The Perils of Not Getting Insurance Reform Right

A new study released on Thursday by the Oliver Wyman firm finds that health insurance premiums will be much higher under the Senate health reform bill than the Congressional Budget Office has estimated.  Premiums for individuals and families purchasing coverage on their own will go up 54 percent over five years, excluding the impact of medical inflation.

The increases in costs for individuals are attributed to the inclusion of new guaranteed issue rules without the support of a strong individual mandate to ensure that everyone gets and maintains health coverage.  According to the study this would translate into premiums for people purchasing new polices of $4,561 for single coverage and $9,669 for family coverage in today’s dollars – representing premium increases of $1,576 and $3,341, respectfully.

“Healthcare reform cannot be considered successful if it makes coverage more expensive, said Scott Serota, BCBS president and CEO, whose organization commissioned the study.  “This analysis illustrates that is exactly what will happen if new insurance market reforms in the individual market are not paired with effective mechanisms to ensure broad participation in the market.”

Congress needs to listen to Scott’s point.  It is indeed necessary that every American have access to insurance, regardless of their pre-existing health conditions.  The insurance industry has called for this, but has also pointed out that the economic model is not sustainable if people can simply wait until they get sick and then purchase insurance.  Enabling this to happen raises costs exponentially for everyone.  It’s politically popular for Congress to mandate that insurers provide coverage to all.  Insisting that people fulfill their social responsibility to have coverage is far less so.  But for health reform to work, Congress has to mix the tough love with the easy lifting.