In Massachusetts, the Health Insurance Game Adds More Players

How effective is the individual mandate to purchase health insurance in Massachusetts? For years, defenders of the plan have touted its effectiveness—both at getting individuals to buy into the system and at reducing the potential for gaming that comes when you require insurers to offer equally priced plans to everyone regardless of preexisting conditions. But a new report indicates that more and more people are ignoring the requirement and gaming the system instead—and causing the state’s already sky-high premium prices to rise as a result. From yesterday’s Boston Globe:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.

“The active members subsidize some of the costs tied to those individuals who terminate within one year,’’ the report says.

One insurer quoted in the article believes that this behavior adds $300 million a year in costs to the system. And, as the report explains, those costs are passed on to everyone who follows the rules.

Right now, it’s only a problem for Massachusetts. But soon enough, it’s likely to become a problem for the rest of us. Starting in 2014, the same combination—rules for insurers and a purchase requirement for individuals—will be in place nationally. And as Cato’s Michael Cannon points out, the penalties for non-compliance with the mandate in the federal health care overhaul are even weaker than the penalties in Massachusetts. That creates the potential for a lot more gaming, and far greater added costs to the system—and everyone in it.

The governor’s office in Massachusetts says it’s working to make rapidly hopping on and off of insurance plans more difficult. But as I’ve argued before, the rule changes Gov. Deval Patrick supports still leave substantial opportunities for determined individuals to take advantage of the system. More to the point, small regulatory changes are probably the wrong approach. The easiest way to fix the system is not tweaking the existing rules by adjusting the number of times an individual can move on or off the system in a given year. It's getting rid of the individual mandate and the insurance regulations entirely. After all, it’s tough to game the system if there’s no game to play.

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  • Jordan||

    They'll just do what Liberals always do when confronted with regulatory failure: bring the boot down harder.

  • ||

    What is it that RC says? "If it is foreseeable, it is not unintended". How can anyone be so stupid that they are surprised by this?

  • ||

    Close enough, John.

    Foreseeable consequences are not unintended.

  • ||

    They're unintended when they are written off/ignored by Those Who Care™ because they want to Make a Difference™

  • Almanian||

    So this is today's "Dog Bites Man" post, right?

  • Almanian||

    ...or "Cops Shoot Dog"...whichever you prefer

  • ||

    Actually dog bites are fairly rare these days. I think for the 20th century, cop shoots dog is the better catch phrase.

  • cynical||

    It's the 21st century now, old-timer.

  • LIBERAL TROLLBOT||

    HEALTH INSURANCE IS A RIGHT! HEALTH INSURERS MAKE ENORMOUS MARGINS! WHO CARES IF PEOPLE GAME THE SYSTEM, IT HELPS ALL OF THE PEOPLE THAT CHAD/TONY/CHICAGOTOM/DANT(SCOTCH) SAY IT DOES! SOME THINGS ARE TOO IMPORTANT TO TRUST TO THE MARKET! WHAT WOULD YOU LIBTARDS DO? LET PEOPLE DIE IN THE STREETS?

    YYYYEEEEEEEOOOOWWWWWWAAAAAARRRRRGGGGGGHHHHHHH!!!!!!

  • This||

    bitch would:
    TrickyVic|6.29.10 @ 4:33PM|#
    """How does the free market handle this?"""
    That's easy, you just don't like the answer.
    If you can't afford it, you don't get it. That's how free markets work.
    You issue isn't about free markets. It's about how to help those who can not, or choose not, to help themselves. That's not a function of a free market. That's a function of charity.
    If you're as poor as dirt, I hope someone will help you with your medical care. But you don't have a right to demand others to pick up the tab.

  • The Angry Optimist||

    So, is it your belief that we are "letting" people in Africa die on the dirt roads because we don't sell all of our stuff and give it to them? After all, $.01 above what you 'need' means that someone, somewhere, in someway, is starving "because" of your "lack of action".

