Guarantee issue with a weak individual mandate will not work!
President Obama, Congress and the mainstream media want to portray the insurance industry as the villain for bringing up legitimate points.
Insurance 101 says that insurance is a sharing of risk. That means you have enough good risks to offset the bad risks. Guarantee issue is not a problem if you cover enough people and have a balance of good and bad risks.
The problem that comes out of the Senate Finance Committee bill is that they want guarantee issue without really forcing participation. A $200 fine will not get enough healthy people to sign up.
Politically we do not seem willing to force people to buy coverage they may not want. Without a meaningful fine, many healthy people will opt out. You will have a disproportionate number of expensive unhealthy people in the pool.
As a general rule, 20% of the people will spend 80% of your claim dollars. It doesn’t take a rocket scientist to figure that rates will go up if you do not balance the pool with enough healthy to offset the influx of unhealthy people.
The PriceWaterhouse study may not be perfect but it does support what I have to say.
Wellman Shew
Fresno
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