Posted by: Joe Eds | February 18, 2010

Krugman, Upbeat as ever

Krugman takes on health care. Yeah, a rosy picture if ever. This comes off the story that Anthem will raise its premiums 39% for its California customers. These are individuals (self-employed to unemployed) who do not get an employee discount, roughly 800,000 people.

Why the huge increase? It’s not profiteering, says WellPoint (who owns Anthem), which claims instead (without using the term) that it’s facing a classic insurance death spiral.

Bear in mind that private health insurance only works if insurers can sell policies to both sick and healthy customers. If too many healthy people decide that they’d rather take their chances and remain uninsured, the risk pool deteriorates, forcing insurers to raise premiums. This, in turn, leads more healthy people to drop coverage, worsening the risk pool even further, and so on.

Yep, pretty gloomy. Krugman slices and dices through the proposed solutions, however towards the end of his piece he brings up what many health reformers have been saying since the beginning (italics mine).

What would work? By all means, let’s ban discrimination on the basis of medical history — but we also have to keep healthy people in the risk pool, which means requiring that people purchase insurance. This, in turn, requires substantial aid to lower-income Americans so that they can afford coverage.

And if you put all of that together, you end up with something very much like the health reform bills that have already passed both the House and the Senate.

What about claims that these bills would force Americans into the clutches of greedy insurance companies? Well, the main answer is stronger regulation; but it would also be a very good idea, politically as well as substantively, for the Senate to use reconciliation to put the public option back into its bill.

But the main point is this: California’s death spiral is a reminder that our health care system is unraveling, and that inaction isn’t an option. Congress and the president need to make reform happen — now.

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Responses

  1. I’m actually currently covered under an individual plan with Blue Cross/Blue Shield in Texas, and switching over to a California provider has been on my to-do list. Anthem Blues Cross may very well have been the one I went with. Now I’m glad I delayed.

    The good news, though, is that the hue and cry over the rate hike seems to have convinced Anthem Blue Cross to at least delay implementation. Which would “give state regulators time to have newly hired outside health-insurance actuarial experts analyze Anthem’s rates to make sure they don’t violate California law.” Uh-huh.

    http://www.latimes.com/news/nation-and-world/la-fi-anthem14-2010feb14,0,7992135,print.story

    And here’s Ezra Klein (as usual) with a good post on how the reform bill stuck in Congress would prevent this kind of thing from happening in the first place.

    http://voices.washingtonpost.com/ezra-klein/2010/02/a_california_insurer_shows_how.html


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