by Rob Roper
What would you call a policy that drove up the cost of health insurance dramatically, caused people to drop their coverage, drove successful employers out of Vermont, and damaged the long-term financial health of the state? Would compassionate come to mind? Caring? Warm-hearted? Probably not.
However, these have been the documented results of healthcare policies called “Community Rating” and “Guaranteed Issue” – two policies embraced and defended by Governor Peter Shumlin at his recent campaign kick-off event at Nectars in Burlington and in the ensuing gubernatorial debate on VPR. Shumlin even went so far as to call his opponent’s desire to reform these policy fiascos as “cold-hearted.”
Vermont has had community rating and guaranteed issue since 1991/1992. In a nutshell, what they do is force insurance companies to charge young, healthy people and older sicker people equally despite the very real differences in risk to the insurer, and to accept clients regardless of health status.
According to a recent study by the Milliman, in 1994 the average annual cost of an individual health insurance policy in Vermont was $806 and 31,257 individual Vermonters took advantage of the low price tag to purchase insurance on their own. By 2010, Vermont’s community rating and guaranteed issue “reforms” had driven premiums to $3683 per year, and just 4482 could still afford the bill. Almost 27,000 Vermonters dropped their coverage.
Between 2000 and 2010, the costs for small group market coverage rose from $1,996 to $4,154 and the number of covered lives dropped from 46,349 to 23,688. Costs for association plans also more than doubled from $2,134 to $4,608, but Associations did manage to keep their number of insured stable, starting at 74,131 and ending with 74,693 with peak coverage of 114,384 Vermonters in 2005. The Shumlin Administration’s answer to association’s success in maintaining levels of coverage and controlling costs? Basically outlawing association plans in H.559, passed into law in 2012.
Millman originally came out with their study in 2007 of eight states (Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington) that had adopted guaranteed issue and community rating. They recently updated it in May of 2012. The results in all eight states are pretty damning to community rating and guaranteed issue. As the report itself states:
Although results varied widely among the eight states, in general we found that, measured in terms of market size, level of premium, and availability of insurance options, individual health insurance markets deteriorated after the introduction of GI and CR reforms. Often, insurance companies chose to stop selling individual insurance in the market after reforms were enacted which resulted in a decrease in competition.
Enrollment in individual insurance also tended to decrease, and premium rates tended to increase, sometimes dramatically. We also did not observe any significant decreases in the level of uninsured persons following the enactment of these original market reforms.
Faced with the reality of the situation – failure at astronomical costs — most of the states (the 2012 update also points out that two other states, Iowa and South Dakota, passed guaranteed issue laws in 1995 and 1996 and quickly learned their lesson, repealing them in 2004 and 2003 respectively) either jettisoned or made major modifications to their community rating and guaranteed issue policies. Vermont is, unfortunately, not one of them.
Randy Brock, who is running against Shumlin, has proposed reforming the policies that have driven up costs, driven out private health insurance providers, driven private policy holders out of the market into government dependence, and put Vermont on an dangerous financial path. With more and more Vermonters unable to afford private insurance, the burden on publicly funded healthcare services is skyrocketing and on an unsustainable trajectory.
Shumlin’s solution is a $5 billion government takeover of the healthcare system, for which he refuses to say how he will pay for it or what the benefits package might look like. It is a direction even the governor admits has failed every time it has been tried. Brock’s solution, on the other hand, is to embrace reforms that have actually been successful in other states. As this recent headline from the Maine Wire reports, “Individual health insurance rates set to drop by up to 60% as a result of Maine health care reform.”
What Brock is demonstrating here is common sense. What Shumlin is demonstrating here blind, stuborn adherance to a failed left wing ideology despite the proven harm its done to the people of Vermont. That, folks, is cold-hearted.