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More on health insurance mandates
Megan McArdle writes:
Tyler wonders what will be done with people who are required to by health insurance, but don't. The answer, I think, is "they'll get treated". The object is not to play chicken with people; we can't make a credible committment not to treat people without insurance (and thank god for that.) The object, as I see it, is to force the people who care about things like legality to get insurance rather than rolling the dice. The people who don't care about such things will continue costing us some fraction of the small amount that caring for the uninsured currently costs us now. It may only be a slight improvement, but it's still an improvement.
"Improvement over what?" is my query. I prefer taking the needy (some would say more than the needy, not I) and having the government directly provide health insurance for them. I imagine a better and no-real-role-for-the-states version of Medicaid, at the expense of Medicare (lots of old people are wealthy) if it fiscally must be. If it's worth forcing X to buy health insurance and then subsidizing X, it is worth giving X health insurance directly.
Avoiding the mandate keeps the private insurance market relatively "clean," as it were. Mandating private insurance means that the government has to regulate the content of that coverage and that private insurance will likely become more cumbersome and more contested and more expensive for everyone. It means we will never have true insurance deregulation; private plans should be free to compete, innovate, offer catastrophic-only plans, sniffles-only plans, and so on.
The benefits of the health insurance mandate are otherwise small. Many people care about "being legal" (the parents of uninsured 20 somethings?) but those people are probably the least likely to need the insurance. And I am leery of having a law that we know in advance we are not going to enforce. (It's not as if you post a 25 mph speed limit knowing you will only pull over the young people who look like criminals; in this case we're simply deciding on no enforcement or using some dubious bureaucratic tactic of differentiation across citizens.)
And aren't mandates more generally a dangerous and over-used practice?
So I say no, let's not do it. It might be better than doing nothing, but doing nothing is not the only alternative before us. Doing nothing is not even the likely alternative at this point. The mandates limit chances for better long-run reforms, though Matt and Brad will tell you this is single-payer, I will look toward insurance market deregulation. Only one of us has to be right.
Addendum: Here is Ezra Klein on same.
Posted by Tyler Cowen on October 9, 2007 at 07:32 AM in Medicine | Permalink
Comments
My wife, not PhD in anything, says we'll never know if Radiohead is worth a damn, because that would entail removing Faith No More's
Angel Dust from the CD play.
She also says right on to all the above.
Megan McArdle remains dear to our hearts for taking Gladwell behind the wood shed.
Posted by: Different Jeff at Oct 9, 2007 8:12:08 AM
It's hard to see the difficulty here. What if govt simply gave everyone a voucher good for basic health insurance, paid for by the usual taxes? Individuals so disorganized they couldn't be bothered to choose a plan and submit the voucher (which could be nothing more than your Social Security number, which you'd give to an insurer) would be assigned to a plan randomly. Voila, everyone has health insurance, everyone's a part of the system, and everyone pays. The rich could buy fancier plans of course and pay the difference. Employers are then free of this burden, insurance-inspired job-lock is abolished, the self- and unemployed are covered, people can move from state to state w/o worrying, hospitals are relieved of the uninsured, and we've avoided a giant govt single-payer system few of us seem to want. You may not like this plan, but it solves the problem of non-compliance, doesn't it?
Posted by: Daniel Akst at Oct 9, 2007 9:22:55 AM
Very nice point on passing laws that we don't want to enforce. Here in Bangalore, India the govt has made carrying a switched on mobile(even if you aren't using it) a crime when the benefits of this legislation are extremely dubious. It's obvious this is more grandstanding. The most dangeous thing is that politicians dont' mind passing a law like this, most citizens don't mind passing a law like this(knowing it won't be enforced) and thus are penal codes pile up with laws that make no sense at all and are basically electoral signalling devices.
