Tuesday, July 27, 2010

Ongoing series: Unintended consequences of the Affordable Care Act

Government and bureaucracy, even when it is acting with purported good intention, tends to be a poor predictor of human behavior. This needs to be considered before we continue to hand over responsibility for our health care system to our politicians.

Why couldn't the bureaucrats see this headline happening:

Some insurers stop writing new coverage for kids
Ahead of requirement to cover kids with medical problems, some insurers drop out


Now that certain requirements have been put in place on insurance companies, a situation has been created where parents who are interested in saving money on premiums may opt for single coverage and then if some event occurs necessitating medical care for children they can purchase an insurance policy for their children without restriction.

Insurance companies see the potential abuse of parents not paying into the insurance pool and then only obtaining coverage 'on the way to the hospital' and so the insurance companies are now refusing to write 'children only' policies. From their perspective this will force families to pay actual family premiums and will prevent abuses. Alternately, they are lobbying for 'open enrollment' restrictions for children-only policies.

Of course the government spin on this is to make the insurance companies out to be evil for 'dropping coverage for children.' Actually, they are only trying to preserve their actuarial tables that allow them to stay in business.

In this particular instance, the private market previously controlled and managed this problem with pre-existing condition restrictions. To be sure there was a need to reform this so that consumers had adequate protections, but now we can see how inept some of the reforms that were put into place actually are.

All of this will continue to drive up health care costs. The government has rarely been able to do things more efficiently than the private sector - stay tuned for more unintended consequences that will end up skyrocketing our health care costs.



Reference:

Alonso-Zaldivar, R. (2010, July 23). Some insurers stop writing new coverage for kids. Yahoo! Finance. Retrieved from http://finance.yahoo.com/news/Some-insurers-stop-writing-apf-1129458619.html?x=0&.v=1

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