More insurance, less coverage

As the Wall Street Journal (Bill Gives Insurers A Younger Market) points out, there is some upside in national health reform for commercial health plans. In particular, it should increase the number of young, healthy people with coverage. Health insurers have been trying to encourage the so-called ‘young invincibles’ to purchase plans, but it’s a tough sell. Coverage is pricey and puts a real dent in young adults’ lifestyles. Health insurance is not a product or service that’s enjoyable or status-raising either.

Health reform will help by mandating coverage and providing subsidies to those with lower incomes. And it looks likely that reform will allow companies to sell low-cost plans that appeal to this age group. For example, some companies offer plans that cover dermatology and dentistry –services that people are likely to use– but exclude certain other coverage, e.g., maternity and not allow people to opt in once pregnant. That would certainly be an interesting form of birth control!

A nice side effect would be if bringing the young invincibles into the insured market markets the beginning of the transition from health insurance as all-encompassing health care coverage to real insurance, which you only use for expensive, non-routine events, just like other forms of insurance. I have perfectly good automotive insurance but it has a high deductible and doesn’t cover routine care such as oil changes, gas and new tires. That keeps the market for those services more consumer focused and less expensive. Meanwhile, collision repair, which tends to be covered by insurance, has many of the same problems as health care –with a big insurance industry infrastructure built up to keep suppliers in line.

For now, mandated benefits are a fact of life in many states, including my home state of Massachusetts. I’d like to see that change, and economic pressures may make it happen over time.

March 16, 2010

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