What Role Should Private Health Insurance Play?

Sat, 24 Oct 2009 00:06:46 +0000

Today's required reading is this AEI Outlook by Clark Havighurst, "Private Health Plans: Where Is the Value? What Is the Point?" He does not pick up on my one-man crusade for public discussion of risk adjustment mechanisms, but he does discuss how health care reform is not moving in a direction that would enable beneficial competition among health insurers to meet the variety of consumer needs in this market. An excerpt:

The Obama administration has yet to present a credible scenario to justify its claim that reforms creating new, regulation-backed entitlements will control costs, let alone control them sufficiently. Indeed, not only is cost control being largely finessed for now, but the regulatory regime Congress is likely to create will also put a new floor under costs, giving consumers even fewer opportunities to reduce their spending on marginally valuable health care and coverage. Yet now more than ever, the economy needs consumers to spend on things besides nonessential health care, and consumers themselves have other pressing needs, such as making mortgage payments, educating their children, buying new cars, and rebuilding their retirement accounts. What the nation and consumers need most is reasonable economizing options in the huge gap between today's costly conventional coverage and no coverage at all. So far, it does not appear that private health plans will be allowed, let alone encouraged, to offer such options.

Read the whole thing.