« Reasons We Stay In Afghanistan | destor23's Blog | Enough With The Bloomberg Ads! »

But I Want A Monopoly!


Okay, most of us around here don't support the Baucus bill but that's top be expected -- it wasn't written for us, it was written to win the support of the insurance industry because they're the ones that killled reform in the 1990s and they're ready to do it again. So, the theory went: get the insurers on board and you remove the most forceful opposition.

Well guess what, they got 90% of what they wanted out of Baucus and now the industry is not supporting it. Our side makes compromise after compromise with them and they turn on us the second they don't get their way.  This time the objection is that penalties for people who refuse to buy health insurance are too low.

Gee Karen Ignani, I'm so sorry that the law isn't toothy enough for you. How long would you like to have people incarcerated for refusing to buy your products?  Heck, let's execute them because that'll compel people to buy coverage and get us up to 100% covered by getting rid of the holdouts!

I think we've lost sight of how extraordinary the insurance industry's desire is here. If any other industry went out in public and said "Some people don't want to buy our product, their ought to be a law compelling them to" we would laugh in their faces. We would tell them to offer better products at better prices.

We've been debating the mandate around here since the primaries and I'm perfectly willing to just agree to disagree with some of you about it. But even if you think the mandate is the best idea around, you have to agree that it is, in fact, a subsidy.  You might think it's a great subsidy or one that will pay off but it is a subsidy and it's one that the health insurance lobby has thought a lot about.  The insurers are quite obviously convinced that if there's no public option available and the penalties for not buying from the private insurer are large enough that they will make money no matter what conditions are put on them as providers.  They claim they'll stop rescinding people's coverage, stop denying people with pre-existing conditions and will even give up caps on treatments so long as the US government forces people to buy their products.

This is why, by the way, the insurers are so against a real public option. It has to be their products that people buy.  No choices. Not even legally. And the consequences for not complying have to be serious.

Of course, in the Baucus bill as it stands, the consequences are already serious.  If you get caught without insurance the penalties are already high enough that you'd feel pretty silly -- you'd have no insurance and you'll have paid a fine that's more than what you likely would have spent on insurance premiums. Not good enough for the insurance lobbyists though. They want something draconian.

If we pass this mandate without a real public option then we're just writing the industry a check. But without the mandate, says the industry, everyone's premiums will go up because of the "Free rider" problem -- people won't buy coverage until they get sick!

Two things: First, we could solve that by regulating the premiums. We don't have to let them jack rates. Second, we don't actually know that there's a free rider problem. If there is, let the insurance companies document it and lets put their evidence up to scrutiny.  We're right now legislating based on an industry's self-serving and hypothetical claim.

There's a really good reason why the free rider problem might not manifest itself -- fear of serious sudden illness or injury.  Say you're walking around without health insurance and get hit by a bus.  How are you actually going to purchase insurance before the ambulance gets there? Exactly. Not an issue. People don't not have health insurance because they think they can get away with freeloading. They don't have it because it's unaffordable or doesn't offer enough benefits for the price charged. The real solution to the free rider problem isn't "make a law" it's more generous coverage at better rates.

But the insurance lobby doesn't want you to think that way.




43 Comments

| Leave a comment
user-pic

Destor:
I agree with everything you've said, with one exception: that "If you get caught without insurance the penalties are already high enough that you'd feel pretty silly -- you'd have no insurance and you'll have paid a fine that's more than what you likely would have spent on insurance premiums...."
Actually, Destor, that's only true for certain demographics. If, for example, you are self-employed and have to buy an individual policy; and/or, if you are above a certain age -- regardless of health history -- then the penalty, in dollars and cents, is far less than the premium.
I am 60, with no history of heart disease, cancer or diabetes. Yet my Cobra payment is $11, 184 per year with a $2500 deductible. When my eligibility for Cobra runs out in sixteen months -- when I will still be three and a half years away from Medicare qualification, what I will have to pay for an individual policy will be astronomical -- someone I know with a similarly clean history is currently paying $1400 per month with a $5000 deductible. So that's an annual cost of $13,600 for me before I receive any benefit at all and $21,800 for her.
If the penalty is $3800, then you can see that, as a matter of money, it is far cheaper to pay the penalty. Which is not to say opting to be without insurance is a wise decision -- obviously not. But there is already a dollar figure attached to the cost of premiums that is simply unaffordable to many. And those numbers will grow, especially in the pre-Medicare demographic.