Posted by: sa at Oct 9, 2007 9:25:31 AM
My idea:
Provide universal coverage with low deductibles for the poor and very high deductibles for the middle class and the rich. By high deductibles I mean like $100,000/year but based on one's last year's adjusted income. The tax any gap insurance heavily. The middle class and rich are almost all capable people and thus would not be likely to skip helpful preventive care even in the face of very high deductibles. My hope would be that this plan would drive prices down in response to the high deductibles faced by the rich and middle class, but the poor who might be inclined to not use sufficient preventive care in face of deductibles would be encouraged by the low deductibles to use preventive care.
The good news on healthcare is that things can't continue going in the direction that they are going. I see in this the good news that if Government does nothing people will more and more start to solve the problem in creative ways. If things can't remain this way they won't.
IMHO the biggest problems are over insurance, law suits and licensing. Also people who opt for less care or cheaper care should gain by it. E.G. people with living wills should gain by it.
Posted by: Floccina at Oct 9, 2007 9:58:28 AM
From early experience with mandated insurance, you overlook two important aspects:
1) Free-rider problems, from
a) The need to pay to those who have no insurance and need healthcare. Unlike home, auto, etc., we do not have a societal acceptance of abandoning them untreated. With home, auto, etc. if you are uninsured you risk bankruptcy.
b) The absence of the low risk participants from the insurance pool. The lowest insurance participation was from the under 30. By chosing to be uninsured, these low risk healthy people were placing their insurance cost onto the public. One of the reasons that mandating insurance is more palatable is that they do deserve and get lower insurance rates. The net impact on rates for the older and less healthy is thus small, but at least the older and less healthy are not subsidizing healthcare for the young and healthy.
2) Availability of insurance for individuals, consultants, and small businesses. This was a major problem. It is a major barrier to new businesses, consultants, and part time workers to have no ready access to insurance. Part of the mandate is a mandate to provide pooled insurance coverage to these customers. There is still a risk variable in the premium, but there is now a pooled risk option available. Experience had shown that over 16% of uninsured emergency care users had incomes over $100K, and about 60% were considered to have no difficulty in paying for insurance. One major excuse given was the difficulty obtaining insurance when you were not employed by a large firm. I know a number of consultants and small business owners who viewed this as the primary benefit from the new law.
The concern about establishing minimum coverages is quite real. This has been a difficult and contentious issue. I think that the minimums are too high, but the process followed and results have not been the lopsided welfare thinking that typified previous insurance regulation efforts in MA. It remains to be seen how this works out.
Posted by: rjh at Oct 9, 2007 12:19:25 PM
What Daniel Akst said, the state doesn't supply a check I can use to buy auto insurance.
Surely the idea is to link the two? Allow companies to buy insurance from any state. Now a state's desire to give away 'free' stuff is
balanced by it's desire to collect tax revenues.
How much less is health insurance in the state with the least mandatory add ons? Close to 20% less?
You can use your voucher on any state plan. (This will probably guarantee some level of coverage but result in a lot more options, less add ons, and cheaper plans?)
Link deregulation and vouchers for the unisured. Make the debate about socialist state run health care vs free market health care by removing the ohhhh look at all these poor uninsured people element.
Deregulate insurance, make it more market based, and provide the uninsured with badly needed care. (I am glad Glenn pointed out that
the real issue isn't that uninsured people cost us money, that state run single payer system would save us, but that uninsured folks are getting crappy health care.)
Posted by: SomeGuy at Oct 9, 2007 12:39:47 PM
Both here and politically people are trying to do too much with mandating health insurance. Healthcare has hundreds of serious problems. It will need hundreds of fixes. Trying to put too much onto any one fix causes more problems than it solves. My view of the purpose for the mandate in MA is the solution to one medium size problem:
a) too much money was going to those who were not poor. This percentage is much larger than the generally published 3% figure. 3% is percentage of overall costs. What mattered here is percentage of uninsured payments. It was more like 20% going to those who should not have been covered.
b) It was encouraging the wrong kind of behaviors
- Young and healthy patients were being rewarded for going uninsured. (They got free coverage).
- Marginal and poor patients were being rewarded for failure to take preventative actions.
c) It handled the needs of poor part-time workers especially badly, making it hard to transition from poor and unemployed to poor and working.
