Comments on: ANOTHER “UNIVERSAL COVERAGE” PLAN FLOPS

By: Matt Horn

Matt Horn — Tue, 21 Oct 2008 14:22:24 +0000

Scott, your comment in #3 is exactally why it will not work. The phenomenon that happens in that scenerio is known as “adverse selection” and very quickly overwhelms the premium base. This leaves three options: go into debt to cover the loss, raise premiums, or drop coverage. The fundamentals of risk remain the same whether it is being managed by the government or private insurance. The only difference is that the private inductry margins are around 6% while the government margins are around 20% as the proposal stands.

By: Catron

Catron — Mon, 20 Oct 2008 21:01:01 +0000

“I have not seen a healthcare plan put forward that will address the issue of cost.”

McCain’s plan addresses cost. He wants to resolve the underlying causes of health care inflation—benefit mandates, the inability to buy coverage across state lines, etc.

Obama’s plan doesn’t simply ignore costs. His plan will exacerbate the market distortions that are driving costs through the roof.

By: Scott

Scott — Mon, 20 Oct 2008 18:33:03 +0000

I got the point, but the post characterizes the Obama plan has handing out coverage for free.
That’s simply not the case. However you raise a valid point. I don’t think there would be mass exodus from the private market. A lot of people are happy with what they have now and one would think that the sliding scale premiums under Obama’s plan would be competitive with the private market for the ones who can afford to pay. No doubt lower income people would for the most part convert to Obama’s plan; but 1. who’s to say they even had insurance in the first place 2. these are people that the private market would prefer not be in the risk pool. Because studies have shown that lower income people are not as healthy as their counterpart in the middle to upper income bracket. Further, Obama is not excluding private insurers from the NHIE, so then there’s the possibility of private insurers expanding their coverage to people for the most part wouldn’t have covered before (like the Medicare Advantage plans now).

Look, will Obama’s plan achieve 100% of the nation being insured….no. But it’s not intended to. It doesn’t address the COST issue as well. But then again I have not seen a healthcare plan put forward that will address the issue of cost.

By: Catron

Catron — Mon, 20 Oct 2008 17:26:26 +0000

Scott, you missed the main similarity between the Hawaii boondoggle and Obama’s plan—-the incentive that both provide to drop private insurance in order to pick up subsidized coverage.

The result of this sort of perverse incentive is to spend taxpayer money and still not solve the uninsured problem.

By: Scott

Scott — Mon, 20 Oct 2008 16:02:49 +0000

Your article is misleading. Obama’s model is not designed around providing “free” coverage. Obama would establish a National Health Insurance Exchange where Americans could purchase health insurance. Which includes private insurers that offer plans approved by the government (kind of like the advantage plans now). The premiums would be income-based sliding scale. Yes, the plans would be subsidized by not passing on the entire cost on to the consumer but entirely different approach then what your article lead’s your readers to believe.