February 14, 2007

A Prankster in the RI Senate?

Justin Katz

I truly want to know the motivation behind proposed legislation such as this:

Sen. John C. Revens Jr. (D-Dist. 31, Warwick) has introduced legislation that would extend private health insurance coverage to dependents up to the age of 25.

The legislation, (2007 - S0327), targets individuals between the ages of 19 and 25 who are financially dependent but who are not in school full time. Under current law, insurers are only required to continue coverage for this age group if they are enrolled full time in school or have chronic disabling conditions.

“Allowing insurers to stop providing coverage for individuals in this age group can be potentially devastating, medically and financially, for these people and their supporting parents,” said Senator Revens. “We all know the enormous price of supplemental health insurance coverage, which makes it impractical for most, and the other temporary catastrophic programs don’t pay for doctor visits or pharmaceuticals these 19- to 25-year-olds might need.”

Is it naive dogooderism? Is it cynical vote buying? Is it backroom backrubbing? Is it self-interest? Or is it merely a practical joke? Because it seems to me that Rhode Islanders' representatives should be personally embarrassed and politically frightened to offer such bills.

As is a recurring theme in Rhode Island government, there appears to be an assumption that the targeted parties — in this case, insurance companies — will simply eat the additional costs resulting from legislation. They won't. They'll pass the cost on to payers — whether that means the taxpayers who fund RI's lavish public sector benefits or the businesses that supply health insurance to their employees — probably by increasing family plans across the board.

Although this might be news to those who've lived on the public dime their whole lives, in the private sector, businesses often pass additional family-plan costs directly on to their employees. Those companies that do cover employees' family plans will either cease to do so or find other areas of payroll/benefits in which to make up for the increased expenses. Whatever the case — and as is, again, a recurring theme in Rhode Island government — the upshot is that families struggling to get by in the leech-filled Ocean State, without public-union-bullied benefits or In Crowd largesse — will be the ones who bear the burden of ensuring that indolent young adults needn't worry about paying full price for prescription fungicides.

In fact, the only rational basis that I can see for such a policy in Rhode Island is to create financial incentive for those young adults who are not indolent, but motivated and unable to support themselves in this state, from seeking opportunities elsewhere. But they'll leave eventually, Sen. Revens. Why don't we just pass legislation to encourage a healthier state economy?

Here's a project for folks with more time to indulge in hypotheticals than I possess: What would be the cost to RI taxpayers if a married family with three 19–25 year old children all had public-sector jobs and piled their health insurance onto one plan, taking buyouts for the other four?

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The answer to your hypothetical would be: significantly less than the cost of five separate health care plans, but it is a trick question, as 19 to 25 year olds with employment would not be eligible for (or need) parental coverage.

A better hypothetical is "how many private sector workers benefit from the state health plan through spousal coverage, and should their employer contribute to the state for the benefit?"

Posted by: Jake at February 15, 2007 3:19 PM

Admittedly, my hypothetical was meant as an amusing extreme (which is why it's an addendum), but I'm not so sure that it is impossible, primarily because a non-exhaustive search revealed no definition of "financially dependent." Assuming that federal tax code provides somewhat of a guideline (albeit one that will continue to end at age 19), the son or daughter can earn up to half of the funds that support him or her and remain a dependent. I'm confident that scenarios exist in which a part-time and/or entry-level public employee would be eligible for healthcare benefits, but not earn half of his or her living expenses.

At any rate, in keeping with my expressed interest in motivation, I approached the question from the point of view of the beneficiaries — who would obviously prefer combined health insurance plus payouts.

As for this:

A better hypothetical is "how many private sector workers benefit from the state health plan through spousal coverage, and should their employer contribute to the state for the benefit?"

I wouldn't guess at the ratio, but I'm sure there are Rhode Islanders who use one spouse's private-sector health insurance and take the public-sector buyout. But if you're concerned about private companies getting away with not paying health insurance due to public employee benefits, I'd suggest that the solution is to bring the public sector more in line with the private sector and cease to offer buyouts. That way things would likely even out.

Posted by: Justin Katz at February 15, 2007 6:11 PM

How about this for financially dependent... my 24 year old son who has been unemployed for the past 4 years, and resistant to college education.

Posted by: smmtheory at February 15, 2007 8:50 PM

Some might think that the best approach to addressing this issue would be to create jobs that 19-25 year olds can work to get health insurance.

But here the Assembly decides the better option is to require insurers to cover them. I did notice that it says insurers can adjust premimums if this happens.

Maybe they think getting more 19-25 year olds will result in a decrease in premiums for everyone else because this is a group that normally doesn't have health problems?

Posted by: Anthony at February 16, 2007 8:26 AM

"I did notice that it says insurers can adjust premimums if this happens."

(Cue ominous music.)

Posted by: SusanD at February 16, 2007 1:12 PM
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