user-pic

Good point, wwstaebler -- the overpricing of individual insurance policies means that the penalty isn't larger than the costs associated with a lot of plans. Now for that I blame the people setting the policy prices (and the people not regulating them) but I bet we're on the same side there.

user-pic

Part of the reason that your policy is so expensive is that so many young people do not have insurance. The system can't work if everyone gets more than they pay in. When everyone has insurance, the young subsidize the old, so that overall costs are affordable to all. Insurance cannot lower the cost, it only distributes the cost, but if there are too many elderly customers, too few young healthy customers, there is no way to distribute the costs. These same factors increase the cost of medical treatment, as hospitals and doctors redistribute the costs of the uninsured and the poor, and the amounts not covered by medicare, to those with insurance. This is why a medicare-for-all approach can't work, as there will be no one to pick up the uncovered costs.

user-pic

That is not why individual insurance policies are expensive. They're expensive because the risk isn't spread over a large number of buyers, which is what happens when corporations buy en masse for their employees. Punitive measures to force the young into buying a product from a for-profit company are not going to bring anyone else's premiums down.

user-pic

So, those who disagree with you do so because of a knee-jerk dislike of the insurance industry and not because of a reasoned point of view that the frame is false?

Classic.

user-pic

Corporations are mostly self insured, they only pay administrative costs to a plan manager.

user-pic

Your argument made perfect sense until your last sentence. If everyone (ok, theoretically) is covered, then there are no uncovered costs. It's all wrapped up in to the mandate, where the payments that people who have coverage (but aren't sick now) pay. If the price is calculated correctly, then all are covered at a standard rate.

Medicare right now, because it solely covers people that are expensive, is subsidized by the government. But if we have healthy people paying those subsidies, then maybe it would work. I'm curious what we are going to do with Medicare in the long term. It's like we are writing healthcare legislation while ignoring the crazy overweight uncle in the corner of the room who keeps asking for more portions of the mash potatoes.

user-pic

The uncovered expenses I referred to are those expenses that medicare disallows. Doctors and hospitals don't eat those costs, they jack up what they charge other people to get that money back. In effect, the privately insured are subsidizing those on medicare by picking up those costs.

An issue no democrat will touch is what to do with medicare if they get the 'reform' they want. Why have 2 systems, with duplicate overhead, one for those over 65 and one for everyone else. It makes no sense, except that if they talk about getting rid of medicare they are toast.

user-pic

because they don't have the votes for medicare for all.

user-pic

Then we tax the rich!

user-pic

...not to mention 70/30 co-pays and what are now essentially month to month contracts for coverage. (get sick and you can be dropped on 30 day notice)

user-pic

I hope no-one takes offense at this, but I think we should not let the insurance industry dictate our views. Specifically, if they favor something, we should not allow that to force us to oppose it; if they oppose it, we should not feel forced to favor it. We should be independent.

I say this because the recent insurance industrry (AHIP) complaints against the Baucus bill were mostly unjustified, but with one conspicuous exception. They correctly pointed out that a weak mandate that allows too many young, bealthy, low risk individuals to opt out will make insurance more expensive for everyone else. It would cost the insurers more, which is why they disapprove, but it would also cost more for most of the rest of us as well, which is why we should disapprove. It will offer them fewer subscribers, which is why they disapprove, and leave more Americans uninsured, which is why we should disapprove. That's true with or without a public option. It violates the spirit of shared risk that is an essential feature of all successful healthcare systems elsewhere, whether they depend entirely on public insurance, private insurers, or various combinations.

The insurers were wrong about other components of Baucus, and the criticism that most offends me is their complaint that proposed legislation would increase the extent of basic benefits that all insurance plans would be required to offer. If that slightly increases costs, it's an increase we as a society owe to those who are now underserved. Additionally, all the proposed reform bills will severely limit the ability of the insurers to deny coverage or discriminate against individuals based on health status. It would therefore level the playing field vis-a-vis subscribers. A public option would add a further benefit, but we shouldn't ignore what is already inherent in the package.

The industry specifically singled out the Baucus bill because the House bill, HR3200, and the Senate HELP Committee bill both propose much stronger mandates that would come closer to universal coverage of the kind the rest of the civilized world already enjoys.

user-pic

It has nothing to do with what the insurance companies believe and everything to do with the facts. As things stand now, the uninsured in America are mostly uninsured because their jobs don't offer them health insurance and they can't afford to buy it on their own. Nobody's trying for a free ride, it's just a fact. It's either not offered and it's unaffordable (or the insurance company rejected them for a pre-existing condition).

