Adverse Selection

The leftists are all in a tizzy. A tizzy of their own making mind you.

But they’ll never see it that way. Because it was done “for the children” and the Insufferably Morally Superior Left doesn’t care about reality in their fantasies and delusions of “fairness” and “equality” in their own minds.

It makes them “feel good”.

Here’s a little lesson the Left refuses to hear about reality:

People who buy insurance often have a better idea of the risks they face than do the sellers of insurance. People who know that they face large risks are more likely to buy insurance than people who face small risks. Insurance companies try to minimize the problem that only the people with big risks will buy their product, which is the problem of adverse selection, by trying to measure risk and to adjust prices they charge for this risk. Thus, life insurance companies require medical examinations and will refuse policies to people who have terminal illnesses, and automobile insurance companies charge much more to people with a conviction for drunk driving or if you get into an accident (or if your neighbors are idiots you’re going to pay more because of a more adverse selection–that’s why “my rates keep going up but I haven’t caused any accidents”).

It describes a situation where an individual’s demand for insurance (either the propensity to buy insurance, or the quantity purchased, or both) is positively correlated with the individual’s risk of loss (e.g. higher risks buy more insurance), and the insurer is unable to allow for this correlation in the price of insurance. This may be because of private information known only to the individual (information asymmetry), or because of regulations or social norms which prevent the insurer from using certain categories of known information to set prices (e.g. the insurer may be prohibited from using information such as gender or ethnic origin or genetic test results). The latter scenario is sometimes referred to as ‘regulatory adverse selection’.

And regulatory adverse selection is what we have in droves in the Insufferably Morally Superior Left Health Care Cramdown.

And the little superior moralists are shocked and applauded that the insurance industry would actually follow these principle laid out above and not just roll over and kiss their morally superior asses and do  “the right thing for the children” and as they are told like a good little doggie.

Health plans in at least four states have announced they’re dropping children’s coverage just days ahead of new rules created by the healthcare reform law, according to the liberal grassroots group Health Care for America Now (HCAN).

The new healthcare law forbids insurers from turning down children with pre-existing conditions starting Thursday, one of several reforms Democrats are eager to highlight this week as they try to build support for the law ahead of the mid-term elections. But news of insurers dropping their plans as a result of the new law has thrown a damper on that strategy and prompted fierce push-back from the administration’s allies at HCAN.

The announcement could lead to higher costs for some parents who are buying separate coverage for themselves and their children at lower cost than the family coverage that’s available to them.

“We’re just days away from a new era when insurance companies must stop denying coverage to kids just because they are sick, and now some of the biggest changed their minds and decided to refuse to sell child-only coverage,” HCAN Executive Director Ethan Rome said in a statement. “The latest announcement by the insurance companies that they won’t cover kids is immoral, and to blame their appalling behavior on the new law is patently dishonest.

“Instead, they should reverse their actions immediately and simply follow the law. If the insurance companies can casually turn their backs on sick children now, who will they abandon next? This offensive behavior by the insurance companies is yet another reminder of why the new law is so important and why the Republicans’ call for repeal is so misguided.”

Health plans and state insurance commissioners in July raised concerns that the new rules could lead some insurers to stop children-only coverage because families could wait until their children get sick to buy coverage.

Days later, the Obama administration issued regulations clarifying that insurers would still be able to establish enrollment periods in accordance with state law.

“To address concerns over adverse selection, issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open enrollment periods if allowed under state law,” the Department of Health and Human Services clarified.

The issue had largely dropped out of sight since then, but insurers including WellPoint and CoventryOne have announced in recent days that they’re dropping children’s coverage in California, Colorado, Ohio and Missouri, according to HCAN. (The Hill)

I guarantee this is only the beginning. Trust me.

But the Insufferably Morally Superior Left will just sit there and be “appalled” and kick and scream and whine and moan “they aren’t doing what we told them to do whaaaahh!!!”

Then go to their government buddies and pass more regulations to have their way.

I say a new term in a headline recently that fit, LAWFARE. Waging a war by lawsuits and REGFARE, waging war by regulation.

That’s the Insufferably Morally Superior Left in a nutshell.

As I said repeatedly and often during the Health Care debate, it’s about the government and leftists wanting total control of who lives and who dies and you dependent on them for everything. Period. End of Story.

They want private insurance gone. But private insurance is not going quietly.

That would be a moral hazard.

In insurance markets, moral hazard occurs when the behavior of the insured party changes in a way that raises costs for the insurer, since the insured party no longer bears the full costs of that behavior. Because individuals no longer bear the cost of medical services, they have an added incentive to ask for pricier and more elaborate medical service—which would otherwise not be necessary. In these instances, individuals have an incentive to over consume, simply because they no longer bear the full cost of medical services.

And does this not sound like ObamaCare to you?? 🙂

Political Cartoon by Chuck Asay

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