December 17, 2007

Risky business

As the Legislature and the governor prepare to enact a far-reaching overhaul of the health care industry in California, I'm looking at the risks that come with the approach they are favoring. Here are the ones I can think of off the top of my head:

--Guaranteed issue, the requirement that insurers sell coverage to everyone without regard to pre-existing conditions, could push costs higher because it will bring sicker people into the insurance pool.

--Businesses that cover their workers now might stop providing insurance, opting instead to pay the fee required by the state.

--The tobacco tax will decline over time as fewer people smoke, and the payroll tax will probably not keep up with the rise in health care costs. This will probably mean that the program will run out of money soon after it takes effect and will have to be adjusted.

--Insurers might increase rates – increasing their profits even as they comply with the new mandate to spend 85 percent of their premium revenue on health care. This could increase pressure for rate regulation and regulation of hospital and doctor charges.

Any others come to mind? Send them along.

Posted by dweintraub on December 17, 2007 1:19 PM