Code Red: Two Economists Examine the U.S. Healthcare System

March 10, 2010

Obama Could Have Told it Straight

Filed under: Health insurance,Health Reform,Uncategorized — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 7:12 pm

President Obama is in full populist mode, chastising the health insurers who raised premiums by 40%, 50%, even 60%! We are supposed to conclude that those damn insurers deserve whatever they get.

But the problem is not with the insurers, it is with private health insurance. As I blogged last week, we are seeing the beginnings of an adverse selection death spiral. Healthy folks are dropping individual health insurance coverage so they can pay their rent. The average costs for the relatively less healthy unhealthy folks clinging to coverage is much higher and insurers have to raise premiums to keep up. Sadly, this is how unregulated insurance markets work.

Why not explain what is going on and the need to keep risk pools intact? (Ironically, Obama sharply criticized Hillary Clinton for wanting to mandate coverage for all Americans; that mandate could have protected the current death spiral.)

We are not going to have a government run insurance system for the under-65 population.  The votes aren’t there.  So why demonize the private insurers that we are going to need to make the system work?  I guess the President really is doubling down on passing health reform, right now, in any guise.

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