How many times have I said it? When you outlaw cheap insurance, you create more uninsured:
Some colleges are dropping student health-insurance plans for the coming academic year and others are telling students to expect sharp premium increases because of a provision in the federal health law requiring plans to beef up coverage.
The demise of low-cost, low-benefit health plans for students is a consequence of the 2010 health-care overhaul. The law is intended to expand coverage to tens of millions of uninsured Americans, but it is also eliminating some insurance options.
Now the cheap insurance plans colleges offer aren’t great. They are available for about $100 a month or so and only cover the first $10,000 of medical bills. They won’t deal with a dramatic illness. But they do help some students deal with routine checkups, the occasional diagnostic test, the odd broken finger or whatever. But because Obamacare is phasing out lifetime caps on insurance, even these modest plans are either disappearing or seeing price hikes of 1000% or more. You can read more here from Avik Roy, who points out that these plans, while not perfect, fill a useful niche in the market.
What’s the Obama administration’s response to this carnage? Effectively it’s this: that people should pay more for insurance, because it’s for their own good. The costlier, more comprehensive plans offer more protection, and people should be forced to buy that extra protection, even if they think it exceeds their own needs.
In fact, that’s the entire Left Wing’s response to this. They point out that these plans cover only 7% of students, which is meaningless: it still means 600,000 people are being needlessly priced out of the market. They point out that Obamacare allows parents’ insurance to cover students under 26. But this almost meaningless since that was already the case through age 22; I was on my dad’s insurance until grad school. But in the end, it comes down to, “Well, they should get better insurance” as if the money for it is going to magically appear (more student loans, anyone?). And “better” insurance — defined as more expensive — isn’t always a great thing. Roy again:
It’s precisely the proliferation of overly generous insurance plans that causes runaway health costs in the first place. When you have a plan that covers everything, you tend not to be concerned with the cost-effectiveness of the care you receive. And that, in turn, leads to excess health spending, which in turn makes insurance costlier.
I personally would prefer students go in the opposite direction: get major medical, which would cover disasters with a very high deductible, therefore creating consumer pressure to publicize and compete on price. But that’s not in either party’s vision. In fact, the Arizona GOP just killed a law that that would require healthcare providers to publish price lists, creating precisely the kind of competition we need in the healthcare system.