  • ||

    Damn good point "Angry Optimist"

    I would add that what I find most annoying about the health care debate is the "all or nothing" aspect of it.
    A limitness amount of money can be spent on health care. A very good portion of it is wasteful - the waste exists because people believe someone else is paying for it.

    Speaking of gaming the system, I probably game the system by buying insurance - far more is spent on me than I put in. I am the 20% that uses 80% of the resources. Doctors see me and think, there's my yacht payment!
    Right now, there is no incentive for me to shop - I can't get the price of procedures - I have tried. Indeed, there is a disincentive - a second opinion is not covered, there is the game of not sharing medical records and tests among practicioners, etcetera (Oh, sure, my first cardiologist got my arterial scans to my new cardiologist - 6 months later.)
    Getting procedures done on me, and being cared for that results in optimal outcomes are two different things. Pay a man to cut, and you will bleed a lot. The very idea of paying for actions versus paying for expertize incentivizes screwing around. Just as competition and choice have resulted in better computers, the same could happen to medicine if we allowed. At one point in my life, I could not afford a computer - the answer in 1981 was not regulating the price of PC's.

    Now, some may say that you don't need a PC to live. Good point...but a good point must give way to better. In 1980 I was treated for cancer (Hodgkin's disease) a cancer that killed 90% of patients in 1965, AT ANY PRICE, while 90% survived in 1980.
    Which is better - statist care for all, or inovative care for some that will become widespread if effecacious?
    The fact is that rich people get "better" care than most people, generally the same way the rich drive better cars - Rolls and Bentleys. With competition, I can drive a car almost as good at the fraction of the price (a Hyundai - you laugh at my Hyundai? power windows, air conditioning, and on the Washington Beltway at 5 pm, it goes as fast as any Rolls on the beltway at that time). There is a lot of evidence that paying more doesn't get you better results. Open pricing, open results would do more to improve health care than do more of the same.

  • Jordan||

    Obviously this selfish bastard has an internet connection. How many Africans have to starve so you can troll blogs?

  • Selfish bitch||

    Jordan & TAO your idiotic arguments suggests we should not help anyone. Is that your excuse for not helping at all?

  • Jordan||

    Nope. They suggest we should not be forced to help anyone. I gladly give to charity and applaud anyone else who does.

  • West Texas Boy||

    No, their arguments suggest that it's not the government's (nor anyone else's) business or responsibility to compel them to help others. It's their choice alone.

    Similarly, they're not stopping you from sending every cent you earn to Africa or whoever else you think needs it. It works both ways.

    That's about as simple as the libertarian argument can be: nobody forces anyone else to do something he doesn't want to do. That doesn't mean that there isn't a right or wrong (or otherwise moral or immoral) course of action, it just means that YOU cannot make that decision for them. Only they can decide for themselves.

    And if you care to go down the road of defining morality - and the appropriate actions to take thereon - as whatever the majority or collective says it should be, there are plenty of people here who will easily take that argument and disembowel you with it. Tread carefully, uhhh, Bitch.

  • Who's Afraid of the BBL?||

    Nobody is suggesting force. That is the crux of this whiny libertarian dribble: They are going to enslave my goods and services! We pay taxes for our society, and our taxes should be used responsibly for the benefit of Its members. Health care is a basic tenet. 'Bitch Mam' to you dirt cowboy.

  • West Texas Boy||

    By definition, government is compulsion.

    Now tell me that paying income taxes are voluntary. Go on. Please.

    Try again.

  • West Texas Boy||

    IS voluntary. My bad.

  • Who's Afraid of the BBL?|||

    WTB, taxes originate from your duty as a citizen. Since you're not paying state, you have it made. "Go on. Please" should be: Go on, mam. Please. I am starting to think you are a NYC Texan!

  • CJ||

    We pay taxes for our society, and our taxes should be used responsibly for the benefit of Its members.

    If I get health insurance, it's not a benefit to me because I have no desire to live to 95 or some other obscene age, and it's even a negative to me because I'd rather have more money now.

