Why The AHIP Report Is Bulls$%t In Five Steps

I was reviewing the AHIP report and trying to follow its logic, so forgive me if I a missing a step, but this is how it looks:

1. Congress passes individual mandate with fine that AHIP complains is too low.

2. Because fine is too low insurance industry responds to "only" 94% coverage by raising premiums through the roof.

3. More people drop their coverage causing premiums to increase further.

4. However, due to the bar against rescission and denying coverage for pre-existing conditions, people without coverage simply buy coverage after they get sick.

5. Thus, the de facto insurance program is that the people pay the so-called fine as a premium, then obtain insurance coverage once they get sick.

Now, would the insurance industry really raise prices so high that it makes economic sense to drop coverage, pay the fine, then get coverage only after you fall ill? No, because it would be economic suicide to insurance companies to create such a system. Yet, the PWC report assumes that premiums will have no impact on whether or not people buy coverage and game the system to only buy coverage after they fall ill.

For me it's really as simple as that.

It would be like a coal company paying the Heritage Foundation to do a study on global warming, and surprise! The study finds that global warming does not exist.

is that the penalty will be low compared to the cost of insurance from the outset from day 1. And therefore many people, especially the young, will opt to pay the penalty and not buy insurance, decreasing the pool of insured from day 1. And so the pool will start off underfunded at current rates, forcing an increase in rates.

If an insurance policy costs $5,000 a year for an individual and the penalty is only $900, unless you already have a major medical problem, the thing to do is to pay the penalty, wait until you have a major medical problem, then buy insurance. That would apply even if the penalty were $2000. With the penalty at $2000, you'd still save $3000.

Under this scenario, the insurance companies wouldn't have to raise rates for people to drop coverage. Large numbers of people would choose from the getgo not to have coverage. I think that's what they're talking about.

So far, I haven't seen any hard information on what the cost of an individual policy would be, or what the penalty would be. It would be nice to know that informatiuon now as we debate the plan. It seems like those are the two most critical pieces of information. Yet the politicians don't seem to want to let us know.

I think the insurance people are pointing out what I've been worried about all along, that this plan does not control costs. It's touted as reducing insurance premiums, probably marginally at best, but maybe not reducing them or maybe even increasing them. But beyond insurance premiums, there is still the issue of healthcare costs other than insurance premiums which are skyrocketing and which the Senate bill doesn't control at all.

What we're going to end up with is exorbitantly priced healthcare, the cost of which is spread among more people.

Just pay the fine as a premium, but if you get cancer, then apply for coverage, since the insurance company cannot exclude pre-existing conditions.