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Just Say No to Health Insurance

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

Everyone talks about reforming health insurance while ignoring a better alternative: healthcare risk pools. Powerful lobbyists for the healthcare insurance industry have convinced politicians to perpetuate the current system of health insurance, hoping that minor tweaks will solve the escalating crisis. Conservative think tanks have even bought into the system due to heavy funding by insurance companies.

Risk pools allow people to buy into health plans of their choosing instead of obtaining health insurance coverage through employers. Health insurance is not a free market creation. It came into existence as the result of President Franklin D. Roosevelt’s socialist policies. Roosevelt mandated income caps during World War II, which caused employers to offer health insurance in order to keep jobs attractive. Now the government requires businesses to provide health coverage to employees, giving insurance companies a monopoly on healthcare coverage and ensuring their existence.

Risk pools offer healthcare coverage much like insurance, but have much more flexibility and less bureaucracy. Funding comes from premiums. A variety of risk pools are set up based upon various health needs or non-medical criteria such as location and age, although the larger the risk pool, the lower the premiums would be. The administrators of the risk pool could be anyone; a doctor’s office, a church, a nonprofit entity. The administrators would determine what levels of coverage would be offered and what types of individuals fit into each pool.

Opponents of risk pools claim that risk pools are too costly, pointing to existing risk pools at the state and federal level that are managed primarily by the government. This is comparing apples and oranges. Most of those risk pools are only high-risk pools. The people in those plans have expensive illnesses like cancer, circulatory diseases (such as coronary artery disease), post-surgical care (such as chemotherapy) and degenerative joint diseases, and have been denied coverage or have limitations like a pre-existing condition. These are people who make too much money to qualify for Medicaid, but not enough to pay for traditional health insurance; typically the self-employed. Around 207,000 Americans nationwide are enrolled in one of these pools.

Premiums for the existing high-risk pools average several hundred dollars a month, higher than health coverage for healthy individuals. However, if risk pools are broadened to include more than just high-risk people, costs will decrease. Currently government provides part of the funding for high-risk pools.

Healthcare risk pools can be managed with very little government involvement, and for optimal efficiency should be administered at the local level. Several of the 35 state-level high-risk pools are managed by nonprofits, not the government. Federal high-risk insurance pools, which were started under the Obama administration in July 2010 through the Pre-Existing Condition Insurance Program, have proven to be twice as costly as state-level pools. 18 states have opted to have the federal government run their high-risk pools.

Risk pools should be combined with high co-pays, like $50 or so per visit. This would create a disincentive for the type of people who run to the doctor for every little thing. There are some risk pools already in place in the private sector. Tellingly, some of them are managed by doctors.

Requiring employers to provide healthcare coverage is driving companies out of business in this dismal economy. It creates a disincentive for Americans to run their own small businesses. Even if small businesses do not have to provide healthcare for their employees, they still need healthcare for themselves. If employers were no longer required to provide healthcare insurance, everyone would buy into a risk pool instead.

ObamaCare is expected to terminate healthcare risk pools. In 2014, the ObamaCare provision making insurance mandatory for everyone goes into effect. Sadly, a real system of risk pools will have never been given a chance. Insurance companies will claim victory, confusing the public into thinking that costly high-risk insurance pools were the same thing as insurance pools for everyone. Yet as high as costs are for high-risk insurance pools, even they are lower than we will see under ObamaCare when the inefficient federal government bureaucracy takes over.

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