Fighting the Wrong Health Care Battle

[Are_grits_groceries]

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The basic aim of reform is to create a more efficient and equitable system for health insurance and health care and to provide subsidies so everyone can afford coverage. Those who obtain insurance individually or through small businesses now get a rotten deal in the market. Out of every dollar in premiums they pay, nearly 30 cents goes for administrative overhead (as opposed to about 7 cents in large-employer plans). And those in poor health may be denied coverage for pre-existing conditions or be charged astronomical rates for insurance.

By creating a single, large “risk pool” for individuals and employees of small businesses, the exchanges should give those vulnerable groups the advantages of large-employer plans. The bill would also ban pre-existing condition exclusions and require insurers to offer coverage to everyone in the exchange at the same rate regardless of health (albeit with some adjustment according to age).

For these reforms to succeed, there needs to be effective regulatory authority to prevent insurers from engaging in abusive practices and subverting the new rules. The bill passed by the House would provide for that authority and lodges it in the federal government, though states could take over the exchanges if they met federal requirements. The Senate bill would leave most of the enforcement as well as the running of the exchanges to the states.

Yet many states have a poor record of regulating health insurance, and some would resist passing legislation to conform with the new federal law. Under the Senate bill, the federal government can step in if a state failed to set up an exchange. But it’s hard enough to get reform through Congress; to try to repeat that process in 50 state legislatures would be asking for trouble and guaranteeing delay.

Accelerating the timetable of reform ought to be a priority. Although the legislation calls for some important interim measures, the Senate bill defers opening the exchanges and extending coverage until 2014. By comparison, when Medicare was enacted in 1965, it went into effect the next year.

For Congress to put off expanding coverage to 2014 would be asking for a lot of patience from voters. It would also give the opponents of reform two elections to undo it. President Obama would have to run for re-election in 2012 defending a program from which people would have seen little benefit.
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http://www.nytimes.com/2009/11/29/opinion/29starr.html?hp

If they allow insurance companies to cherry pick the healthy consumers, they are setting up any reform for a nasty fall. Smaller exchanges have worked in the past, but cherry picking left them with so many people with costly conditions that they didn't have a low risk pool to offset the spending.