NYT: ObamaCare will drive up costs, burden the healthy

Ed Morrissey
HotAir.com
4/18/2010

Perhaps the New York Times needs to change its well-known motto to All the News That’s Fit to Print … Eventually. In today’s edition, buried in its Regional section, comes an analysis of the health-insurance reforms imposed by the state of New York over fifteen years ago. Like ObamaCare, the state required insurance carriers to issue policies to people with pre-existing conditions as a means of making the industry more “fair” and imposed community pricing rather than risk-based premiums. How did that work for New Yorkers? About the way ObamaCare critics predicted:

New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.

The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

In fact, that death spiral has nearly wiped out the individual market insurance industry in New York. The state has the highest annual premiums for individual-market policies at over $6600 for single-beneficiary comprehensive plans and about double that for families. The employer-based market has fared better, but mainly because employers subsidize insurance and so keep healthy people in the plans.

ObamaCare supporters will argue that the federal insurance mandate will solve this problem, even though the mandate in Massachusetts hasn’t kept costs in line…

Read the rest at HotAir.com

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