Now that the public option appears to be dead and buried, how can President Barack Obama and his backers in Congress guarantee coverage for the millions without health insurance? Why not just mandate that each state create an assigned risk plan?
This idea could salvage President Obama's vision of reforming health care in our lifetime, without eliminating the private insurance market.
This isn't a radical concept. We've already had assigned risk plans for property and casualty coverage, such as auto and homeowners insurance.
The idea would be to pool all those unable to get health insurance through their employers or on their own, and assign them out according to each private insurer's market share in their particular state.
That way, everyone gets covered without having to create a public plan that could in theory underprice private carriers and thereby drive them all out of business.
Assigned risk plans should be seriously considered because President Obama and those in Congress committed to reform are running out of politically viable alternatives. Indeed, if they are not careful, their reforms could leave more, not fewer, uninsured.
All President Obama has left in terms of major reforms to fight over is a mandate that employers offer coverage and that everyone buy insurance. Without a public option to fall back on, however, mandates could leave more without insurance, abandoning tens of millions of individuals to the not-so-tender mercies of the "free market," and possibly bankrupting many with the cost of individual coverage.
Why is that? Well, if the penalty charged to those firms that do not offer mandated coverage is too small–say, 8 percent of payroll, which is the number proponents have been tossing around–companies that already pay a higher percentage than that might be tempted to just dump their group plan and pay Uncle Sam the fine.
You might argue that if the penalty is any higher, it could bankrupt small businesses and certainly discourage job growth, and you probably would be right. If that happens, we'll see more people out of work and most likely uninsured.
This is the paradox of health care reform. Every time you try to impose a "solution," it creates new problems.
The answer might be to mandate that individuals buy coverage, but not impose any mandate on employers. However, to make sure people have options to buy coverage, instead of creating a public plan, Washington could require each state to create a Health Insurance Assigned Risk Pool, charging group rates–which are lower than what's assessed for individuals.
These pools would also prohibit exclusions or higher charges for preexisting conditions–two critical elements in standard, employer-based group plans.
If affordability is a problem, individuals could be granted the same tax deductions for health insurance premiums that employers now enjoy, and subsidies could be offered as well to help some pay for coverage.
This way, everyone gets covered at an affordable rate, and the private insurance industry not only remains intact, but should prosper with millions of new paying customers.
Of course, Republicans will still no doubt decry this idea as "socialism" and a "government takeover" of health insurance.
But frankly, if carriers want to avoid creation of a public plan that will shove them into the dustbin, they had better be willing to take on all those who are currently uninsured. Otherwise their protests about a public plan will be dismissed as self-interested posturing.
What do you folks think?
Sam Friedman is Editor In Chief of National Underwriter. To respond to his column, go to his Aug. 19 blog post at www.NUSamSoapbox.com. You may also follow him on Twitter at http://twitter.com/NUSam.
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