A front-page Washington Post story reports today that there are $1.3 million people without health insurance in New Jersey. According to the Post, as a result of uninsured people receiving care without adequate reimbursement by the state, six hospitals have closed and half of those remaining open are operating at a loss.
The Post then goes on to identify some reasons the situation in New Jersey is so dire, including “underfunding of Medicaid and Medicare,” “state budget cuts,” “the proliferation in recent years of ambulatory care centers,” and even “illegal immigration.” The Post never explains though why the situation is worse in New Jersey than in surrounding states that are facing the exact same pressures.
The answer: too much government regulation. New Jersey has coupled 41 specific benefit mandates (including in vitro fertilization, contraception, and mental health parity) with “community rating” (which forbids insurers from offering different premium levels to different populations) and “guaranteed issue” (which require insurers to sell insurance to all potential customers regardless of pre-existing conditions) laws, resulting in exploding health insurance costs. As a result health insurance premiums have skyrocketed by 500 – 700%. The Council for Affordable Health Insurance explains why:
While mandates make health insurance more comprehensive, they also make it more expensive because mandates require insurers to pay for care consumers previously funded out of their own pockets. … Mandating benefits is like saying to someone in the market for anew care, if you can’t afford a Lexus loaded with options, you have to walk. Having the Lexus would be nice, as would having health insurance policy that covers everything one might want. But drivers with less money can find other affordable options: whereas when the price of health insurance soars, few other options exist.