There is no evidence to support the argument that young people who can afford health insurance routinely refuse to buy it and free-load on the system. It's a nice story but there's no substance to it. So I say that before we pass a Draconian law at the behest of a well finance and well connected industry we at least ask for some real evidence.

The mandate is only essential if you want to rely on private health insurers to deliver universal coverage. Obviously, there's another way: a state run plan where the government just signs you up and your tax dollars make up for what you now pay in premiums.

You say the public option would be nice but isn't necessary. Okay, fine. But it's also not necessary that we be mandated to buy insurance from private companies. Adding a public option available to anyone who would prefer it solves that problem.

It's true that by definition you can't get to 100% coverage if you have people opting out. Fine, we can agree on that basic bit of math. But if you don't offer people a choice beyond the private companies then you really have no moral standing to demand that people not opt out. The insurance companies don't want this mandate for the good of the Republic. They are very specific about what they want: they want it to be illegal for people not to buy their products.

user-pic

I personally know a few young people who by choice do not have insurance because they don't want to 'waste' their money, also a number of artists and musicians who do not have insurance and rely on medicaid (even though they could afford insurance).

user-pic

The data show that among the many millions of uninsured, a substantial fraction are young and healthy, wherease others are neither. If both groups are mandated for coverage, premiums will be more affordable, but if only the older or unhealthy choose coverage, the premiums will be less affordable. Some of these individuals who are young and healthy can easily afford coverage, but many would have trouble and require help via government subsidies. They should be subsized, but opting out is not an acceptable alternative:

http://www.kff.org/uninsured/upload/7451-05_Data_Tables.pdf

Finally, those who could choose to opt out when they should be required to obtain coverage with subsidization as needed already cost the sytem hundreds of millions of dollars annually. It has been estimated that unreimbursed expenses (including those from ER visits) may raise the average family's insurance premium by about $1000 per year. Coverage for these individuals would provide care more efficiently, better for their health and for the economy.

Every other nation already recognizes universally mandated coverage as a cornerstone of a workable healthcare system. This includes the single payer nations, the many with various public/private combinations, and nations such as The Netherlands and Switzerland that rely exclusively on private insurers.

user-pic

The data, as best I can tell, doesn't really support your position here. Yes, rates of uninsured people are higher among the younger-than-34 crowd but they're not sky-high (under 35% at the peak, which seems to be right after college when people are getting starter-jobs) but you have to keep in mind that the younger generation is also smaller. So a bigger percentage of a smaller group doesn't mean more people.

People are more than willing to buy health insurance when it's available and when they feel they're getting adequate service for the price.

It's really up to the insurance companies to price policies so that people will want to buy them. Yes, that might cut into profit margins but cry me a river. Every company in this economy has to deal with the same problem of slimming margins to meet consumer demand. Why should the insurance companies be any different?

user-pic

As long as millions of low risk individuals can opt out, they needn't be the majority to raise the cost for others. I agree with you that people should be willing to buy insurance when it's available and provides adequate benefits. A mandate, therefore, while essential in my view for reasons I've outlined, must also be accompanied by whatever subsidies are needed to make it affordable for low income earners. What is still lacking in the proposed legislation, particularly Baucus, is adequate subsidies, but what is proposed is better than nothing.

Strengthening the subsidies would be a step forward. Weakening the mandate would be a step backward, but as I read the attitudes of the more liberal Senate Democrats, we are likely to see a strenghthening of the mandate in the final legislation. Eliminating it is extremely unlikely to happen. I believe the House will choose an even stronger mandate.

user-pic

I also think there's a vicious cycle element to a weak or absent mandate. It raises the cost of insurance for those who opt in, making opting out attractive to an increasing number of individuals, and so on, until we get to where we are now, and then get even worse, because if insurers are required to charge the same rate for the ill and healthy alike, that rate will skyrocket when more and more individuals with health problems reflect an increasing percentage of the insured.

user-pic

It's not just about subsidies for individuals. If the government is going to require me to buy something then it also needs to regulate the price of what I buy. We should regulate the amount of profit the health insurers can claim and the amounts they can compensate executives and other top earners. An insurance company, like a utility, shouldn't be allowed to raise rates without the permission of a government commission.

