Plan for Uninsured in Florida Goes South (plus, Defending My Opponents)

This is one of the most predictable health insurance stories we’ve seen so far in 2008:

A report from the Center on Budget and Policy Priorities, a nonprofit policy research group in Washington, D.C., concluded that Cover Florida, a health plan recently implemented to provide coverage to some of Florida’s 3.7 million uninsured, is not likely to succeed …

Why was the failure of Cover Florida inevitable?  Because it avoided the tough questions.  Like so many political creations, it tried to please everybody.  It tried to reduce the number of uninsured without spending any real money, imposing any rules – or goring anyone’s ox.

Here’s a simple rule of thumb:  If the private sector could solve the problem of the uninsured on its own it would have done so already. It didn’t need Gov. Charlie Crist or the Florida Legislature to encourage it.

Cover Florida attempted to incubate inexpensive insurance plans that low-income Floridians could buy for $150 a month and up.  But economics is, in its own way, as inelastic as physics.  A plan that costs that little, and that receives no government subsidies, simply can’t provide very much coverage.

Besides, $1800 per year is a lot of money to lower-income people – more, in fact, that they can afford.  Most uninsured Floridians are in lower income brackets, and people in these brackets are rational economic actors like everyone else.  To the extent that they’re aware of Cover Florida, they’ll look at the premiums and find them unacceptably high.  Or if they get past that, they’ll look at the out-of-pocket costs and see that this plan won’t protect them from the risk of financial catastrophe …

… which is, after all, the original concept behind the invention of “insurance.”

Here’s the bottom line:  There was no way Cover Florida could provide a meaningful cost/benefit choice for uninsured Floridians.  Not without introducing something new into the equation: new revenue sources, new processes … new something.  And any plan like this will have low participation, which means adverse selection.

Gov. Crist made sweeping claims for Cover Florida:  “Competitive negotiations” would produce “an affordable, quality insurance product for Florida’s uninsured citizens.”  They would have “a robust set of benefits” with “no mandates for participation and no tax dollars.”

Sounds too good to be true … and it was.  A similar program called Health Flex had already failed in Florida, which raises this new initiative to the old definition of insanity as “doing the same thing over and over and expecting a different result.”

The problem of the uninsured will never be solved by “press-release policymaking.”  There are more than 40 million uninsured Americans, and sometimes it seems as if politicians have uttered a buzzword for every single one of them.

I’ll close with a defense of people I’ve disagreed with over the years:  Those of us who are health policy wonks have had more than our share of internecine battles.  I may think the folks at the Cato Institute are unrealistic about the free market, or that too many Democrats turned “shared responsibility” into an onerous burden for the working poor, or that some single-payer advocates are so inflexible it becomes counterproductive.  And they may all think far worse of me (if they think of me at all.)

But these sorts of policy debates need to happen if meaningful change is ever going to take place.  Everybody I’ve just named is willing to look past the bromides and feel-good cliches in order to fight the difficult fights.  They’re all willing to confront tough issues and struggle with hard choices in order to come up with real solutions.

I’ll take that over political happy-talk any day.

(Original reporting from the Orlando Sentinel via CovertheUninsured)