FreedomWorks

“[I]n the absence of universal health care, which is present in every industrial country in the world but the United States, guaranteed issue and community rating are the only humane policy.”

- Chairman of the Democratic National Convention and former Governor Howard Dean (D-Vt.), The New York Times, May 2, 2004

Guaranteed Issue: This policy, also known as “prohibiting insurers from excluding,” forces insurance companies to accept all applicants for health insurance regardless of the potential costs.

FreedomWorks Analysis: Government interference usually causes harmful unintended consequences and rarely the desired results. Prohibiting health insurance providers from excluding certain applicants may sound like a good idea, but doing so will only make health care less effective and more costly. There are alternatives to more intervention that can provide affordable insurance for those with pre-existing conditions without driving up the costs of insurance available to the rest.

If insurers are required to sell insurance to anyone who wants it, regardless of risk, they would respond by charging prohibitively high rates to those with pre-existing conditions in order to cover the potential costs or to avoid having to insure them at all. Lawmakers certainly foresee this possibility and will likely provide legislation to prevent such behavior by requiring insurance companies to offer insurance at mandated rates (called community rating, see page 8). When paired with community rating to remedy potential problems caused by guaranteed issue, companies might offer only services that particularly healthy clients would want—perhaps by offering very limited services for their potentially more risky patients in order to remain profitable. This will drive a downward spiral of government control with new rules requiring all insurers to offer more services (mandated benefits) to everyone who wants it (guaranteed issue) at the same price (community rating). This is the recipe for much more expensive insurance—or, more likely, for most private insurers shutting down, putting everyone in the government program.

Whether guaranteed issue is accompanied by price controls or not, it will distort the market for health care more severely than current intervention has. Alternative methods of offering affordable insurance to those with pre-existing conditions include health-status insurance and high-risk pools.

Fmr. House Majority Leader and FreedomWorks Fdn. Chairman Dick Armey says:

“The only thing ‘guaranteed issue’ guarantees is more expensive health insurance and more government involvement. Imagine if they did this to restaurants—if restaurants had to serve dinner to everyone who wanted it (guaranteed issue) from a longer menu (to qualify for the national exchange) at the same price (community rating). The feast would be great—except that all the restaurants would close shop before I got dessert.”

[click here for pdf version]

File Attachments
Guaranteed Issue.pdf	113.87 KB