Fair's fair, Fred.

user-pic

I wouldn't be against that, but since it would run into almost insurmountable political opposition, we should ask whether that's the only way costs can be contained. I would answer that in other private insurer nations - e.g., the Netherlands - it's accomplished by competition. I expect that competition would be reasonably effective here, and in some markets, that doesn't yet exist. The Insurance Exchange would probably help to correct that. Would a public option help even further? Sure, but I don't conclude that if true competition among private insurers is guaranteed, then we wouldn't see reasonable cost constraints.

Right now, even in "competitive" markets, insurers compete by cherry picking subscribers to keep rates low, as well as by other maneuvers to avoid a level playing field, such as recissions or excessive copays. That's about to be outlawed.

user-pic

Okay, okay, okay Destor. But if we do start a game can I have that little shoe thingy.

I do not know why, but its lucky for me.

user-pic

I wanna be the iron!! I wanna be the iron!!

user-pic

We have a mandate now. It's called the payroll tax. What's the matter with some good old-fashioned taxation?! But let's go one better and make it highly progressive taxation (which of course the payroll tax is not).

Young people should pay if they are employed and can afford it just like everyone else. Tax those who can afford to pay. They often happen to be middle-aged which makes it a good deal for the young. Heck, think of all the doctors we could tax! The more they make the more we tax them.

The old saying is there's nothing sure but death and taxes. How about a little less death and a little more tax.

user-pic

You make it sound so simple, Bluebell! Which, of course, it is. Then you don't have to bother with mandates at all and for those who are worried about a tax increase... your insurance premiums ARE a tax, so it evens out.

user-pic

Payroll Tax is incorrect. It is the FICA (Federal Insurance Contributions Act) tax, paid by both employer and employee. It is quite busy failing to fill the looming deficits in Social Security and Medicare. None of that available for health care.

Note, Federal Deficit projected for 2009: $1,400,000,000,000 ($1.4 Trillion). Seems like a strange backdrop for adding another program.

user-pic

What do you mean? You just increase it but also point out that while the payroll tax will go up, people will no longer have insurance premiums deducted from their paychecks and it'll be a wash.

user-pic

What destor said plus you make it progressive. I'm all for big incomes -- just tax the hell out of them and we can start with Wall Street bonuses. Bonus tax!

It's totally unrealistic to expect to transform the healthcare system without raising the deficit or raising taxes. Can't happen. Maybe we get savings down the line but that won't happen over night.

But if you want to get rid of some programs - try the Pentagon and substract two wars from the budget.

user-pic

I'm in agreement with a progressive tax system; it already is progressive. Tax filers making less than $33k per year (50% of tax returns) earn 12.3% of income and pay 2.9% of income tax; those with Adjusted Gross Income above $410K (top 10%) earn 48% of income and pay 71% of the income tax. (2007 data, latest I could find).

Removing the Bush Tax Cuts will increase the progressivity, which is OK with me. Beyond that, though, and I think it becomes too much like California and the issues they have with tax revenue variability.

You'll get no argument from me about too much money wasted (and spent wisely) on the DoD. Too many bases, too many unnecessary programs (F-22 for example), too many overseas locations, too many wars.

user-pic

Dickday and LisB, I like you two very much so you can be whatever pieces you'd like and I'll be the thimble if it comes down to that.

user-pic

Dang, I was hoping to be the thimble.

user-pic

I've already decided if it is mandatory I won't participate. That's an easy choice. There is no way to submit to this. May as well say fuck freedom. The hassle isn't worth it. Many people will blindly cave to this and have no idea at all what they have done. Living free ain't easy. Patrick Henry was right. "Give me liberty or give me death". It's not even a choice. Government and corporations keep chipping away at our freedoms. Pretty soon all that'll be left is a pile of rubble. What a fuckup.

user-pic

So how would your "Fuck It" approach ... or "Freedom Approach"... or whatever you want to call it... How, exactly, would that help?

People need health care. It MUST be paid for somehow.

How would your approach cover that?

user-pic

I don't know that he's actually trying to solve that problem. I think he's saying that it's unethical for the government to require its citizens to buy products from private companies and he's planning to protest that. It doesn't solve the health coverage problem but it tackles another problem: the mandate isn't ethical as part of this plan (I maintain that as soon as you add a national public option and/or regulate the rates that people pay, you solve the ethical problem).

user-pic

You got it Destor. My point was we have to figure out at what point our freedoms trump government / corporations. Under the mandatory plan we losse a freedom and the insurance companies have a ton more money they'll surely use to good leverage in congress. Sounds like a loss all the way around to me.

user-pic

Well... I tend to agree with that in general.

