I almost laughed out loud when I read the Economist’s article on US health care reform: Economics focus, Creeps and bounds (July 21, 2007)
…Massachusetts obliges individuals to buy insurance or else face higher taxes. This requirement lowers premiums overall, by forcing relatively healthy, low-risk people into a system they might otherwise avoid. Their premiums help to cover the costs of people who are more likely to need health care.
Sounds logical doesn’t it? But it’s hard to square with my 26.3 percent premium increase for next year, which coincides with the mandate’s phase-in. Am I supposed to believe that my increase would have been 30 or 40 percent otherwise? What does “lowers premiums overall” really mean in a market where premiums are rising rapidly for most everyone?
One reason that the Economist’s logic doesn’t hold up is that once people are insured they may want to try out their shiny new health care insurance by going to the doctor. They may even go to the emergency room more frequently, which flies in the face of the typical argument that the newly insured will substitute care in more cost effective settings for their previous emergency room visits.July 26, 2007