Tuesday, September 29, 2009

It's Not Reform, it's Redistribution

As the Congress fights bitterly amound themselves and their constituents at townhalls across America, we are getting closer to an actual government redistribution than we know with the healthcare bill.

Under healthcare reform, Obama proposes to require insurers to sell policies to everyone no matter their health status. This requirement, call 'guaranteed issue' would mean that insurers would cost sick people the extremely high insurance premiums that reflect their future expected costs. But, if Congress adds another requirement, called 'community rating', the insurer's ability to charge higher premiums for higher risks will be limited.

Example: a healthy 20 year old male and a 50 year old male with cancer would pay nearly the same premium for a health policy. Obama and the Dems emphasize the benefit for the seniors, but younger people, who may also have a lower income, would pay significantly more than their expected costs.

Senator Max Baucus added the 'individual mandate' clause, a legal requirement that nearly every American obtain health insurance or face substantial tax penalties.

The combination of a 'guaranteed issue', 'community rating' and 'individual mandate' would force the younger, lower income earners to subsidize older, higher income earners. And because these subsidies are buired within health insurance premiums, the massive income redistribution is hidden from public view.

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