Fish Wrap: Say, Those Insurance Fixes Don’t Work Too Well In New York

Apparently, the Times is interested in dropping a few bombshells this weekend. First you have the “Gates Says U.S. Lacks Strategy to Curb Iran’s Nuclear Drive,” which others have covered, and then there is this, which basically says that the provisions of ObamaCare are doomed to failure

When her small executive search firm in New York City canceled its health insurance policy last year because of the recession and rising premiums, April Welles was able to buy her own plan and still be covered for her cancer and multiple sclerosis.

She was lucky to live in New York, one of the first states to require insurance companies to offer comprehensive coverage to all people regardless of pre-existing conditions. But Ms. Welles, 58, also pays dearly: Her premium is $17,876 a year.

“That’s a lot of groceries,” she said.

New York’s insurance system has been a working laboratory for the core provision of the new federal health care law – insurance even for those who are already sick and facing huge medical bills – and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.

Unplanned consequences. The entire craptastic piece of legislation is a lesson in unplanned consequences. Heck, even the parts that are planned, namely, those that force or incentive people and companies to dump their insurance and purchase through the exchange, are having consequences, such as companies like AT&T, Verizon, and Caterpillar reporting non-cash hits. You can bet your bottom dollar – which Uncle Barack will be soon taking – that there will be plenty more “un-planned consequences.”

The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

Hey, I wonder what would happen if New York allowed insurers to charge according to risk, stopped requiring insurers to cover every type of medical condition for every person. They could, say, not require Hysterectomy coverage for 18 year old men. Just imagine if there were nationwide pools for small businesses and individuals. I wonder if anyone has made any of those suggestions, among others?

“You have a mandate that’s accessible in theory, but not in practice, because it’s too expensive,” said Mark P. Scherzer, a consumer lawyer and counsel to New Yorkers for Accessible Health Coverage, an advocacy group. “What you get left clinging to the life raft is the population that tends to have pretty high health needs.”

And there in lies the problem with liberal policies: they are long on theory, but, rarely actually work. The Left is more interested in good intentions. Positive results? Not so much. Witness their 40+ year “War on Poverty,” which has been a miserable failure. New York has the highest premiums in the country. With ObamaCare, they will soon have the other 57 states, er, 49, join them.

Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach

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