New Publication: How Health Insurance Failed America

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FOR IMMEDIATE RELEASE: Wednesday, October 3, 2018
CONTACT: Erin Humiston, (972) 874-5139, or

DALLAS – The U.S. health insurance system has failed and left Americans without access to affordable coverage. Unless Congress repeals Obamacare or at least gives insurers enough flexibility to operate outside of its current restrictions, health insurance, and especially the individual market, will become even more dysfunctional and less affordable. 
In a new Institute for Policy Innovation (IPI) publication, “How Health Insurance Has Failed America,” IPI’s Dr. Merrill Matthews examines how politicians forced health insurers to abandon standard actuarial principles and have tried to turn health insurance into a social justice tool to achieve their vision of “fairness.”
“Health insurance (like any insurance) is supposed to protect us from catastrophic losses,” said Matthews. “Most insurance markets—life, property, auto, etc.—still rely on standard actuarial principles. Not health insurance.”
“Today, health insurance and the health care system are driven by perverse economic incentives, exacerbated by President Obama’s misnamed ‘Patient Protection and Affordable Care Act,’” said Matthews. “The more federal and state politicians and bureaucrats tried to improve access to quality, affordable health insurance, the less access people had,” Matthews said.  

“Politicians have turned health insurance on its head,” he said.
“Under Obamacare’s regulatory onslaught, insurance increasingly protects patients from costs they can easily pay, while exposing them to costs they cannot afford—on top of the sky-high premiums,” said Matthews, who also called out hospitals as another problem, with many charging outrageously inflated prices, especially to the uninsured. “Congress could have easily provided a solution for the relatively small number of uninsured individuals with a preexisting condition. Instead, Democrats chose to reinvent the health insurance system, and in the process made most Americans worse off.”
But there’s hope, said Matthews. If Republicans cannot repeal and replace Obamacare, a well-functioning health insurance system might still emerge if Congress or the administration implement policies that:

  • Encourage insurers to develop more flexible, short-term insurance policies for consumers;
  • Expand HSAs so anyone with high-deductible coverage would be qualified to have one;
  • Embrace “direct-pay,” bypassing third parties;
  • Promote alternative coverage options, e.g., life insurance policies with an accelerated-benefit option, as an additional safety net for patients facing high out-of-pocket costs; and
  • Block grant federal Medicaid and Obamacare subsidy funds to the states, which could offer more flexibility than a top-down distribution from Washington.

“It is time for health insurers to devise new options,” said Matthews. “We know the current system has failed, and the primary reason is government intervention in the health care system. Now those who passed the failed Obamacare system want to impose even more government.”

“A better solution is to let consumers buy the kind of insurance coverage they want, not what politicians think they should have, and give insurers the freedom to offer those policies,” said Matthews.

The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy organization based in Dallas. IPI resident scholar Merrill Matthews, Ph.D. is available for interview by contacting Erin Humiston at (972) 874-5139, or Copies of “How Health Insurance Failed America” are available at 



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