The reason Reid dropped the annual limit from the Senate bill was to make his bill appear cheaper in the CBO score, and make insurance premiums appear lower. (Via Ezra Klein)
Hill sources explain that this was inserted because CBO said premiums would “go through the roof” if insurers couldn’t cap benefits. The official quote from Jim Manley, Harry Reid’s spokesperson, says much the same thing. “We are concerned that banning all annual limits, regardless of whether services are voluntary, could lead to higher premiums,” he explained. “We continue to work with experts on how best to accomplish our goals of preventing insurance companies from imposing arbitrary coverage limits while providing the premium relief American families need and deserve.”
This is true. Fake insurance will always have much lower premiums than real insurance. Requiring insurance companies to actually pay for people’s health care when they get really sick does cost more money. It would be much cheaper for insurance companies if we let them cut the sick off and let those people die from lack of care while drifting toward medical bankruptcy. If I could set an annual limit at $100, I could sell “health insurance” with very low premiums.
I do not buy the argument that premiums would “really go through the roof.” The CBO scored the House bill, Senate HELP Committe bill, and Senate Finance Committe bill–all three bills banned annual limits, and their projected premiums might have been slightly higher than Reid’s bill, but not by much. The annual limit did not make them go through the roof, unless the CBO did not truly score the bills as written (if that happened, we have much bigger problems). It seems Reid condemned millions of the American most in need to medically caused financial ruin so that his bill’s price tag and premiums appeared cheaper. That is a lot of suffering to cause for a few dollars off premiums and some minor PR.
Of course, eliminating the ban on annual caps makes a mockery of the entire idea of “insurance.” If it will not help you when you really, really need help, it is only a cruel joke. Forcing people to buy expensive private insurance is bad politics and public policy. Forcing them to buy expensive fake insurance that will be taken away from them when the need it the most is pure evil.