Let Joe Camel Subsidize Health Insurance

I’ve been watching a replay of last Friday’s health care forum. Lefty Senator Jay Rockefeller has been blathering about evil insurers cancelling coverage for people with pre-existing conditions. Separate from debating the truth of the characterization, is this really a big problem?

I figure the Failed Obama Administration™’s own website, HealthReform.gov, should provide data well-suited to support a perspective that this practice, called “recission”, is a widespread horror:

A recent Congressional investigation into this practice found nearly 20,000 rescissions from three large insurers over five years, saving them $300 million in medical claims – $300 million that instead had to come out of the pockets of people who thought they were insured, or became bad debt for health care providers.

Math reveals there are 4,000 instances of recission per year, by a presumably worst-case estimate. The purported savings—added to the evil insurers’ bottom lines—is $60 million per year.

This is a trivial problem.

The denied claims—that’s actually what the issue is worth, economically—represent .00085% of the Federal budget. Eighty-five ten-thousandths of a percent.

And I suggest that there is a source of revenue that could be tapped to pay the cost without raising taxes. 1998’s Tobacco Master Settlement Agreement represents a payment stream of about $7,327 million per year spread across 46 States (the other four have separate agreements).

$60M ÷ $8240M = .0082 :: For 8/10ths of one percent of the fund States use to pay for anti-smoking ads, they could eliminate all the economic and emotional distress resulting from health insurance being cancelled for pre-existing conditions.

The problem, it seems, is not evil insurers. But instead, it’s stupid legislatures that would rather kill Joe Camel than care for John Q. Public.

I recognize that States have already folded Joe Camel’s kickbacks into their budgets. It’s not an untapped revenue stream. What I suggest is that, if health care is truly important, States should set their spending priorities to reflect that importance. Addressing the problem of recission in each State might require sacrificing improvements to zoos and concert halls.

But, for all the talk, only a handful of people actually suffer recission (by the worst-case stats). Way more people voters go to the zoo. Maybe the zoo can provide medical care to those denied human insurance coverage.