Romney’s Plan for Pre-existing Conditions Is Better Than Obama’s

Try searching Google for Mitt Romney’s plan for pre-existing conditions for healthcare insurance, and what you get is page after page of Democrat talking-points citing or mimicking Paul Krugman’s assertion that the Romney plan covers only those who already have a health insurance policy and that it is, therefore, a typically cruel, heartless, Republican plan that does nothing for those who need such a plan – namely, those who do not have a plan and are unable to get one because of the condition of their health.  But if you search long and carefully enough (and are willing to fight through Google’s efforts at politicizing the search process), you do find one exception to this propaganda blanket:  an article in Forbes magazine’s 10/9/12 issue:  “Why Mitt Romney’s Plan for Pre-Existing Conditions is Better Than ObamaCare’s,” by Avik Roy.  The Roy piece, which is eight pages of somewhat difficult reading, makes a good case for a Romney Plan that does not appear to exist anywhere other than in the Roy piece and that can, I think, be briefly summarized:

a)      There are lots of people in this country who do not have health insurance, but for the vast majority, pre-existing conditions (PECs) were not the reason;  only a tiny fraction of them were disqualified because their health was too poor for them to qualify – at most, 0.6% of the U.S. population, probably quite a bit less. The rest of the uninsured population is uninsured because they are not eligible for group coverage with an employer and they cannot afford the cost of an individual policy – either because of health issues that create unacceptable premium levels or exclusions, or because, despite being in good health, they consider the cost of individual policies to be unacceptably high.   Some perspective is needed:  A hardship for 0.6% of the population and a matter of financial need for certain others, is something we should try to solve, but is hardly of a scale that justifies nationalizing the entire healthcare system, instead of just directly taking care of this portion of our population with a simple, laser-like patch.

b)      The reason for the over-pricing in the market for individual policies of healthcare insurance is that we do not have a viable, competitive market for individual policies – one that could respond to demand for every kind of healthcare-insurance product, at market-driven rates.  Under our present laws, individual policies are far too expensive to be a viable alternative to employer-sponsored plans.  The reason is, discrimination against individual policies under our tax laws – the net cost of the tax-differential is very substantial.  (Not mentioned by Mr. Roy, but also important, are the various bans or limits on interstate offerings of insurance policies, which reduce the size and competitiveness of the market and the variety and attractiveness of the offerings.)  Fix these tax and legal issues, and market forces would cause individual policies to become much cheaper and more attractive – both for those who are relatively healthy, and for those who are not.  And of course the ultimate advantage is that individual policies are totally portable, meaning they follow you, and you don’t lose your coverage if you lose your job or change employers.  (Also not mentioned by Mr. Roy is another big advantage:  An active, interstate market for individual policies would routinely expand to include insurance for longer terms and insurance against premium-increases, which would make them more attractive than group policies and might eventually lead to the obsolescence of the group-policy model – with all of its built-in cross-subsidies and pricing distortions.)  Young people would have a built-in incentive to voluntarily buy a policy.  Goodbye, individual mandate; hello, reasonably-priced individual policies.

c)      The effect of making these fixes would be to reduce the PEC problem to miniscule proportions.  A miniscule problem can be solved by a miniscule patch: premium support (to use the Ryan lingo) for those who are healthy but cannot obtain an affordable individual policy, and for those whose PECs push the cost beyond what they can afford.  Premium support would finance the cost of healthcare insurance for those people but would collectively cost our federal government an amount so small as to look like a rounding error in our federal budget.   (Other pertinent issues, such as guarantied-issue rules, banning of community rating, and other minor technical fixes, could be easily and cheaply addressed and would further enhance the desirability of individual policies.)

So, it turns out that Governor Romney actually does have a plan to protect people with PECs – a good plan.  The problem – at least for those who have a vested interest in doubting him – is that his plan does not come in the format preferred by the Democrats, that it involves the application of market forces rather than governmental mandates, and that it takes more than one sentence to articulate.  (Not eight pages, but more than a sound-bite.)

Do we really need the permanent fiscal and regulatory catastrophe of nationalized healthcare in order to solve a problem that could be solved for peanuts?  If Mr. Roy is correct, as he appears to be, why does no one else know about this?

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