Home > healthcare, Peter Suderman, Reason Magazine > Don’t Compromise the Comprehensive

Don’t Compromise the Comprehensive

A Republican compromise on the healthcare bill on things like tort reform and other cost control issues made sense. Of course they didn’t and we got a Democratic Party-only designed bill, which actually turned out fairly well since they moderated themselves. Of course, major improvements are still needed – especially to control costs and to make sure this bill is payed for. There is no doubt that this is an expensive bill – in theory the GOP could still offer some sensible conservative ideas. But as I’ve discussed with many people compromise couldn’t and still can’t mean that only the politically popular things both parties can agree on get passed (or kept). A comprehensive solution was necessary; not a few incremental reforms. Peter Suderman at Reason magazine tells us the problems of over-compromising. Keep in mind that Suderman is not a proponent of this bill but recognizes the key problem with the Republican’s “do only the stuff we agree on” approach.

[I]nsurance reforms without a mandate would, in their own way, be just as bad, and twice as stupid. Prohibiting preexisting conditions entails enacting two different regulations, known as “community rating” and “guaranteed issue.” There are variations on each, but in basic terms, these regulations mean that insurance companies have to charge everyone the same amount for the same policy, regardless of risk factors, and that they have to issue policies to everyone who’s willing to pay. 

The problem is that with these regulations in place, there’s no incentive to buy insurance until you’re already very sick. After all, if the insurance companies can’t turn you down or jack up your rates, why buy in early? So what happens is that, in hopes of saving money, some number of healthy people decline to buy insurance, creating a sicker, more expensive pool. That pushes a new wave of the healthy people to jump ship, which creates a pool that’s even sicker and even more expensive. Go through a couple iterations of this, and fairly quickly you have a very small, very sick, and very, very expensive insurance pool. 

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