McCain Health Care And Individual Health Insurance
If you have health insurance through your employer, will that still be the case if John McCain becomes our next president? The effects of McCain’s health care reform plans on employer-sponsored health insurance are uncertain. People on the far left are saying that McCain’s plan would “shred” employer based health insurance. While I’m not a big fan of McCain’s health care reform proposals, I doubt that the employer-based health care system would really disintegrate under his leadership. It’s generally acknowledged that his proposals for increasing tax credits for people who buy their own health insurance would make individual health insurance more attractive to consumers who can qualify for a medically underwritten policy. This would likely lead to at least some attrition from employer group policies, with younger, healthier employees choosing to purchase their own health insurance, for less than the amount of the tax credit ($2500 for individuals, and $5000 for families). That in turn would lead to employer group policies being comprised of an older, sicker population, likely resulting in increased premiums.
But employers use health insurance benefits as a tool to woo and keep good employees. With the baby boomer generation heading into retirement over the next couple decades, American companies will have lots of job spots to fill. It’s likely that they’re going to want to keep as many hiring tools in their arsenal as they can. And change doesn’t come about overnight, especially big change like a massive shift away from employer group health insurance. With gas at $4/gallon, people aren’t driving half as much as they were when gas cost $2/gallon. We’re creatures of habit, and I can’t see employer sponsored health insurance disappearing overnight.
I don’t think that we necessarily need to have health insurance linked to employment, and in many ways I think it’s detrimental. But the main advantage is that it’s guaranteed issue. If McCain’s plan results in any decrease in employer group plans, we’re going to see an increase in the number of people without health insurance, simply because of the underwriting rules that individual health insurance carriers use. This is a double-edged sword, because if we remove the underwriting from individual health insurance plans, the prices would increase dramatically. But for people with serious pre-existing conditions, options for coverage are seriously limited in the current market. In Colorado, we’re lucky to have a guaranteed issue high risk pool health insurance plan, but it’s expensive and has high out-of-pocket costs.
If McCain’s plan is going to provide set tax credits for everyone who purchases their own health insurance, we should at least make age and gender non-issues for individual health insurance premiums. If we average the costs over the entire population and charge everyone the same price, regardless of age or gender, we would come closer to a fair system. I’m still in favor of charging higher premiums for smokers and people who are obese (ie, things that contribute to increased health care expenses and are personal choices), but it doesn’t seem fair that a healthy 20 year old male can pay $1200/year for his health insurance, while a healthy 50 year old female might pay $3000/year – and they both get the same $2500 tax credit under McCain’s plan.
If the country were to shift towards a system based more heavily on individual health insurance, I think that one benefit would be that the individual health insurance industry would be in more of a public spotlight, and might be forced to make some modifications to allow coverage for more people, with more fair pricing.
Thanks for the information on McCain’s health care plan, Louise. I didn’t know much about it before.
The US is known for helping out when other countries are in crisis. But is the US doing enough for themselves? There are around 47 million people in the US who don’t have medical insurance and so many more have bad insurance coverage, can’t afford their premiums or deductibles, and have no access to dental care. Does more need to be done?
Louise:
Thanks for providing your thoughts.
I agree that individual insurance should be guaranteed issue and community rated.
However, we don’t want the prices to dramatically increase, due to potential high-claims participants getting cheap insurance.
To help solve this problem, I recommend a 2-year waiting period, in which no coverage is effective.
However, all the contributions would go toward one’s coverage starting in year 3.
In addition, the community-rated premium would be on a “defined-contribution” basis.
For example, if someone pays x, he has y in benefits.
If he pays 2x, he has 2y in benefits.
Thoughts?
Don Levit
Don,
Those are some good ideas. I like the idea of defined-contribution benefits, as long as catastrophic care is provided equally. If a person (myself, for example) wants to pay less for health insurance in trade for not having doctor visits covered prior to the deductible, that’s fine. But I don’t think that there should be policies with, say $50,000 max coverage, based on a low premium. That sets people without much money up for a disasterous situation in the event of a catastrophic illness or injury. But for the small stuff – things that are less than maybe $5000, I agree that people should be able to buy more or less coverage, depending on their risk preference and how often they use medical care.
As far as the waiting periods go, I think that would be a better solution than permanent exclusions or flat-out denials. Are you proposing no benefits at all for the first two years, or just for pre-existing conditions? Playing devil’s advocate here – but if it’s the former, what would people do in the event of a serious illness or injury in the first two years? Would you propose “gap” insurance that takes on claims just for those two years? It could be less expensive, just as short-term policies are now, since they know they won’t have long-term claims from anyone.
Interesting ideas – thanks for sharing. You should write up more details and submit your ideas to ChangeNow4Health.com
Louise:
I would like to see catastrophic coverage, but I would like to see the premiums for the benefits to be assessed in a separate pool.
For example, if the primary policy’s benefits maxed out at $50,000, the secondary policy’s benefits would provide catastrophic coverage from $50,001 of benefits.
With today’s policies of millions of dollars of lifetime benefits, premiums are assessed whether you have $10,000 of benefits claimed or $5million of benefits claimed.
If we want to attract and retain low claimants, they must be given incentives to remain in the pool.
Putiing all participants in a catastrophic pool of $50,001 of benefits or more, will help accomplish this worthwhile goal.
Don Levit