Economist Mark Thoma, professor of economics at the University of Oregon, muses on the affects of health care changes, including mandated coverage.
BY MARK THOMA
One of the provisions in the new health care bill is an end to the lifetime cap on benefits. As a state employee I have a plan that has such a limit but I also have an annual open enrollment period in which I am allowed to switch to another plan offered by the state benefits board.
So I have always wondered: If I get close to my lifetime benefit on one plan, can I then switch to another and start over again at zero?
This question will soon be moot, but does anyone know the answer?
In a related development Regence has decided to stop offering children’s stand-alone health plans. From the linked Oregonian article:
Insurers that have discontinued child-only coverage say the new health reform law has set the stage for large and unpredictable medical costs. Now that coverage is guaranteed regardless of health, insurers say too many families may wait until their children are sick to buy health insurance. Insurers need enough healthy enrollees to pay premiums to cover the costs of enrollees who are sick.
Which was always the point about mandating coverage. If you prohibit insurance companies from screening based on pre-existing conditions then people can just wait until they are sick to enroll which raises costs, and thus premiums for everyone.
Democrats are using the threat of excluding companies that don’t cooperate from participating in exchanges, so far this threat is not working. One suspects that insurance companies are trying to use actions such as this for more negotiating leverage, but is going to be an interesting ride for a while.
Mark Thoma is a professor of economics at the University of Oregon and the author of the blog Economist’s View. He can be reached at [email protected]. This blog is reprinted with permission.
