Stop Us Before We Cheat Again

In his pitch for the Obama health care restructuring, Paul Krugman quotes a Reuters story about a young man who was denied benefits for a pre-existing condition even though he didn’t have such a condition when he got his health insurance. A check of the article shows that Krugman referenced it accurately. The young man sued and got a $10 million settlement. It’s hard to read that story and not believe that the company, Assurant Health, cheated him. If so (and the only reason I’m hedging is that my only source on this is Reuters), then the verdict was just.

Krugman uses this case to argue for the Obama bill. What’s the connection? Well, if insurance companies couldn’t exclude people for pre-existing conditions, then such cases would no longer occur.

But here’s what he doesn’t tell you. First, in that same Reuters story, someone else agrees with Krugman, namely, Don Hamm. Who’s he? None other than the president and CEO of the self-same Assurant Health. Here are the last two paragraphs of the Reuters story:

During his appearance on June 16 before the House Energy and Commerce Committee, Hamm, the CEO and President of Assurant, urged Congress to pass the new health care legislation, in part, to prevent such practices.

“We can achieve the goal we share — providing health care coverage for all Americans,” Hamm said. “If a system can be created where coverage is available to everyone and all Americans are required to participate, the process we are addressing today, rescission, becomes unnecessary.”

What about another alternative: allowing more competition. In the 1970s, when the Interstate Commerce Commission limited the number of companies in the business of moving people’s household goods, one nightmare Americans had was of having some of their valuables destroyed. Then, in the late 1970s and early 1980s, the ICC deregulated and we got more competition, lower prices, and more accountability from moving companies. Why not try the same thing with insurance: letting people buy health insurance across state lines so that they can choose states with relatively tough enforcement of laws against insurance companies that cheat their customers.