Health Bill's Fatal Flaws

U.S. Senate leaders can't be serious about proposed penalties in their health care reform legislation, imposed against those who don't buy insurance. The fine is so low that if this provision survives, it would almost guarantee the death of the private health insurance market.

Under the Senate bill, individuals would be required to buy health insurance. But the penalty for opting out, so to speak, would be ridiculously low–starting at $95 in 2014 and rising to a still paltry $750 in 2016, with a maximum of $2,250 for a family.

This is a fatal flaw. If you ban insurers from rejecting those with preexisting conditions, yet set a ridiculously low penalty for those who refuse to buy coverage when they're healthy, many will avoid getting insurance until they become seriously ill.

It would be like requiring a homeowners carrier to sell someone coverage while their house is on fire! Should such a low penalty make the final bill, it would be a deathblow to private carriers–which perhaps is the Democratic leadership's agenda.

The House bill is more realistic in this regard, levying a penalty equaling 2.5 percent of income–although individuals could apply for hardship waivers if coverage is unaffordable (under whatever standard is ultimately determined).

Another key controversy is over the public option, with a government-run health insurance plan included in both bills. However, the Senate takes a more clever approach, giving each state the opportunity to opt-out.

If this provision survives and makes it to President Obama's desk, I cannot imagine too many state lawmakers summoning the political courage to deny constituents a public option–especially once they see what private insurance would cost them. This debate would make health insurance a hot-button topic in every state election. Legislators and governors who “opt out” might find themselves voted out!

I'll tell you what, let's make a deal! We'll allow a public option–but only if the government plan is the one that has to cover those who initially reject coverage, only to demand it once they need expensive care.

How do you think that would fly in Congress? Talk about an unfunded mandate!

Meanwhile, I have another beef.

If having 30-to-40 million uninsured Americans constitutes a “crisis,” how is it Congress is willing to wait three- or four years to put its “solutions” into effect? What are people without coverage supposed to do in the meantime?

I have an idea. How about including the creation of Assigned Risk Pools in each state for those without health insurance?

I've floated this trial balloon before, and watched it sail away into the distance. No one has blown it out of the sky, but nobody has reached out to embrace it and call it their own, either.

It's not a big mystery why such a move is not the first alternative that comes to mind for members of Congress or the Obama administration. Bottom line, it would mean steering billions of more dollars into the private health insurance system.

But if we were to mandate that everyone buy coverage, and make sure they could get it affordably by requiring every private health insurer to do their part by accepting policyholders from the pool according to their market share in the state, that just might solve the uninsured problem–and without creating a public option.

How does that sound to you? If you like the idea, call your representatives in Congress today!