‘Ownership’ Isn’t the Cure
After 27 years of work, Dave Parker lost his job at a small electronics sales firm in Orange in October 2001. A 1986 federal law called COBRA, requiring insurers to continue offering employer-based coverage to employees who have lost their jobs, kept Parker’s insurer from dropping him. But that didn’t stop the insurer from “customizing” his policy to address his heart condition -- a personal touch that boosted his premiums by 39%. Later, his premiums soared further, and this year his insurer doubled his co-payments and raised his premiums by an additional 16%.
Welcome to President Bush’s ideal of “added choice” in healthcare.
Buzzwords like “flexibility” and “ownership” might sound empowering when read off a teleprompter, as they were frequently during this week’s Republican convention. When discussed behind the scenes by health insurers, however, they are read as code words for giving insurers more leeway to “cherry-pick” -- offering bargain-rate coverage to those who need it the least (such as healthy children) while pricing care beyond the reach of many who need it the most.
Bush’s “ownership society” ideal for healthcare is embodied in the health savings account. These let a family of four put aside up to $5,150 in tax-free savings that can be used to purchase health insurance on the open market. That will be small comfort to low- and middle-income families because the premiums for such family policies ran more than $9,000 in the group market last year, and would be even pricier if purchased by an individual family.
Another danger is that many healthy and wealthy people will flee group plans in favor of health savings accounts, leaving the older, more comprehensive health insurers stuck with a growing proportion of poor and sick members. Insurers that aren’t driven out of business would be forced to raise costs.
Not all “ownership society” healthcare ideas are bad. One of the most radical -- requiring all U.S. residents, some with government help, to buy health insurance, much as drivers are required to buy auto insurance now -- has gained converts not only from the predictable places like the conservative Heritage Foundation but from centrist think tanks like the New America Foundation. The proposal deserves to be at least discussed by both presidential candidates.
Most of the healthcare ownership ideas the president has proposed so far, however, are fundamentally unfair. It’s an issue both parties will have to address more seriously before the country’s near-terminal healthcare system goes flat-line.
