Critical Condition

Group, Not Individual, Health Insurance Is Failing

Last Friday, I encouraged a “new rule” about health-insurance horror stories: Back them up with full documentation. I noted that Rocky Mountain Health Plans, the non-profit health insurer which refused to cover a weighty baby in Grand Junction, Colo., had not helped matters with its press release describing that it had changed its mind and would cover the baby. RMHP suggested that covering babies was a new line of business, and that parents were increasingly seeking individual coverage for their kids. The assertion seemed a little mysterious.

Ana Wilde Mathews of the Wall Street Journal has suggested an answer. Ms. Mathews notes that employers are asking workers to cover more of the costs of covering their entire families. As a result, more working parents with employer-based health benefits are finding that individual coverage is better for their kids.

So, actual consumer behaviour is debunking President Obama’s assertion that individual coverage is three times more expensive than group coverage. It also makes Speaker Pelosi’s excitement about a federal “slacker” mandate, to keep kids on their parents’ plans until they reach 26 (!) increasingly irrelevent.

Furthermore, consumer behaviour is demonstrating that the employer-based group market for health insurance is breaking down. Rather than plastering over its cracks with so-called “public options,” “co-ops,” “gateways,” or whatever else they want to call them, it’s time to give every American the freedom to seek health insurance outside his employer’s control.

— John R. Graham is director of Health Care Studies at the Pacific Research Institute.