Meg Whitman might know something about online auctions and business management. But she probably ought to brush up on her understanding of the way health insurance works.
At a campaign appearance in Redondo Beach Tuesday, Whitman drew loud and sustained applause by calling for the repeal of the new federal health reform law. She even suggested she would “force” the state attorney general to join a states’ lawsuit against the plan, though she later conceded that she could actually order an independently elected attorney general to do anything.
Whitman did say there was at least one part of the new law she likes. It’s the same part nearly everyone loves: a prohibition on insurance companies denying you coverage if you have a pre-existing medical condition.
But Whitman, of course, opposes the individual mandate — the requirement that everyone carry coverage.
And as just about any health economist will tell you, you really can’t have one without the other.
If anyone can get insurance, any time, regardless of their health condition, there would be a huge economic incentive to avoid coverage until you needed it. Why pay now when you can get coverage later? It would be like letting people buy car insurance after they’ve already been in a wreck. In health insurance, that kind of incentive would skew the pool of the insured toward the sick and the injured. That would drive up the cost of coverage, pushing still more healthy people out of the pool. And so on.
The fix for this is to require everyone to have insurance, with subsidies for those who can’t afford it. That way everyone — the healthy and the sick — is in the pool, and you spread the risk broadly.
Whitman’s solution has been tried in several states. And it usually leads to even higher insurance premiums than we have now, while doing little to broaden access to care.