It does not attempt to solve all the other many problems in healthcare. It doesn't need to. Resolving cost and behavior inefficiencies in the provision of care to the poor is a sufficient goal for one change.
Posted by: rjh at Oct 9, 2007 1:05:59 PM
All the discussions on the "mechanics" of universal mandates seem to skip over a fundamental flaw:
The mechanisms of governments are being used to take assets (money) from individuals, and transfer them to others.
The only prescribed powers of our governments to do so are as taxation and under the "Police Powers" to bring the funds in as license charges, etc.
The current "mandate" policies seem to be founded ultimately on the collectivist concept that all assets and incomes are a social commonality, which have arisen or come into being as a result of the social order, rather than the social order arising out of individual human actions.
At the root of the "mandate fallacy" is the collectivist fallacy.
R. Richard Schweitzer
s24rrs@aol.com
Posted by: R. Richard Schweitzer at Oct 9, 2007 1:14:00 PM
Is it worth noting that medical service is denied every day to needy (in a medical sense) individuals under the system we have now? I understand that the system we have now disperses culpability, and that a nominally universal system under government mandate would put elected officials and bureaucrats in the position of facing bad headlines if service were denied to the needy-but-forgetful. Beyond that, though, if denial of service to some, at least initially, made the system work better, is that an ethical problem? As a fallback, we could make provision for signing people up at emergency rooms. Make provision to care for the non-insured if not mentally competent.
Posted by: kharris at Oct 9, 2007 1:30:54 PM
The health debate reminds me of the story of epicycles. If you don't remember this was a theory to explain the motion of the planets. Because of theological beliefs it required that heavenly bodies move in perfect circles. Unfortunately, in the real world planets move in ellipses. So circles were added to circles and as measurement accuracy increased so did the number of circles needed. The assumptions were wrong. Kepler reduced the whole thing to one simple formula.
In the health care issue the assumption is that people need insurance. To provide this we keep getting more and more epicycles. Special plans for certain classes of people, supplementary plans, Medigap plans, drug plans, catastrophic care plans and so on. The assumption is wrong. We don't need health insurance we need health care.
The insurance is an intermediary between the patient and the service. It provides no care of its own. The only purpose any insurance provides is to spread the risk over a large group. In any system of universal care the risk would be spread over the entire population, that should be a large enough pool.
Like the epicycle theory there is an alternative, we see it in operation in many other industrialized countries. None of them are failing to meet their obligations to the vast majority of their populations. They all do so at lower cost than the US. None of these country's respective populations is clamoring to replace their own plans with one like the US. In fact when people from there travel and come here they are appalled if they have to get care while in the US.
So theoretical arguments about the evils of government administered health care are not borne out by the experience of others. In fact the only ones who are objecting to adoption of such programs are those who are making money off the present system. That is primarily insurance companies and other middlemen and drug companies which would be faced with the types of profit margins they are permitted elsewhere instead of the outlandish prices they get to charge in the US.
The evidence for national health systems is so overwhelming that the only way to keep the issue off the table in the US is by a constant barrage of mis- and dis-information abetted by ideologues so caught up in the theoretical they forget to look out the window.
Posted by: robertdfeinman at Oct 9, 2007 3:11:37 PM
There are ways to enforce such a law other than denying treatment. E.g., income tax compliance is very high, even though you still get paid if you file late.
The statute books are already full of mandatory coverages. Yes, that's a bad thing, but if everybody has to have them, it will increase the pressure to eliminate the marginal ones.
The reason not to "give" everyone health care is that, like car, housing, and life insurance, you want to promote innovation and competition. Decentralizing the purchasing decision gives you that.
Posted by: Larry at Oct 9, 2007 4:30:58 PM
In fact the only ones who are objecting to adoption of such programs are those who are making money off the present system.
I do not make any money off of it, and I object. If you are not willing to admit the possibility that others are arguing in good faith against what you propose, you shouldn't bother even engaging in discussion.
I agree with you though that there is no reason for health "insurance" as we know it. Like Arnold Kling, I think what we have should be referred to as "insulation" and could be replaced with catastrophic plans.
