(HT Drudge Report) Ricardo Alonso-Zaldivar wrote a interesting article that describes how and why the Obama administration abandoned a part of health care reform that provides long-term nursing care including but not limited to nursing homes, home health aides for the disabled, etc. The insurance plan (CLASS: Community Living Assistance Services and Supports) was to be open to working adults regardless of preexisting conditions.
Insurance policies are inexpensive when the pool of insured consists a representative sample of society with the typical person facing a small probability of incurring the event such as a fire for a home, or an accident for a car that would result in a claim against the pool’s fund. Those with the greatest probability of needing the insurance will try to populate the pool. This problem is known as adverse selection. One method that insurance companies use to protect their profits and the cost of insurance for others in the pool is by eliminating those with preexisting conditions like a bad driving record or ill health.
The problem with CLASS was in the selection of the pool. The program was intended resolve the catch-22 facing those in need of long-term nursing care. They did not have the money to purchase the services and insurance companies would not provide funding for care of those with preexisting conditions. The young and healthy were to fund the self-sustaining as young, health workers insured themselves against possible long-term care needs and paid for older workers who had those needs. The Obama administration learned that eliminating people with preexisting conditions was not just a way to raise insurance company profits but a necessary means to establish an insurance pool. It is a market mechanism for rationing goods and services.
Health and Human Services Secretary Kathleen Sebelius acknowledged that the service cannot be provided with self-sustaining funding. Alonso-Zaldivar quotes officials who estimate premiums from $235 to $391, with some estimates as high as $3,000 per month.