Which is pretty good--unless something goes wrong. If you can get covered. If you don't have a high "default risk."

Anyway, don't worry about it. The same de-regulated markets that catapulted our national investment banks and mortgage companies to the top of the finance world is sure to help you out when your kid gets hit with leukemia, or something.

Obama's plan. If you care.

Here's a Boston Globe Editorial saying essentially the same thing. I hadn't read it until today (9/22), believe me or don't.

1 comment:

Anonymous said...

Think about it some: Let's say that before any credits your family is liable for $4,000 in Fed income tax. Each child is going to get you $1,000, and so your two kids knock off half of what you owe.

So the $5,000 health insurance tax credit is really only worth $2,000, because it is a credit - the Fed isn't going to pay the difference to you.

This is the fallacy of all of these tax credit schemes that no one explains - if you pay little or no income tax, you receive little or no benefit from tax credits.