Updated:Duh! Healthcare Bill Doesn’t ‘Outlaw Private Insurance’

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Earlier today, Twitter was all a-Itself with news, courtesy of Investor’s Business Daily, that the House healthcare reform bill “outlaws private insurance.”  I knew, without knowing, that they were misreading the thing, but haven’t had the chance to run through it yet.  Luckily, the Heritage Foundation debunks them, while ladling on their own false alarmism.

To sum it up, IBD reads a passage, from page 16 of the bill, that describes a grandfather provision which they interpret as “making private health insurance illegal,” but fail to read a paragraph on page 19 that explains it further.  Non-grandfathered policies would be required to compete in health exchanges, alongside the public option.

The Heritage article still thinks this is going to ruin everything because of “teh regulations!”

In order to qualify as an “Exchange-participating health benefits plan,” all health insurance plans must confirm to a slew of new regulations, including community rating and guaranteed issue. These will all drive up the cost of health insurance. Furthermore, all these new regs would not apply just to individual insurance plans, but to all insurance plans.

The irony here is that the health exchange fixes a major flaw in John McCain’s plan from the 2008 campaign.  McCain wanted people to be able to purchased insurance across state lines, but that would have meant trashing or weakening important protections for consumers.  Without them, there would simply be a race to the bottom to provide the cheapest, crummiest insurance to those who can’t afford more.  From my story on the subject:

Saying that all McCain wants to do is “erase artificial boundaries” between states is like saying, “I don’t want criminals to roam the countryside, I just want to unlock their cells so they can compete for the best one.”

In order to allow such “competition,” companies would need to be exempt from state regulations, regulations that protect consumers from being denied coverage, or being canceled if they get sick, or from being sold worthless insurance that doesn’t cover anything once you read the fine print.

The notion that insurance companies can’t compete while consumers are protected is a frightening one.  There may be some that can’t hack it, but maybe they’re the ones who need to go out of business.

Update: I finally found a complete copy of the bill that my crummy connection would let me download, and it turns out that the IBD headline is even dumber than I thought.  On page 15, immediately prior to their “Oh, noes!” paragraph, is a clearly labeled intro that states that the section is simply a definition of “grandfathered coverage,” which is then referenced on page 19:

GRANDFATHERED HEALTH INSURANCE COVERAGE DEFINED.—Subject to the succeeding provisions of this section, for purposes of establishing acceptable coverage under this division, the term ‘‘grandfathered health insurance coverage’’ means individual health insurance coverage that is offered and in force and effect before the first day of Y1 (as defined in section 100(c)) if the following conditions are met:

That’s where IBD started reading, and stopped before they got to page 19.

More on this later.

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2 Comments

  1. “The notion that insurance companies can’t compete while consumers are protected is a frightening one. ”

    It’s also a fake one. No one is positing that consumer protection precludes competition, straw man. You assume facts not in evidence. Like, for example, that the only valid protection of consumers is preventing purchasing across state lines. Can you back up such an absurd reduction of the debate with a fact or two?

    I won’t hold my breath. (I don’t dare risk injury with Obamacare coming.)

  2. Caleb,
    You actually missed the point. The things that Tommy calls “consumer protections” are actually benefit mandates. How exactly a laundry list of preventative measures qualifies as insurance is really beyond me.

    insurance: the act, system, or business of insuring property, life, one’s person, etc., against loss or harm arising in specified contingencies, as fire, accident, death, disablement, or the like, in consideration of a payment proportionate to the risk involved.

    Does your homeowners insurance cover inspections(physician check-ups)? repainting(any number of cosmetic surgeries that are required in several states)? power washing(teeth cleaning)?

    The same questions apply to car insurance.

    But that’s okay. These “consumer protections” aren’t really the problem, are they? Oh, wait. You say mandates have caused the price of insurance to rise by at least 20%? {I’ll let you think about why that’s a problem.}


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