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.”
Hmm. Sounds like what happened in Massachusetts, where, lo and behold, insurance costs continued to climb, and, despite an individual mandate, many people chose to pay the fine rather than pay exorbitant insurance premiums. So in New York, the number of insured has dropped to 31,000 from 128,000 as costs soared to more than double the nation’s average.
As the Times explains, “The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.”
So we’re going to force individuals to buy more-expensive plans than they might want (the issue Paul Ryan alluded to at the health-care summit), dump them into pools with high-risk patients, and then hope the costs don’t drive healthier customers out, hiking up the costs for the remaining individuals, who will look to the government for ever-increasing subsidies. Remarkable isn’t it, that the Democrats never looked, or cared to look, at the experience of Massachusetts and New York before jamming through their historic legislation? But then they didn’t much care in the end what was in it or how the CBO flimflam scoring was arrived at. What was important is that they had a “win.”
Now that we’re getting a good idea at what they’ve done, it certainly boosts the “repeal and replace” effort. It would seem the responsible thing to do before the entire country winds up like New York or Massachusetts — with sky-high insurance costs and a new budget-busting entitlement, and nothing approximating “universal coverage.”