Insurance industry renews offer to end underwriting

The main sticking point is this. Insurers will not accept government competition. They fear the government would take the best risks and leave them holding the rest.

The health insurance lobby has renewed its offer to end most medical underwriting in exchange for a mandate that every American buy coverage from them.

I wrote about this offer in November, but the new letter caused the Wall Street Journal to treat this as a new story.

In fact it looks like the same deal the industry was previously offering. Everyone has to buy, the industry has to offer everyone a price, but there is no assurance the price will be affordable, even though the underwriting standards are being relaxed.

The main sticking point is this. Insurers will not accept government competition. They fear the government would take the best risks and leave them holding the rest.

Republicans are still carrying the industry's water, and with filibusters routine that should be enough, unless Democrats can unite to force a proposal through under budget reconciliation rules.

It's in the question of who the mandate covers where that Republican coalition may rip apart.

If the mandate is placed on individuals, many will be left at the industry's mercy. If it is placed on employers, the business community is divided.

Large employers would accept a mandate, because pushing coverage on everyone lowers their costs. Small employers reject a mandate, because most offer employees no coverage today.

I have described the fight over health reform as one between buyers and sellers. It's important to remember that.

Hospitals, doctors, device companies and drug companies are all sellers. Employers and government are buyers.

Insurance companies are both. As buyers they want power to pressure sellers. As sellers they want the power to control prices and assure themselves a profit.

The question is whether the people paying their bills will give them this power over the market.

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