208 rationale flunks Econ 101

Sound market economics is missing from a 208 Commission spokesman's recent Denver Post piece defending their recommendation for the legislature to mandate health insurance. Chairman Bill Lindsay would have us believe that the uninsured are cost-shifting their unpaid bills onto the insurance premiums of common, everyday folks. In fact, the uninsured are on the bottom of the totem pole and bear the brunt of the cascading effect of cost-shifting down from large players above them. Remember, government, which represents half of all health care payments, is reimbursing providers 25% to 40% less than provider costs. And, while big insurance companies seem to pay more than costs, they still pay far less than the retail prices charged to the uninsured. Insurers can use their clout to negotiate hefty PPO and HMO discounts.

What rarely gets mentioned is that the uninsured have their meager incomes taxed heavily up front to pay for Medicaid for the poor and Medicare for the elderly. The unreimbursed expenses of illegal aliens are also factored into the prices these people are charged. Maybe if they were relieved of this regressive burden they could start to buy insurance for their children and themselves.

What Mr. Lindsay and the Commission seemed to have missed entirely is that until systemic changes are implemented to reduce health care costs across the board, the uninsured will not be able to avail themselves of affordable coverage. Until then it is just a game of government and large insurance companies getting what they need to make their constituencies happy and the rest of us having to pay jacked-up rates.

Sure, hospitals want their bad debts to go away and insurance companies want an easier time selling policies. But, to do it through coercion and mandates makes a mockery of the legislative intent behind the 208 study process. It’s also bad economics.