Heritage Foundation ‘Scholar’ Doesn’t Understand Insurance

Of all the arguments against Obamacare, surely the most bizarre one is that healthy people shouldn’t have to buy insurance policies because their premiums will go to subsidize those who are less healthy. That is literally the entire concept of insurance. That logic apparently eludes even Heritage Foundation “scholar” Stephen Moore:

Doctors550

STEPHEN MOORE: I love this idea of passing it on to states and letting governors and state legislators figure it out. Look, Massachusetts is not the same as Texas. Texas will come up with kinds of reforms that fit their citizens. And Massachusetts can have a single-payer system if they want to. Why not let the states do it?

BROOKE BALDWIN (HOST): Stephen, what about — Let me ask you about a key piece, this is where people’s ear really perk up, is on pre-existing conditions, right? That’s a huge piece of this. And Republicans say yes they will be protected but it’s my understanding that the bill will actually give states the ability to let insurers raise prices on those with pre-existing conditions.

MOORE: Well, what you are going to have to do is have some kind of special fund so that people with pre-existing conditions are protected against price increases. But on the other hand, you don’t want — what happened in Obamacare, the disaster of Obamacare, is they put people with pre-existing conditions in the insurance pool with everyone else and that’s what led to the big increases in costs. And that’s why so many people who are healthy are basically saying, “Look, I don’t want Obamacare. I’ll pay the penalty. I can’t afford the high costs of Obamacare because I’m relatively healthy and I don’t want to pay for somebody who has got high health care costs.” People want insurance for their own families, not for other people’s families.

First of all, the cost of health insurance has risen significantly less quickly under Obamacare than before it. Inflation in insurance had been going up on an annual basis many times higher than inflation in general prior to 2010, but have gone up at a much lower rate since then. And that includes group insurance premiums for small businesses that are not purchased through the ACA exchanges. Moore is simply lying about that.

But he’s deeply confused, or at least pretending to be, about how insurance works. I suspect he does understand it but is deliberately trying to appeal to those who don’t by telling them that their insurance premiums are subsidizing sick people. Well guess what? That has always been true. Every single person who buys any kind of insurance but doesn’t use it much is subsidizing those who have insurance and use it a lot. If you buy car insurance but never have an accident or file a claim, you are subsidizing others who had many claims. That’s the whole idea behind insurance. It’s what insurance means, for crying out loud.

Moore is an economist. He knows this. But he has an agenda to sell and he knows that people are generally pretty dumb, especially conservatives. So he is shoveling out some manure for them, which they will eat up with a spoon.

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