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The big news of the day is that the insurance industry has offered a deal: In return for a mandate in which every American must purchase health care coverage, they will stop refusing to sell insurance to those with preexisting conditions. Some deal. They're basically saying that if we legislate that every American must purchase insurance coverage, they will sell insurance coverage, at some price, to every American. Their "concession" here is something called "guaranteed issue," and it's an important step, but not a sufficient one. The question is not whether they'll offer to sell coverage at all, but at what price? Selling insurance products that no one can afford may mean you're not technically denying people access to insurance, but it doesn't guarantee accessibility, which is a necessary precondition for a universal system. For that, you need "community rating," which would force insurers to offer coverage at the same price to everyone, spreading risk equally and ensuring that coverage is no less affordable for the sick than the well. So I e-mailed Robert Zirkelbach, AHIP's spokesman, to ask if this proposal had a community rating provision:
the proposal we issued yesterday was for guarantee issue combined with an individual mandate.We also need to take steps to ensure coverage is affordable for all. There needs to be an adequate safety net and we should provide tax credits to low and moderate income workers. We also have to address the key medical cost-drivers that drive up the cost of coverage.In other words, no. At least not yet.That said, this discussion is an important step forward. The current composition of the insurance market inevitably means that one of two things will happen: Either we will screw them, or they will screw us. Health insurance is fundamentally a collision of information. We know whether or not we're sick. The insurers do not. If the game stopped there, the economically rational act would be to wait until we were sick to purchase health care coverage. But then the insurance pool would be solely composed of the ill (and, arguably, the stupid), and it would inaffordable for everyone, and unprofitable for the insurers, and that would be the end of that.But insurers are perfectly aware of this. So they run the opposite play: They gather data on whether or not we're sick, or likely to get sick, and then use that to refuse to sell us care. The individual health insurance market, fundamentally, is incoherent: Insurers try to deny coverage to those who want it and to sell to those who don't. That's because the most profitable customer for an insurer is one that never gets sick, and the least profitable is one who falls very ill. But that's not how you want your health insurance market to work. We want sick people to get care. That's the point.