Mitt Romney’s ‘Firing’ Comments Highlight Insufficiencies Of Health Care Proposal

Yesterday, I offered some context to Mitt Romney’s “I like being able to fire people” comment, arguing that his call for a greater reliance on individual health insurance plans would increase costs for many Americans, particularly beneficiaries who suffer from pre-existing conditions. The Incidental Economist’s Aaron Carroll also pinpoints why Romney’s belief that people can just fire health insurers is problematic:

First of all, let’s unpack the idea that if individuals have their own insurance, the “insurance company will have an incentive to keep [them] healthy”. That’s totally backwards. The idea that people might fire their insurance companies is exactly why they don’t have an incentive to keep you healthy. Insurance companies preferentially cover healthy people, and they want those who are ill to leave, or, better yet, not enroll in the first place. Captive populations, like those in the VA, or maybe plans with long-term contracts through big employers might have the right incentive, but the types of plans Gov. Romney seems to have in mind don’t do the very thing he is saying they do. Insurance companies have a vested interest in keeping you healthy when you can’t or won’t leave.

But that’s the least of his problems. The real issue, unfortunately, is that very, very few people have the luxury that Gov. Romney is endorsing. Let’s say that you are self-employed, and lucky enough to have found a company to provide you with health insurance. Then, let’s say you develop cancer. You suddenly find out that your insurance company stinks. So you fire them, right?

Of course not. You’re screwed. Now you have a pre-existing condition. There’s not an insurance company out there that wants to cover you. So you don’t fire them. You scream, and curse, and cry, but you’re stuck. Only healthy people have the luxury of picking and choosing.

The other piece of “incentive to keep [them] healthy” has to do with investing in prevention and increasing access to preventive benefits — the kind of services that many people in high deductible plans tend to skip altogether. In other words, as Jonathan Cohen points out, “deregulating the insurance market would make coverage cheaper for healthy people” as long as they don’t become sick or use too much care, but would also make it “less accessible for sicker people.”