Eight ways Obama wants to kill competition in health insurance

Eight ways Obama’s proposed reforms will drive up costs for consumers and drive private insurance companies out of business *

1. Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

For you: This means that there will be no economic benefits to those who make healthy life choices. Non-smoker? You’ll pay just as much for insurance as that three pack a day chimney.
For your insurance company: This means that insurance companies will be required to take on bad risks.

2. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

For you: No co-pays, or fewer/lower co-pays. This means that policy holders will have less encouragement to limit trips to the Doctor’s office. It will also mean that high volume visitors (like hypochondriacs) will get a fee ride at your expense.
This also means that you will have fewer options, and those options left to you will be the lowest cost options. For example: Instead of allowing you to have brand name medications if you pay the difference from generics, brand names won’t be an option.
For your insurance company: This means that premiums will have to go up, or services will have to be cut. Responsible policyholders will have to pay more to cover their less responsible counterparts.

3. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

This is not a medical insurance issue, it is more of an HMO or budgetary issue. This is akin to requiring car insurance companies to pay for all vehicle maintenance, rather than just repairs after accidents.
Regular checkups somehow don’t sound like the thing we keep hearing about from those who claim we need health care reform – the unexpected medical emergency that bankrupts a family.
Again, costs will go up, and it will force all medical insurance companies to also become HMOs.

4. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

Does this mean that if you are ill, and can no longer pay your premiums, your coverage must be continued? Sounds like a bad business model.

5. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

This contradicts the whole point of things like actuarial tables. I guess that we can also require that car insurance companies can’t use gender in their rate calculations either.
Fact: Men get in more car accidents. Women go to the Doctor more often.
Corresponding fact: Men pay more for car insurance. Women pay more for HMOs and medical insurance.
Is this gender discrimination, or simply having the business model match the facts?
Men’s insurance costs will increase. Women’s may come down (but don't count on it).

6. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

Caps on coverage allow companies to balance risk and offer lower cost policies. This will increase policy costs – just as having a smaller deductible on your car insurance, or insuring a more expensive car will increase your car insurance premiums.


7. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

This makes no sense at all, since any adult will supposedly be eligible for care under their own plan, their employer’s plan, or the “public option”. This actually seems like it is a subsidy for upper middle class and wealthy families who tend to send their children to college and grad school straight after high school.
This means that an adult child will have to be covered for nine years after their 18th birthday, since coverage won't end until their 27th birthday, adding 50% to the time that children are covered by their parent's policies, and forcing an increase in costs to the policyholder.

8. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

This will increase costs as the insurance companies will not be able to cut their losses with policyholders who end up using up more money than they pay in. This has also sometimes been described as not allowing insurance companies to raise insurance rates.

What these eight things do is to guarantee that private insurance companies will either have to dramatically raise their rates, or they will lose money and eventually be bankrupted and driven out of the health insurance business.
Even if they raise rates, that means that fewer people will be able to afford the insurance, reducing profitability, and making this a bad business model.

* The eight policy statements (in bold) are courtesy of Mr. David Axelrod, writing in an Official White House email on August 13th, on behalf of President Obama. The responses are my own.