President Obama’s largest legislative accomplishment to date was the passage of the health care reform law, which has been going into effect in stages, with regulations currently being written for the most substantial changes due to take effect in 2014. So it is odd the President mentioned health care only briefly, and in passing, in his State of the Union address last night.
Perhaps this has something to do with the fact that the law remains deeply unpopular with a skeptical public, or the fact that despite some provisions “to increase coverage” have already gone into effect, the percentage of American adults without health coverage has increased to an all-time high of over 17%.
Still, it’s worth looking at the two sentences of the speech that dealt with health care. First, President Obama said, “I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men.”
For his first example, he would have to go back very far indeed – for decades, it has been illegal for health insurance companies to cancel polices, except for fraud or misrepresentation by patients. The relevant section of Obama’s health reform law merely restates, at a federal level, what was already the law in all 50 states. Even prior to the passage of those state laws, traditional contract law – which predated the invention of health insurance by several centuries – prevented insurance companies from having “unchecked power to cancel” contracts they had entered into.
As far as health insurance companies denying coverage, this is a particularly odd claim to make. The primary federally-run health program is Medicare, which denies a higher percentage of claims than six of the largest seven health insurance companies. And unlike with private health insurance companies, when Medicare denies coverage, the patient can’t sue claiming that coverage is required under the insurance contract – because there is no contract. Unlike the case with insurance companies, Medicare’s claim denials are effectively final.
And while in theory some states allow for rating differences based on the difference in health care costs between men and women, this affects only those with individual, non-family, non-employer-based coverage – that is, substantially less than 5% of the insured population, and only in some states. Men and women covered through their employers pay the same rates, as do those with family coverage.
Obama second statement about health care – from a much later point in the speech, is even more at odds with reality: “I believe what Republican Abraham Lincoln believed: That Government should do for people only what they cannot do better by themselves, and no more. … That’s why our health care law relies on a reformed private market, not a Government program.”
Health insurance was invented by private companies in the mid-nineteenth century – far closer to Abraham Lincoln’s time than the present, and almost a century before Medicare and Medicaid. And apparently the insurance companies did such a good job of developing their product that it’s now considered a travesty that anyone goes without it.
Yet despite President Obama’s description of the new health care law as a “reformed private market, not a Government program,” the government will determine the benefits – which will be essentially the same for all health plans – while regulating every aspect of the financial arrangements – the premiums, deductible, copayments, and loss ratios – and require every virtually every American to enroll. This arrangement is not a “market” at all, and is “private” in name only. Whether it can “do better” than what they people have done for themselves for over a century remains to be seen.
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