According to Elizabeth Edwards, the wife of former Democratic presidential contender John Edwards, neither she nor John McCain would be able to get health insurance under Sen. McCain’s health plan. He, because he has been treated for melanoma. She, because she has breast cancer. Under McCain’s plan, says Edwards, insurance companies “wouldn’t have to cover preexisting conditions like melanoma and breast cancer.” Here’s what she doesn’t know:
1. Access to insurance is already guaranteed by current law for both McCain and Edwards. Any Senator or Senator’s spouse who has been participating in the federal employee’s health program cannot be denied coverage by any subsequent employer plan or in the individual market. This guarantee also applies to every other American who is currently in an employer plan under federal law.
2. What’s good about current law: you can’t game the system. At least not completely. Access to insurance is only guaranteed if you (or your employer) have been paying premiums into the system. Elizabeth Edwards apparently thinks insurance companies should have to insure cancer victims even if they were willfully uninsured and paid no premiums during all the years when they were healthy. Were that rule in place, we would all stay uninsured while healthy and rush to get covered only after we get sick. Only sick people would have insurance and the insurance would be very, very, very expensive!
3. What’s good about current law: it is enforced by the states. Federal law is enforced by the states and they do so in different ways. Also states are free to experiment with other reforms and there is no one-size-fits-all solution. Gov. Romney has implemented radical reform in Massachusetts. Gov. Schwarzenegger proposed a different reform plan in California. Other reform plans are being tried in Florida, South Carolina, Indiana, Oregon and elsewhere. Let a thousand flowers bloom.
4. What’s bad about current law: potentially smaller benefits and higher premiums. Depending on the state where you live, the new plan (to which you have guaranteed access) may not have the same benefits as the old plan and the premium may be much higher.
5. The solution: portable insurance. When a Dallas Cowboy becomes a New York Giant, he keeps the same health insurance plan, regardless of past injuries. When a United Mine worker moves from one employer to the next, he keeps the same insurance plan, regardless of preexisting conditions. The ideal solution is to let other people have what football players and mine workers already have: personal and portable health insurance.
6. The solution: creating a market for chronic care. Were John McCain to leave the Senate, he would be in Medicare. If he enrolled in a (private) Medicare Advantage plan, Medicare would pay a risk-adjusted premium – higher than average, because of his preexisting condition. In this way, Medicare encourages private plans to compete to enroll people with health care problems and search for ways to efficiently provide their care. In the Elizabeth Edwards’ world, by contrast, health plans would try to avoid the sick and if they failed at that, their incentives would be to underprovide care. For a demonstration of how truly bad an Elizabeth Edward’s world would be, see our analysis of managed competition.
Key questions for Elizabeth Edwards:
1. Do you really want a health care system in which insurers have incentives to attract the healthy and avoid the sick?
2. Do you really want a health insurance system in which every health plan has an incentive to overprovide to the healthy and underprovide to the sick?
3. Do you really want a health insurance system in which people who remain uninsured while healthy are allowed to get insurance (without penalty) after they get sick?