Senate GOP
dusts off the continuous coverage penalty at behest of insurance companies, by Robert Romano
In Obamacare replacement legislation
offered by the Senate Republicans this week, like the House-passed legislation,
the individual and employer mandates were eliminated. However, one problem with the House
bill was that it essentially repackaged the individual mandate, renaming
it the
“continuous coverage” penalty,
which would have increased premiums for people if they went 63 consecutive days
without coverage during the preceding 12 months, hiking premiums by 30 percent
with the penalty lasting for a year.
Fortunately, in the original
discussion draft of the Senate bill dropped last week, this provision was
stripped out — improving on the House legislation by removing one of its more
controversial mandates.
That is, until it wasn’t. The Senate
GOP has now revised its legislation and it
includes a new version of the continuous coverage penalty, this time by denying re-entry into insurance markets for
six months if individual coverage lapses for 63 days. The individual mandate
just won’t die.
To call this disappointing would be
an understatement. The Senate has reintroduced this penalty, at the behest of
insurance companies, not the American people, to replace the individual
mandate.
All this to address a hypothetical
problem, where some undetermined number of individuals game insurance markets,
and only purchase insurance when they get sick.
Never mind that the vast majority of
those with private insurance have employer-based coverage: 156
million, who had such coverage in 2015 because
their employer or parent or spouse’s employer provided it, according to data
compiled by the Kaiser Family Foundation. That is largely unchanged from
2007, when
158 million were covered by employer-provided insurance.
The individual insurance market, on
the other hand, has grown from 14.5
million in 2007 to 21.8
million today, per Kaiser. That represented a
shift from about 4.8 percent to about 6.9 percent of the population.
But, employer provided insurance
dropped by 2 million, falling from 53 percent of the population to 49 percent.
That accounts for an additional 10 million people who would have had
employer-based health insurance had the rate remained the same.
Instead, the recession struck and
employment population ratios dropped among working age adults in the
intervening decade.
The increase in the individual
market was not because of the individual mandate and Obamacare taxpayer
subsidies. It was because employers were hemorrhaging employees in the
recession and then dumped some more employer-provided coverage in the Obamacare
era.
Millions of people who could not
find a job were then forced into individual markets by the individual mandate
and many were subsidized by Obamacare taxpayer transfer payments. In that
context, Obamacare was a bailout for insurance companies in the recession.
Therefore, we’re talking about a
potential penalty being slapped on 178 million in the private insurance market,
because insurance companies told Congress they need a few more million
customers. Does that seem right?
Penalizing people for losing their
jobs and employer-provided coverage was un-American when Obama did it, and it’s
un-American today.
Despite years of claiming there were
people gaming the system on the individual market by only buying insurance when
they get sick, after the individual mandate went into effect there is still no
data to support the claim.
If anything, the greatest barrier to
young people entering insurance markets are a combination of poor job creation
in the U.S. the past decade and the high costs of insurance thanks to all of
the mandates, representing millions who were displaced by the recession and
then wound up on the individual markets.
Like many of the nation’s economic
problems, this would be solved if the economy started growing robustly. The
solution is to create jobs, not to punish those who lose them and the
employer-based health insurance they once received.
Robert
Romano is the senior editor of Americans for Limited Government.
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