I’m up at Spot-on with a few thoughts about the current state of the healthcare reform movement. You’ll get the gist of my argument from the title. The piece is called  "Why Healthcare reform won’t work."  As usual, return to THCB to leave your comments. If you want more, go look at my last column "The Bush Health plan."

It’s taken quite a bit of the time. But the efforts by Republicans George Bush, Arnold Schwarzenegger, and Mitt Romney have finally convinced the national press that the rash of cancellations in the individual insurance market is a story worth writing. Perhaps it’s because we’re now discovering that this is a national phenomenon.

It’s somewhat older news here in California where it looks as though the state may decide that any retroactive cancellation of policies needs to be reviewed by an independent official. One Californian insurance company, Kaiser Permanente, caught with its hand in the cancellation cookie jar has already proposed something similar but it’s less likely that competitors WellPoint (Blue Cross of California’s parent), HealthNet and Blue Shield of California will be quite so thrilled.

Blue Cross of California, one of several plans being sued in California, says that it rescinds an average of 1,000 policies each year out of about 260,000 new individual enrollments — less than one-half of 1%, says spokeswoman Shannon Troughton.

WellPoint is strictly speaking right to say that less than 1% of its applications get canceled. But it’s evident from the various testimony already leaked from depositions of Blue Cross of California’s employees that the applications of any individual policyholders submitting high claims were routinely subjected to a review looking for the slightest excuse to cancel the policy. But that’s not the heart of the matter.

The issue is that we have an individual insurance market which is designed to stay away from the care of sick people. And that’s why healthcare reforms, as they are currently proposed won’t really work. Continuez …

With support apparently growing for the Schwarzenegger plan in California, opponents are already laying the groundwork for a legal challenge. The Financial Times (UK) quotes business sources as saying lawsuits are  "all but inevitable" if the plan passes in Sacramento. That could tie the effort up in court "for years" — perhaps even until after the 2008 elections. According to the newspaper, challengers are likely to use a strategy based on the one used to overturn Maryland’s "Wal-Mart law" last month. 

"Jack Bovender, chairman and chief executive of HCA, the big hospital group, underlines the legal problems faced by such state efforts. "we’re pleased that some states have recognized the gravity of the issue of the uninsured. However, a patchwork of state plans is problematic because of potential problems with ERISA (The Federal benefits law.) That 1974 statute, the Employee Retirement Income Security Act, in effect nationalized employer health plans to spare companies the cost of complying with conflicting state benefits.

"Legal challengers are (also) likely to claim that the plan imposes a disguised tax and so should require a two thirds vote of the  legislature, since California law mandates a super-majority for tax increases. Alternatively, opponents will try to use the Erisa law."