Are you familiar with "MEDICARE PART D" ? (Prescription Drug Coverage).

I said over a year ago that Part D was the "Test Balloon" for Healthcare to come. (I sincerely hope I'm wrong about that)

Part D is Administered by Private (for profit) insurance companies...

ALL who sign up have to a pay a monthly premium (albeit a small one)...

AND the companies are "Subsidized" by the Federal Gov't on the backside.

They get paid up front... and they get paid in the back, too. PAYDAY for insurance companies.

BTW, The Gov't is NOT allowed negotiate drug prices, either. GAH!!!!!!

And now we see Pharma got real cozy with the WH early on... Betcha they're gonna be just fine.
>>>>>>>>>>>>>>>

I understand that being forced to buy coverage feels bad... but... Still... to just bitch and moan... and refuse to pay into a system from which YOU WILL BENEFIT seems wrong, too.

If you're not going to pay into it... are you willing not use it?

user-pic

It doesn't look as though the nations healthcare costs will decrease. That was the goal. All of this then becomes a charade and ends up merely putting money in the pockets of insurers. You don't honestly think we should be obliged to honor that do you? If citizens don't start to take a stand on the screwing we are getting it'll just get worse and worse. With out national cost of healthcare out of whack with the rest of the developed countries we are screwed when it comes to competing for jobs. I'm a Vietnam vet and I don't think 55,000 persons of my generation gave their lives for this pack of lies and I'd bet the troops in Iraq and Afghanistan don't think so either. There is no chance I am going to let them trample all over our freedoms like this. Not anymore.

user-pic

One other thing...

You're pissed that you may be REQUIRED to buy insurance, right?

Do you drive a car?

You are REQUIRED to have insurance to drive.

I realize that driving is a choice... Theoretically one could choose to NOT drive.

Living... Well... that's not exactly a choice. I mean... I didn't choose to be here in the first place. And, now that I'm here, it's not reasonable to expect me to drop dead rather than buy health insurance.

It may be apples and oranges...

BUT!!! Right this minute there are laws that REQUIRE you to buy insurance...

Do you drive?

user-pic

There is a notable difference with driving a car. The possibility in this instance is a one-on-one liability can occur with the possibility of lawfully negigent conduct or illegal action to account for. That is the very essence of why we have that requirement.

A unified public health system is different, with significant variation in scope and purpose. Your underlying premise of comparison is not valid.

user-pic

yes but,...."Freedom's just another word for nothing left to lose..."

user-pic

I was thinking of that as I was writing earlier.

user-pic

There has been some media discussion recently about whether mandated insurance (with or without a public option) might be unconstitutional. Most constitutional scholars, of which I'm not one, have said that the courts would probably decide it is. The constituion, in section 8, includes among the responsibilities of Congress "to provide for the general welfare"; that and the "commerce clause" are judged to satisfy the constitutionality criteria.

Other examples that have passed muster included the military draft. It is also true that our taxes are often spent by Congress to pay private corporations for products or services - e.g., Boeing or Lockheed for aircraft - even though we don't get to choose which private corporations our tax dollars are paid to. In the case of an insurance mandate, we would actually get to choose. If the choice included a public plan, all the better.

When it comes to freedom, I'm results oriented. We need to cover everyone, or as close to it as possible. The Institute of Medicine estimates that lack of insurance costs about 18,000 lives per years, and I'd like to see those individuals enjoy the "freedom" to live.

user-pic

I have no doubt that the courts would uphold the mandate if only because the justices will be wary of undoing legislation that's come from such a long and public debate. Of course, the Constitution protects a lot of behaviors that I find unethical...

user-pic

Does the Constitution really protect those behaviors you find unethical or do some judges just interpret it that way? I would bet a lot of persons might agree with your assessment.

Leave a comment

destor23

user-pic

Following: 96
Followers: 48

Posts
Comments & Recommends


  • Website: thosethingswesay.blogspot.com
  • Location New York City
  • Party We've thrown a few
  • Politics social libertarian, economic liberal, foreign policy skeptic.

Favorites

  • Favorite Blogs TPM, Atrios, Swampland, Forbes Trailwatch.
  • Favorite Books The Great Gatsby
  • Favorite Quotes Diamonds are forever and so is Ric Flair.

Bio

Writer, journalist, typist.

All Reader Posts
How to use myTPM

Advertise Liberally
Share
Close Social Web Email

"To" Email Address

Your Name

Your Email Address