Health care reform, if passed, will affect every man, woman, and child in this country. Because of the voluminous legislation moving its way through Congress, it was great to see the Miller Center sponsor "Health Care Reform Panel: Policy, Economics and Ethics." The panel featured a number of prominent University professors with different areas of expertise, and overall the panel did a good job of outlining the proposed reforms. It was apparent, however, that the majority, if not all of the panelists, were in favor of the types of reforms currently being proposed in Congress. For example, the panel culminated with one audience member speaking to the audience, at the permission of the moderator, about how we need to call Senator Mark Warner and tell him to support the strong public option that "we want." She even gave us his phone number, which one panelist then wrote on the chalkboard, urging us to call. Perhaps next time, this type of panel can include experts with more diverse opinions.
Given that the panel focused the majority of its time on the perceived "good" aspects of the proposed health care reforms, it is important to consider some of the drawbacks, particularly with respect to how these reforms will affect University students. Currently, most students have health insurance through their parents, and that is not likely to change under any proposed plan. What is at stake are the options available to graduating students if they need to buy insurance on their own. The majority of University students are young, healthy, and consume little health care. This demographic benefits from cheap, high deductible-low premium catastrophic insurance policies. Unfortunately, the proposed reforms will make such policies more expensive, if not eliminate them altogether.
Examining reforms enacted in Massachusetts in 2007 is the best way to get a glimpse into the future of health care should these reforms pass. One such reform is a national, individual mandate. Massachusetts requires all of its residents to buy "acceptable" health insurance, or they must pay a tax. The catch is that the government defines what constitutes "acceptable coverage." The plans offered through Massachusetts' form of a "Health Insurance Exchange" have to meet standards dictated by the state. These standards contain many premium-increasing requirements, such as creating caps on deductibles and out-of-pocket expenses. This means that the high deductible plan a young and healthy person may want will no longer be an option, forcing these individuals to purchase more expensive plans. In Massachusetts, the effect has been a large increase in premiums. Michael Tanner, who conducted a study of the effects of Massachusetts reforms for the Cato Institute, found that insurance premiums in the state have risen at a greater rate than the national average every year since reform was passed.
One reason that health insurance is so expensive is the heavy regulations imposed by states on the insurance industry. Currently, it is illegal to purchase health insurance from anywhere other than your home state. This greatly reduces competition. On top of this, each state has its own definition of "acceptable coverage," meaning a long list of mandated benefits. However, most states do not have an individual mandate. As the list of mandated benefits grows, even the most basic plans become much more expensive. The Council for Affordable Health Insurance conducted a study and found that, depending on the mandated benefit, each one can add between less than 1 percent to nearly 10 percent to the cost of insurance. Since most states have between 20 and 60 mandated benefits, this can increase the cost of insurance from as little at 20 percent to as much as 50 percent. Massachusetts for example, has 52 mandated benefits according to the study, including in vitro-fertilization (IVF), which itself increases the cost of premiums between 3 and 5 percent.
There is nothing wrong with an individual purchasing IVF coverage or some other mandated benefit if that person believes they might desire this type of treatment in the future. There is something wrong when the government forces people to buy it whether they want it - or can afford it - or not. Just imagine what will happen when the federal government tries to define "acceptable coverage" nationally. You can bet that thousands of lobbyists will soon descend on Washington to get their service covered and basic inexpensive plans will cease to exist.
Also crucial for the young and healthy are the terms "guaranteed issue" and "community rating", which mean insurance companies will have to accept everyone who applies and will be unable to charge higher premiums for the sick. This means that the cost for the young and healthy will go up. Since insurance companies can't charge more for those who are sick, they will simply pass on the increased cost to the those who cost the least to insure, the healthy.
Ironically, those that consume the least amount of health care will be greatly affected by the health care reforms in Congress. It is thus important that our generation is informed and makes ourselves heard, because ultimately we are the ones who will have to deal with the consequences of both inaction and action in the years to come.
Megan Stiles' column appears Wednesdays in The Cavalier Daily. She can be reached at m.stiles@cavalierdaily.com.
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