    If I get health insurance, it's also a negative to you and many other members of the country because my living longer means I'll be voting against and opposing policies you and others would like to see enacted for that longer period of time.

    The argument about unpaid emergency room bills is more compelling, but all told I'd sign a document that would deny me admission to emergency rooms (if I couldn't pay) if that document could guarantee I wouldn't be fined for not having health insurance. Too bad the notion of choice is dead in the country unless it's used in fringe circles or in the context of abortion.

  • West Texas Boy||

    Seriously, forcing "insurers" to cover people who are already sick complete eliminates the purpose of "insurance." It's now just a payment plan. How totally fucked up and stupid is that?

    Why can't we have a system where people can still buy actual *insurance* and, as these idiots desire, also let them have their own prepaid healthcare plans that reflect the true cost of their care? Why can't responsible people have their own system and irresponsible people have whatever fairy dust system they want? Why does this shit have to be MY responsibility? Why do we let these idiots vote in the first place, and thus force our representatives into this stupid kind of shit that affects everyone?*

    * Note - entirely hypothetical series of questions, except maybe the last one... which kind of answers the hypothetical on its own, I know.

  • ||

    Wait.....so when people are incented to act in a certain way they actually act that way.....I'm shocked by this. Surely no one could have predicted such a result. I'm confident that changes will now be made to address this unforeseeable problem.

  • Jordan||

    And people wonder why health insurance is so freaking expensive. It's because it's not insurance; it's a third-party payment system.

  • West Texas Boy||

    Kind if a self-fulfilling prophecy, no? A death spiral much like many of the other free-ponies-for-everyone death spirals we see so often today.

    Dipshit: I want my insurance to cover my (elective procedure).

    Legislature: OK. Done.

    Insurer: Fine, but it's going to raise your premiums.

    Dipshit: That's OK, I'm not paying for it (tee-hee).

    Employer: Premiums are going up this year. To pay for it, we're taking more money out of your paycheck.

    Dipshit: THIS IS AN OUTRAGE!!! WHY DO MY PREMIUMS GO UP EVERY YEAR!

  • PR||

    I like that Suderman. It's the people who make the logical choice who are "gaming" the system, not the ones who insisted on redefining the meaning of insurance to accomodate their gaming.

  • ||

    Gaming the system = deriving some benefit from the system by understanding and responding to the incentives in the system.

    As opposed to just being a good mule for Our Masters to flog for their various income redistribution schemes.

  • Chony||

    Those who try to game the system by not having health insurance until they need it are not at fault. They have been brainwashed into trying to make an extra buck by the capitalist system you libertards support. Stop blaming people for behaving the way they are supposed to in a ruthless, dog eat dog system you believe in.

  • Jeffersonian||

    This isn't stupid enough to be a real Chony.

  • West Texas Boy||

    +1

    But your heart is in the right place.

  • Chony||

    Yes, the collective heart of the progressive movement is in the right place. Finally, a libertarian has admitted that.

  • ||

    Lots of libertarians have long maintained that liberals are generally well intended. And their statist policies generally lead to where the road paved with good intentions usually goes.

  • Hugh Akston||

    HA HA HA HA HA HA!

    Burn Baby Burn!

  • x,y||

    those costs are passed on to everyone who follows the rules.

    Not true. The people "gaming the system" are in fact following the rules. The difference between them and the people still paying their insurance premiums is that the former are following the rules better.

  • Paul||

    I think it's been said here before that in a world where healthcare is a right, then there is no such thing as "gaming the system". You're either receiving healthcare, or you're not.

    Which means that if regulators acknowledge that people are gaming the system, then they don't beleive their own trope that healthcare is a right.

  • ||

    "Romneycare" wasn't under maximum scrutiny during the Obamacare debate because it happened in Mass., a state that no one cares about unless the Red Sox are active. For the benefit of the nation, "Romneycare" (or "terminator care", if you prefer) should have struck California first, where people who game the system are either 30-40% of the 30 mil population or elected politicians. The resulting devastation would have served as a helpful reminder of things to come under O-care.

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