What are the best reasons to believe that there is a very good chance that proposed Democratic health care reforms would be disastrous? The best reason is that they’ve already been tried. As Peter Suderman wrote the other day in the Wall Street Journal:
Like participants in a national science fair, state governments have tested variants on most of the major components of the health-care reform plans currently being considered in Congress. The results have been dramatically increased premiums in the individual market, spiraling public health-care costs, and reduced access to care. In other words: The reforms have failed.
The state of New York has been a trailblazer in testing some of the cornerstone features of Obamacare. In 1993, New York enacted legislation prohibiting insurers from turning down people with pre-existing conditions. Insurers were furthermore required to charge all enrolled the same premium, regardless of health status, age, or gender. These regulations were intended as a way to get more people insured. So how’s it going?
It hasn’t worked out very well, according to a Manhattan Institute study released last month by Stephen T. Parente, a professor of finance at the University of Minnesota and Tarren Bragdon, CEO of the Maine Heritage Policy Center. In 1994, there were just under 752,000 individuals enrolled in individual insurance plans, or about 4.7% of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today, that percentage has dropped to just 0.2% of the state’s nonelderly. In contrast, between 1994 and 2007, the total number of people insured in the individual market across the U.S. rose to 5.5% from 4.5%.
The decline in the number of people enrolled in individual insurance plans, the authors say, is “attributable largely to a steep increase in premiums” because of the state’s regulations. Messrs. Parente and Bragdon estimate that repeal of community rating and guaranteed issue [i.e., the requirement to disregard pre-existing conditions] could reduce the price of individual coverage by 42%.
Washington state enacted similar “reforms,” and the result was the some premiums went up as much as 78% in the first three years of the reforms—that is 10 times the rate of medical inflation. This was accompanied by a 25% drop in enrollment in the individual market, and a reduction in services offered. Four years after the reforms, no major carrier in the state sold plans that included maternity coverage.
According to the article, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey and Vermont “deteriorated” after insuring people regardless of pre-existing conditions became mandatory. The percentages of the population that remained uninsured didn’t significantly change.
Okay, so guaranteed issue makes premiums slightly more expensive, which causes many healthy folks to opt out. You end up with a pool of sick people with very high premiums. So, what if we force healthy folks to buy insurance? Won’t that solve the problem? Well, no, according to Suderman:
The experience of Massachusetts, which implemented an individual mandate in 2007, suggests otherwise. Health-insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state’s family plans are now the nation’s most expensive. Meanwhile, insurance companies are planning additional double-digit hikes, “prompting many employers to reduce benefits and shift additional costs to workers” according to the Boston Globe.
And health-care costs have continued to grow rapidly. According to a Rand Corporation study this year, the growth now exceeds state GDP by 8%. The Boston Globe recently reported that state health-insurance commissioners are now worried that medical spending could push both employers and patients into bankruptcy, and may even threaten the system’s continued existence.
Meanwhile, survey data from the Massachusetts Medical Society indicate that the state’s primary-care providers are being squeezed. Family doctors report taking fewer new patients and increases in wait time.
Most of the proposals in the Democratic plan have been tried and found woefully inadequate. But the Democrats want to try again. It’s almost as if our health care is incidental to this vast expansion of government. So what if it doesn’t work!