Democrats are in turmoil. In the wake of last week's Republican Senate victory in liberal Massachusetts, there's no agreement about what to do with the government health care bill. A dazed Speaker Nancy Pelosi admitted she didn't have the votes to pass it in the House, but House Majority Leader Steny Hoyer and Senate Majority Whip Dick Durbin still seem determined to ram it through.
President Obama and some other Democrats are putting out sounders about scaled-down health regulations. Striking his new populist pose, Mr. Obama told ABC News, "We know that we need insurance reform, that the health insurance companies are taking advantage of people." The problem with the president's anti-business stance is that if enacted into law, it will destroy private health insurance.
You don't have to take our word for it. Liberals like New York Times columnist Paul Krugman are warning about the president's suggestion. Regarding the regulation to forbid insurance companies from taking into account preexisting health conditions, Mr. Krugman wrote, "healthy people [will] choose to go uninsured until they get sick, leading to a poor risk pool, leading to high premiums, leading even more healthy people dropping out." In other words, proposed regulations would produce more uninsured Americans and higher insurance costs.
To illustrate how bad this idea is, imagine if motorists could buy automobile insurance right after an accident and then were allowed to drop it once the car was fixed. Without revenue from regular premiums, insurance companies couldn't cover all the claims and would go under.
In the current Senate bill, people who didn't buy insurance would be fined on an escalating scale that would start at $200 in 2014 and peak at $750 by 2017. In 2008, the average price of an insurance policy was $4,704 for individuals and $12,682 for a family of four. It's not hard to see how quickly private insurance companies would go bankrupt with those numbers.
Some Republicans are tempted to support this faux reform. If they do, they will share the blame with Democrats for the impending insurance collapse.