The Boston Globe
June 30, 2010
Short-term insurance buyers drive up cost in Mass.
By Kay Lazar
The number of people who appear to be gaming the state's health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.
The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.
"The active members subsidize some of the costs tied to those individuals who terminate within one year," the report says.
Comment: During the reform process the concern was expressed repeatedly that an individual mandate - requiring individuals to purchase their own health insurance - would result in gaming the system. People would enroll when they needed expensive care, and then drop out after the care was completed. The experience in Massachusetts has demonstrated that it did not take long for the public to learn this game, for this is precisely what has happened. Nevertheless, the individual mandate is now the law of the land.
Options being considered to reduce this form of adverse selection include, as examples, allowing open enrollment for only one month per year, or increasing the penalty for remaining uninsured. Although such measures might reduce this tendency to game the system, they will not eliminate it.
It is the structure of the financing system that is fundamentally flawed. It cannot be fixed merely by tweaking the mandate, nor by tweaking the thousands of other provisions in this dysfunctional system. It needs to be replaced with a structurally sound system.
With a single payer national health program the issue of an individual mandate would be moot since everyone would be enrolled, automatically, throughout life.