Insurance company wrong-doing no rationale for government health plan
by Brian Schwartz | 1:30 am, November 30, 2009 | Comments Off
The Denver Post published my letter to the editor on October 31. (Yes, I just saw it now.)
Re: “The cost of failure on health care for Colorado,” Oct. 28 online-only guest commentary.
Say your neighborhood deli rigged its scales so that customers who paid for a pound of meat left the store with less. Does such fraud justify a government-run “public option” for delicatessens? Surely not, but this is how Colorado AFL-CIO Director Mike Cerbo argues for a new government-run insurance plan. Cerbo says it should “impermissible” for insurers to “drop coverage due to pre-existing medical conditions” — presumably when patients had been honest about medical histories. This is called “post-claim underwriting,” and it violates the insurer’s contract with the policy-holder. But this is no justification of a “public option.” Rather, if it happens frequently and without penalty, it shows that government has been lax in one of its legitimate duties: enforcing contracts.
Thanks to Tyler Cowen and Scott Harrington for having made this point earlier.
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