The Universal Coverage Mandate and What It Means For You

The Universal Coverage Mandate and What It Means For You

President-elect Barack Obama’s sweeping victory in November has Democrats in Washington itching to pass healthcare reform as soon as he takes office. As it turns out, the Democrats in Washington are not the only ones. Recently the Associated Press reported that the trade group America’s Health Insurance Plans (AHIP), which represents 1,300 companies in the insurance industry, released a statement saying that they would support legislation requiring guaranteed coverage for every American if it included a an enforceable requirement that everyone have a policy. In addition, the Blue Cross Blue Shield Association, which represents thirty-nine companies that cover over 100 million Americans, released a similar statement.

What Does It Mean?

Essentially, by mandating that all Americans have coverage while guaranteeing that all Americans will be eligible for coverage, the private insurance companies would be able to spread the risk across a larger base of customers. Alissa Fox, vice-president of the Blue Cross and Blue Shield Association, said “Insurance works best when everyone is in the pool. You need healthy people in the insurance pool to help pay for the sicker individuals who are much more motivated to buy coverage.” This system would most certainly guarantee an increase in revenue for the private insurance industry, but that might not necessarily translate into higher profits. The insurance industry contends that any mandate for guaranteed issuance would have to be combined with a mandate for coverage. Ms. Fox told reporters that an individual mandate was an indispensable corollary of any approach forbidding insurers to reject applicants because of health status.

Private insurers fear the ramifications of guaranteeing coverage without mandating coverage for everyone. Donald Hamm, president of Assurant Health, said “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.” The insurers claim that in states that require guaranteed coverage, they have already seen these problems.

The Politics of Universal Coverage

Mr. Obama supported a universal coverage guarantee during his run for the presidency this year, but he stopped short of calling for a mandate to require every American to have health insurance. Many on Capitol Hill also question the feasibility of requiring coverage due to the high cost and the difficulty of enforcement.

Senator Charles Grassley, a Republican from Iowa, said that mandated coverage would likely inflate the federal budget deficit. He said, “Increasing the record-breaking deficit is not a legitimate option. Ignoring the burden of inefficient spending that health care places on our economy is also not an option.” Other members of Congress tend to agree. Grassley participated in a closed-door meeting on Capitol Hill with other Senators concerned over the direction of the nation’s health insurance industry, including Democratic Senators Max Baucus and Edward Kennedy as well as Republican Senator Orrin Hatch among others.

Alternatives to Federally Mandated Universal Coverage

The mandated universal coverage plan has found support on Capitol Hill with Democratic Senators and in the president-elect but not everyone in Washington is behind it. While just about everyone agrees that universal coverage should be the ultimate goal for our health insurance industry, not everyone agrees on how to get there. The Republican candidate for the presidency this year, John McCain, ran on a healthcare platform that opposed universal healthcare mandated by the federal government. McCain, and other conservatives in the Republican Party, believe that any federal health insurance program would be an overexpansion of government involvement in private industry. McCain proposed a consumer-driven model for the health insurance industry, spurred by tax credits from the federal government to encourage coverage.

Many insurance industry analysts tend to agree. They believe that government-based health insurance is generally much less efficient than private-based insurance. Matthew Coffina, an analyst with Morningstar, said “Government plans tend to be much less profitable than commercial insurance. To the extent that they’re insuring more people, it’s good. To the extent that they are insuring people through government options instead of through commercial options would tend to depress margins.”

Change Is Coming

Regardless of what happens on Capitol Hill in the next four years, we will see some sort of reform in the healthcare industry soon. Our nation cannot afford to continue on with our current arrangement. Each year healthcare costs become a larger and larger portion of our spending. Without some change in the current system, we will eventually be spending more money on healthcare than anything else. Our nation has to commit to improving our overall health along with reforming our healthcare system. This change will affect us all, so it is certainly any issue that deserves our attention.

Source

http://www.nytimes.com/2008/11/20/us/20health.html?ref=us

http://www.bloomberg.com/apps/news?pid=20601202&sid=axooOa9vVGnc&refer=healthcare

http://www.google.com/hostednews/ap/article/ALeqM5jplyo5XCZt-sbgL21ggOoqg5nC3QD94I8HP80