In his mid-50s, George Kretchun was finally living the dream: After years of working for someone else, the Reidsville man opened his own catering business.Mr. Kretchun's problem was that he developed a liver condition several years ago. As part of a larger risk pool, such as a large employer, Mr. Kretchun's bad health draw would have been balanced by better health draws, making affordable insurance possible. However, as a self-employed person, Mr. Kretchun constituted a pool of exactly one. Insurance companies seeing his pre-existing condition would only offer him unaffordable policies. Mr. Kretchun's experience illustrates a well-known market failure that can arise in the presence of adverse selection.
But when he went looking for health insurance, the dream dimmed.
At his age and with a pre-existing condition, he faced paying more than $25,000 a year in premiums.
The Republican plan, which calls for ending end tax subsidies to companies for providing health care and replacing them with individual subsidies, would lead to the further dismantling of employer-provided care. The plan hails itself as providing "choice," but choice in the insurance market is a two-way street--insurers also get to choose how much they will charge each customer based on that customer's health.
Mr. Kretchun was eventually helped through one of those supposedly awful government-established and subsidized programs, Inclusive Health, North Carolina's high-risk health insurance pool. The pool is administered by a non-profit that was established by North Carolina with strict rules regarding how much it can charge and who can be admitted. The plan is targeted toward people who are unhealthy and who lack access to employer-based plans. Because insurance for these folks would be unaffordable to them, the plan is subsidized by the state. Inclusive Health is still much more expensive than the insurance available to currently health people, but it's premiums are nevertheless within reach of most people.
The Republican plan rules out "new government spending." However, individually-affordable high-risk health insurance requires some type of subsidy. The Republicans also criticize "public plans," like Inclusive Health thusly
Patients should be able to choose from a variety of private insurance plans. The federal government would run a health care system—or a public plan option—with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.Mr. Kretchun had his choice of market-based private insurance plans--the private insurance market failed him. As he put it "I don’t mind if they tell me you’ve got to pay double. But don’t tell me I’m not allowed to get any insurance." His experience shows that government intervention can be compassionate, socially efficient, and competent, "a God-send" in his words.
