Be careful what you wish for: health insurance without regulation

An oft-repeated goal of reform opponents is their desire to ‘get the government out of health insurance’.
Let’s say they get their wish, and the vaunted free market is allowed free rein (or reign) to do as they would. What happens?
A lot and none of it good.
Insurers would be able to cancel policies when insurers have the temerity to fall ill.
Individuals with pre-existing medical conditions would not be able to get insurance to cover those conditions.
Employers with aging and/or sicker workers would find coverage language carefully crafted to exclude payment for those workers.
Insurance premiums would be lower, for those who could get coverage.
Larger employers (who tend to be self insured) would be little affected by these issues, at least initially. But over time their costs would increase as providers shift cost to them to cover the expense of treating the growing pool of uninsured.
Those with chronic conditions, the people responsible for three quarters of our health care costs, would in increasingly be on their own.
Local and state taxes would increase dramatically as governments struggle to balance commitments to their workers with protests from hard-pressed taxpayers.
Within a few years the insurance death spiral will have reached terminal status, and voters will be clamoring for any and all relief.
Will this happen? Without regulation, absolutely.
This isn’t to damn health insurers; they exist to serve their owners first and customers second. That’s not good or bad, it’s just reality.
But to hear the anti-government folk, all will be well if government just gets out of the way. Nothing could be further from the truth, and they know it.
What they really mean is government should have a lighter hand. But that’s not what they say and not what their supporters hear. These are the same supporters who would find themselves without coverage, without care, relying on charity if government wasn’t there to ensure insurers operate in a socially responsible way.
Todays version of regulation will slow down the death spiral process but will not prevent it. We are in a macro version of adverse selection; insurers are avoiding riskier individuals and employers, healthy folk are dropping coverage leaving the insured population older and sicker and more costly, and Medicaid enrollment is rapidly increasing as wages and employment stagnate.
What does this mean for you?
The only entity that can fix this is government. The free market has failed to control costs and failed miserably. The solution is apparent; change insurers’ motivations to reward them for care and cost management and not for risk avoidance.