So why is Anthem Blue Cross raising the premiums of its California customers by as much as 39%? Here’s an argument for an “individual mandate” requiring everyone to have insurance, as well as a case for making sure this coverage is affordable.:
Anthem said its costs have been driven up in part because the weak economy has led many people in good health to forgo coverage, leaving those with greater medical needs in its pool of customers.
UPDATE: Our friend Jonathan Cohn digs deeper:
Piecemeal reforms, unfortunately, can’t really stop this from happening. As it is, the law prevents insurers from raising rates (or canceling coverage) only on individuals with high medical expenses. That’s why insurers end up raising rates for entire blocks as costs go up. The favorite conservative answer–high-risk pools–don’t offer much relief, either. They tend to be underfunded, which generally translates as less coverage for higher prices. They may be better than nothing, particularly for people who don’t have coverage already, but they’re not a real solution.
No, the best way to avoid adverse selection, as I’ve argued many times, is to create one giant insurance pool–in which everybody, healthy and sick, gets coverage at the same rates. And, roughly speaking, that’s what the Democratic health care bills would do, by creating insurance exchanges through which all individuals in a given state would buy coverage.
In these exchanges, insurers couldn’t charge different rates based on medical risk; they’d have to cover a defined set of benefits and would have to spend most of their revenue on actual patient care. The government would require (almost) everybody to get insurance–and then offer subsidies, so that (almost) everybody could comply with the requirement. Projections suggest most people in the individual market would end up paying less for their coverage than they would otherwise, while getting stronger, more reliable benefits.
It’s not the most elegant solution or, to be sure, a perfect one. (A single-payer system would be even better, in my humble opinion.) But it’s good enough, certainly. Just ask the people of Massachusetts, where such a system is up and running–and rather popular, as well.