The Back Door Option

29Sep09
So the government option is out of the senate bill, for now. I frankly wouldn't be surprised to see it creep back in through the amendment process, and any joint house-senate bill will certainly have a version in it.

But there are two items already included in the finance committee bill that amount to a kind of backdoor government option, establishing a trigger scenario, and creating conditions likely to cause it to come into play.

The first is the "Snowe Amendment #1" on page 207 of the AHFA Coverage Amendments, which would institute a government option in any state where affordable coverage was not available to at least 95% of the population. "Affordable" being defined as at least 2 plans available, costing no more than between 3 percent of adjusted gross income at 133 percent of the Federal Poverty Level, to 13 percent at 300 percent and above.

The second is a ban on companies denying coverage on the basis of pre-existing conditions. This would allow individuals to carry minimal insurance to meet mandatory insurance requirements outlined in the bill, and then buy into a better plan once they realize they are sick.

To use President Obama's pet car insurance analogy; this would be like me carrying only liability on my car, only to call my agent and upgrade to comprehensive coverage the day after an accident, so I could take my car into the body shop.

Webster's defines insurance as: coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril. Insurance relies on the notion of probability that not everyone will need to file a claim at once, and claims in excess of individual premiums paid can be offset by the premiums of individuals who have not made claims.

Well in this case the contingency would already have been met. Health insurance providers could expect to pay out significant claims for the majority of the insured. This would necessitate an increase in reserve requirements, and a drastic increase in premiums. Assuming the insurer could even stay in business, one could expect to see health insurance premiums grow two or three fold.

Remember that trigger?

Contact you senator, and reiterate: no government option, backdoor, front door, any door.