While Barack Obama and Hillary Clinton continue to tell the American people that our government is the solution to the health care “crisis” in this country, they fail to acknowledge one simple fact. The government is the problem! I had written last year regarding guarantee issue laws passed by mindless politicians and how they adversely affect insurance premiums. The National Center For Policy Analysis has examined it even further, and come to the same conclusion.. government regulations are the cause of unaffordable insurance:

Guaranteed issue means that health insurance companies offering individual policies must sell coverage to all applicants, regardless of their medical condition. While this sounds like it protects consumers, it actually harms them by driving up prices. When insurers are forced to accept all applicants, they raise premiums to guard against losses. As a result, insurance becomes a poor value for everyone except those with serious health conditions, and people often wait until they become sick to buy coverage. Subsequently, insurance companies lose business and leave the market, and rates go up as competition diminishes. This has happened in all states that require guaranteed issue.

These guarantee issue laws are made by politicians who believe that health insurance is an inalienable right embedded in our Constitution. In passing these laws they ignore the purpose of insurance, forcing companies to make large payments without ever receiving premiums from that customer. Insurance is a means to transfer risk from one entity to another in exchange for a premium. Similar to car insurance, or homeowners insurance, these premiums need to be paid in advance of the risks being realized, otherwise what is the point?

For example, you wake up one morning and find your car stolen. Provided you have theft coverage, your auto insurance will reimburse you based on the current value of your car. This is the underlying principal of purchasing insurance, making small monthly or yearly payments to transfer the risk of a large loss to a third party.

Now imagine you did not have theft coverage, but you were living in a state with “guarantee issue” laws for theft coverage. You could then call up your insurer and add theft coverage even after your car was stolen thereby being entitled to a hefty check from the insurance company while only making one minimal payment to them. Under these circumstances, would you as an individual choose to pay money every month for theft coverage on the next car you purchased?

Maine instituted guarantee issue laws in 1993 only to watch their uninsured population remain steady as costs soared. “Medicaid enrollments grew from 9 percent in 1993 to 21.4 percent in 2004. In fiscal year 2003 Maine spent $535 million to fund its Medicaid program.”

“In states with guaranteed issue and community rating, premiums for family plans are also higher — often more than double the national average [see the figure]. Because of the higher cost, younger (or low-income) individuals with few health problems tend to drop insurance, leaving an increasingly unhealthy risk pool.

Proponents of guaranteed issue and community rating claim that rates will be affordable if everyone is required to have coverage. But this has not been the experience in Massachusetts, the only state with an individual mandate. Premiums have not fallen there.”

A look at the graph below illustrates that point:

As you can see, insurance premiums in Massachusetts are almost 3 times the national average, due to their “universal health care” mandates. As opposed to less regulation, such as removing restrictions on purchasing out of State insurance, our government has always opted for more regulation. Despite the fact that a healthy 25 year old male could purchase health insurance in Kentucky for $960, politicians prefer to mandate that same person pay $4,032 to purchase it in his home state of Massachusetts.

The next time Democrats attempt to demonize insurance company for having the audacity of earning a profit, remind them who the real villains are.

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Election 2008, Entitlements, Features, Health Care, Politics