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Wednesday, June 30, 2010

More Health Care Ills from Massachusetts

Much of ObamaCare was based on RomneyCare in Massachusetts.

One of the big problems of each is the guaranteed issue mandate. Guaranteed issue means that individuals may not be turned down for health insurance coverage no matter the condition of their health or risk status. This obviously provides no incentives for people to purchase health insurance before they become ill. A guaranteed issue mandate raises health care costs.

On June 30, the Boston Globe reported the following fallout on guaranteed issue in Massachusetts:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance. The result is that insured residents of Massachusetts wind up paying more for health care, according to the report…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available…

When state lawmakers overhauled the health care system in 2006, they combined into a single insurance pool consumers who buy coverage on their own with those who get insurance through their jobs at small businesses that employ 50 or fewer people. The aim was to make insurance more affordable for the individuals buying coverage on their own, who tended to be sicker and therefore had been paying very high premiums. And the hope was that having small businesses and their workers absorb some of the cost of covering this group would raise their premiums only modestly. But insurers said consumers who work for small businesses are shouldering a much larger burden. Part of the reason, they said, are these short-term buyers of insurance.

Unfortunate, costly, but completely predictable.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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