You state: “In the Exchange, you automatically become part of a group, and so rates would be much lower than they would be if you tried to purchase your own individual insurance.”

You make that statment as if it is true for the entire population. Sure, for older, less healthy individuals that holds true. But for younger or healthier individuals, your statement would often be incorrect.

Not only is it enough that liberals want to transfer wealth and income from the relatively rich to the relatively poor, but they now want to transfer income from healthy to unhealthy individuals via community rating.

Have you ever bothered to read Adam Smith…..”Mercy to the guilty is cruelty to the innocent.”

If I were to error in developing public policy that will effect every American either now or in the future, I would error on the side of encouraging healthier behavior. How? The same way car insurers encourage better driving, by allowing actuaries and underwriters to do their jobs and assess risk at the individual level. Only then will people be held accountable for their unhealthy behavior. SKIN IN THE GAME!

Liberals, in their fantasy world, are dying to hold bankers accountable for risky loans via higher underwriting standards and higher capital requirements (or even compensation tied to long-term value of equity shares), yet when it comes to the health behavior of individuals, where are they?

onlineuniversalwork

Under the House bill, if you leave/lose your job and are temporarily uninsured, you can go into the Insurnace Exchange where you can purchase private insurance or the public plan.

In the Exchange, you automatically become part of a group, and so rates would be much lower than they would be if you tried to purchase your own individual insurance.

Once in the Exchange, you can stay there until you’re 65 (an elligible for Medicare) –even if your “circumstances change” (i.e.you get a job that offers insurance.)

I double-checked this with the House Education Committee, so I’m quite sure it’s correct.

This is one reason why many, many more people will be eligible for the Exchange (and for the public plan) than CBO acknowledges.

Although I’ve been wondering how this is handled with state COBRA-equivalents such as Cal-COBRA, when the individual writes the check directly to the insurance company. I’ve seen this with Kaiser– it passes the credit directly to the consumer, but to get reimbursed, does it have to claim the credit against it’s own employees’ payroll taxes? That’s what the language in the stimulus bill seems to require.

I think small business plans are usually age-banded, so age may not be an issue here. In this case I think adverse selection would be largely due to tax treatment. The tax exclusion more-or-less compensates healthy employees for bearing the high cost of group coverage. When they go on COBRA, the tax exclusion is gone, and there is now a definite advantage to shopping for individual coverage. So only sicker employees remain. I think tax treatment has to be the culprit, since that’s the only thing that’s changed with the layoff.

I’m not as familiar with large-company practices. But where COBRA is not age-banded, you’d be hard-pressed to keep young healthy people from dropping it even with equitable tax treatment (then again, maybe that’s why the temporary COBRA tax credit is so high, at 65%). I expect that during their employment, the non-age-adjusted cost would have been mostly accounting fiction, compensated by adjustments in salary etc. But there’s no way to continue the fiction when the ex-employee has to write an actual COBRA check.