One little-talked-about aspect of the health care legislation poised to become law is that it essentially turns our health insurance companies into entitlement programs.
Per the Mises Institute, this health care legislation prevents insurance companies from turning down coverage for anyone but the most blatant fraudsters. The net effect? Insurance companies are going to crumble under the weight of uninsurable risk:
Not oblivious to the exclusion of these unfortunate citizens, on page 95 of the bill, House Democrats have proposed to completely outlaw the exclusion of any customer on any of the following grounds:
health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, disability, or source of injury (including conditions arising out of acts of domestic violence) or any similar factors.
Thus, it will become illegal to refuse to insure any consumer on any grounds, including evidence of insurability. In addition to being unable to exclude future enrollees, insurers will be prevented by page 29 from legally dropping any consumers from their plans on any grounds other than “clear and convincing evidence of fraud.”
The effect on the structure of insurance is obvious; this new law will turn health insurance into a legally-enforced entitlement program, and the new entitlement will be used by those who are too costly to be insured under the current restrictions on risk-pool partitioning.
Of course, one option here would be to spread the risk of these high-risk insurance seekers to the rest of the insurance customers. But that means our premiums going higher. Not a good thing given that the cost of insurance is one thing this health care bill is supposed to fix, and also because the insurance market may not be able to bear such price risks even with a mandate and fine for not buying insurance.
So the end result would be the crumbling of the private insurance industry. Yesterday we got news that that stocks for insurers were on the rise, but that’s some short-sighted investing. Long term, the insurance companies wouldn’t be able to hold up this burden. They’d crumble, inevitably be “bailed out” by the government and soon we’d find ourselves under an insurance regime totally controlled by the government.
Which, frankly, was probably the whole point to begin with.