Under Barack Obama’s plan, which is bogged down in Congress, the private-insurance market would expand dramatically—but so would regulation. The proposal would require all Americans to buy cover. To make it affordable, the government would regulate products and prices and offer subsidies for the poor.
The above quote is from a special report in last week's Economist on health insurance around the world, which situates the President's reform proposals in the context of how other countries treat health insurance. It's the shortest explanation of the reform bill I've yet seen (though I think my own is still the best).
The article also contained this bombshell graphic, which shows that the US health care system is hardly free of the hand of government, even relative to other countries:
Seen in this light, and explained so succinctly, the President's plan sounds like the moderate, common sense approach that it is. In contrast with its reporting on US politics, the Economist's international and business reporting is still quite good.
Since the Economist is now behind a pay wall, here's the full context of the quote:
In countries where state-financed health care is not available to all, some governments are worried that too few of their citizens have sufficient cover. They want private insurance to be expanded to cover everyone. The most prominent effort is under way in America, where about 47m people lack health insurance of any kind. Under Barack Obama’s plan, which is bogged down in Congress, the private-insurance market would expand dramatically—but so would regulation. The proposal would require all Americans to buy cover. To make it affordable, the government would regulate products and prices and offer subsidies for the poor.
This effort is similar to reforms undertaken over the past decade in the Netherlands and Switzerland. The Swiss were keen to expand access to all, and to contain costs; the Dutch saw private insurance as a boon both to consumer choice and to innovation in the delivery of health care. To ensure equitable access, both countries forbid private insurers from discriminating against applicants because they are in poor health or at high risk of falling ill. This practice, known as “lemon dropping”, continues in the American market for individual health coverage.
Inevitably, however, some insurers (say, those offering cheap, bare-bones packages) will attract younger, fitter and cheaper customers while others (with a reputation for quality or gold-plated coverage for chronic diseases) will attract the old, the sick and the costly. In the Netherlands, Switzerland and Germany, which copied some earlier Swiss reforms, regulations force companies that make “excess” profits in this way to hand over that money to those who end up with costly patients. Uwe Reinhardt, a health economist at Princeton University, jokes that Germany has the illusion of 200 private health insurers but because of risk adjustment it in fact has just one. The Dutch are now shifting from risk-smoothing after the fact to doing it even before the fiscal year begins.
Such a tightly regulated expansion of private insurance—in effect, turning health insurance into a utility—can expand coverage. European countries that followed this path now enjoy near-universal access. So does the American state of Massachusetts, which has implemented similar reforms. If Congress eventually accepts Mr Obama’s proposals, the rest of America will also see coverage increase markedly.
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