By James K. Glassman
Tuesday, April 23, 1996 12:00 AM
Almost everyone describes the changes that Congress is about to enact in health insurance as "modest." I would put it differently: The changes seem small, but they are likely to have enormous consequences.
The reason is that the Kennedy-Kassebaum health bill won't solve the problems it promises to solve. New, stricter laws will be needed to correct the deficiencies, and probably more after that. Inevitably, Americans will arrive at the destination they rejected when Bill and Hillary Clinton proposed it: government-controlled health care.
At its heart, the bill does two things that seem worth doing. First, it makes insurance policies more "portable" by requiring insurers to issue you a policy if you lose or leave your job. Second, it prevents insurers from denying you a policy if you have a pre-existing medical condition.
Both of these measures seem humane and sensible. Unfortunately, they are also expensive. For example, if an insurer does not have the right to reject -- or delay for a long time -- coverage of someone who has a disease that's costly to treat, then the insurer will have to raise premiums.
The bill sponsored by Sen. Ted Kennedy (D-Mass.) and Sen. Nancy Kassebaum (R-Kan.) does not cap premiums -- which is why so many Republicans support it. But caps will come because the outcry over higher rates will be deafening, and politicians will be forced to respond. That's what makes this bill so insidious and its "modesty" so illusory.
Just take a look at what's happened in the state of Washington. The state's program, says an article on the front page of the Wall Street Journal, "contains many provisions -- broader public access to insurance rolls, portability and short waiting period for people with pre-existing heath problems -- that mark the health-care bills that congressional reformers are pushing."
The article continues: "But three years into Washington state's program, rates for its 400,000 individual policyholders are soaring, in some cases to triple their former level. . . . More than 30 insurers have notified the state they no longer want to do business here."
The Washington state program is broader than Kennedy-Kassebaum, but the effects are likely to be similar. What Congress wants to do is to force insurers to insure sick people. When that happens, everyone else will have to pay more in premiums. And when that happens, the healthiest people (mainly the young) will decide they don't need insurance at these prices, so they'll drop out of the system. And when that happens, premiums will increase even more sharply for those who are left, because the healthy people who subsidized the sick people will be gone.
Already, liberals are complaining that Kennedy-Kassebaum makes a cruel and hollow promise. In the New Republic, John Judis quoted Kennedy as saying, "Any employees losing group coverage because they leave their job or for any other reason would be guaranteed the right to buy an individual policy." But, writes Judis, "That statement, echoed by other supporters of the bill, is at best misleading and at worst false."
The reason, he says, is that "neither the House nor the Senate bill caps the premiums insurers can charge individuals who leave their jobs. Those with pre-existing conditions could pay premiums double or triple the average."
What will happen when premiums soar and insurers get accused of using astronomical rates to circumvent the aims of the reformers? Is there any doubt?
The history shows that once an entitlement has been created, it's nearly impossible to withdraw. This entitlement -- which comes close to the original Clinton plan in mandating universal coverage -- won't be rescinded. Instead, regulations and restrictions will multiply to solve the new problems that Kennedy-Kassebaum would cause.
Judis is correct when he writes that "there was a reason the Clinton bill was so complicated. Health care finance and delivery is a web of extraordinarily intricate relations where progress in one area can easily lead to regression in another."
But Judis sees this web as benign and necessary. Most Americans, I believe, do not -- which is why they rejected the original Clinton plan. It will make government too obtrusive in a personal part of their lives.
In backing Kennedy-Kassebaum, Republicans in Congress (including Bob Dole and Newt Gingrich) are betraying these Americans in order to meet immediate political ends: Kennedy-Kassebaum makes conservatives look compassionate, and it takes the volatile issue of health care off the table for the elections.
But the long-term price is far too high, as Tom Miller of the Competitive Enterprise Institute pointed out in a recent paper. He called Kennedy-Kassebaum "a Trojan pony" -- a nice term that suggests that, once the bill passes, the enemy will be inside the gates and impossible to eject.
Health insurance poses a difficult question: How much power should government have to force healthy people (of whatever age and income) to subsidize sick people? My own answer is that, with rare exceptions, these obligations should be discharged voluntarily, through personal acts of charity, rather than by government dictation.
The state, for example, does not require a life insurance company to insure someone who has terminal cancer and a year to live. Yes, life insurance is different from health insurance, but not much.
It's an issue that requires a thorough national debate, but the Kennedy-Kassebaum bill has avoided such serious consideration.
One reason is politics. But another is Nancy Kassebaum herself. A modest, intelligent woman, she's loved by everyone in Congress, and she's retiring. This bill is seen by her colleagues as her lasting monument.
But why not build a big building somewhere and put her name on it? That would be a lot cheaper, and less damaging, than taking an irrevocable step down a narrow path leading to nationalized health care.