Can't Afford Health Insurance? Thank Your Legislator


"My plan begins by covering every American. If you are one of the 45 million Americans who don't have health insurance, you will have it after this plan becomes law."

--Sen. Barack Obama

By Brian Harper

Hardly a day goes by without a headline about America’s “health insurance crisis”. Advocates push for reasonable, available health care for everyone. So why does the Washington legislature pass laws which make health care more expensive and less available?

Last year, Olympia passed a health insurance mandate requiring “mental health parity”; insurance plans, by law, must now cover mental health treatment at the same levels as they do other health treatment. Such a policy had previously passed in other states, and in all cases the end result is a 5-to-10-percent increase in premiums. Group Health just announced a 10 percent 2008 increase for their individual and family plans. They were the first to announce a hike since Olympia’s 2008 mandate: insurers must now get permission for rate increases from the Washington state insurance office. Should that permission be denied, insurers will have to eat the costs, right? Wrong, ultimately they’ll leave the state, leaving fewer insurance options for consumers.

Perhaps our representatives in Olympia aspire toward the New Jersey model. According to America’s Health Insurance Plans, the average cost of a policy in that state for a family of four is $10,398, 80 percent more than the national average of $5,799. A 25-year-old male in Jersey will pay $5,880 a year for an insurance policy, roughly five times the cost of similar coverage in Washington, Colorado, Kentucky or Georgia, as reported by the Commonwealth fund in 2005. The higher costs reflect 42 state mandates, including in-vitro fertilization, chiropractic, podiatry, knee braces and prosthetic limbs, and coverage for unmarried “dependents” until age 30. Is it fair that a twenty-five year old in an entry level job subsidizes the knee brace of a fifty-five year old, or coverage for his unemployed buddy who spends his days playing X-Box in his parents basement?

New Jersey also mandates “guaranteed issue”, which requires insurers offer coverage to all applicants regardless of their condition, as well as “community rating”, which prevents insurers from charging higher rates to the sick. This creates a natural disincentive for consumers to purchase insurance when they are well. Freeloaders are also have no motivation to make healthy choices, as their premiums will be the same regardless of their health.

Who are the uninsured? The media love a juicy anecdote, and it seems like public policy is often a reaction to a few horror stories of children and the poor. But in reality, 59 percent of the uninsured are young adults (18-44). 24 percent of this age group do without health insurance, presumably by choice. My previous neighbor, for example, was a 41-year-old bartender and raving advocate for nationalized health care who chose to go without insurance. He said he’d rather take that money and take a nice trip every year, and if he has an accident he’ll either incur the debt, or try to slip onto Medicaid after his resources were gone. I snidely mentioned that perhaps he just wants free coverage. This only made him angry.

Some argue that the solution, as employed in Massachusetts, is to require that everyone get health insurance. The irony here is that legislatures pass laws which increase the cost of coverage and then blame the people for not being able to afford coverage. And mandates don’t guarantee that everyone will comply. Auto insurance is mandated in all states but three, yet the nationwide uninsured rate for auto is 14.6%, very close to the 15.7% who lack health insurance.

Are our legislators aspiring toward the New Jersey model? There isn’t a documented case of a state in which adding mandates didn’t increase the cost of insurance. If you increase the cost of anything, you decrease the resulting demand for it, which simply pushes more people into the uninsured category. Ultimately the question boils down to this: what is the purpose of insurance? Is it to cover every nickel and dime, elective treatment, or to prevent catastrophic loss?

As Thomas Jefferson stated, “a government big enough to give you everything you want is big enough to take everything you have.”

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