Posted by: TGGP at Oct 9, 2007 4:45:31 PM
TGGP:
You continue making your remarks personal thus indicating a lack of actual substantive points that you have to make.
I'm breaking with my usual policy of not playing that game this time to point out that I covered your type of mindset in my final sentence:
"...abetted by ideologues so caught up in the theoretical they forget to look out the window."
Ideologues, such as yourself, are so caught up in their belief systems that they can't "bother even engaging in discussion".
What part of "the rest of the industrialized world has functioning national health plans" don't you understand? We, who would really like to see things get better in the real world, don't see the point in engaging in ideological arguments with those whose ideas have no hope of ever being adopted in any real social system. Especially with those who have to resort to ad hominem attacks.
Here's the issue: we can continue to expand an inefficient piecemeal private/public insurance system or we can work towards replacing it with a unified national health system. The more practical will work to expand the fragmented system, the more idealistic will work for a national system.
No one will work towards making libertarian schemes a reality.
Posted by: robertdfeinman at Oct 9, 2007 5:38:51 PM
Daniel Akst: "Employers are then free of this burden, insurance-inspired job-lock is abolished, "
Why do we think that employers want to be "free of this burden"? Why do we assume that employees want to be freed from employer-provided health insurance?
IMO, most large employers see their health insurance as a key benefit for attracting employees. Why should such employers and their employees be forced to pay taxes in order to negate that competitive advantage?
How big a problem is this so-called "job-lock"? Is it caused by lack of government-funded health insurance? or by government regulations of health insurance that prevent affordable products being offerred to individuals?
Posted by: John Dewey at Oct 10, 2007 5:02:22 AM
robertdfeinman: "The only purpose any insurance provides is to spread the risk over a large group."
The variety of private health insurance programs allows us individually to decide how much risk we will assume ourselves and how much we will pay insurance companies to assume. Would you take away from individuals that freedom to choose?
The biggest problem I see with health insurance today is that government restricts the products that can be offerred. Government has restricted our freedom to choose the right plan for our individual needs.
Posted by: John Dewey at Oct 10, 2007 5:24:40 AM
I agree with Megan, best to keep the role of government in terms of regulation at a minimum. Were private insurance to be mandated by the government, it's likely that the apparatus of monitoring such insurance would likely be an agency in and of itself. This would seem to be the last thing we need, as I believe insurance would in fact become more difficult to secure when government intervention is factored in. I don't necessarily have a problem with the doing away of Medicare, IF that is what Megan is proposing; I certainly don't want to misquote her. It is worth noting that many older Americans are in a financial position in which Medicare is simply gravy, and if benefits can be redistributed somewhat to younger citizens without totally disrupting the economy, I'd say it's worth a chance.
I like Floccina's idea of the deductible system and the incentives it would offer to individuals who would otherwise roll the dice and be uninsured. I would say that many individuals in the U.S. have went without insurance due to high premiums and/or deductibles. For example, as a 22 year old single male in 2002 I was paying ~$110/month for Blue Cross/Blue Shield and never really needed it. AND, the one time I did "use" it was for an urgent care clinic for which the insurance covered ~$30 of a ~$200 bill. So I decided to roll the dice and set the money aside should I need it. The one contention I have with Floccina's proposal is that many individuals may be likely to shelter their money or hide income in whatever way possible in order to dodge a higher deductible than they should be paying. But, I think the potential loss of revenue from this proposed risk is less than the burden which the uninsured already place on society. Plus, a deductible in terms of an annual expense is not as daunting as having to pay one every time the insurance is put to use.
Posted by: Jason at Oct 10, 2007 9:41:02 PM
"It is worth noting that many older Americans are in a financial position in which Medicare is simply gravy"
Problem is, those older folks paid into the system for 40 years. Wealth was taken by the government for Medicare:
- from the Greatest Generation when they were middle aged and older citizens;
- from the Boomers for all of their adult lives;
- from the Boomers' children for all of their adult lives so far.
Now the grandchildren of Boomers - the great-grandchildren of the Greatest Generation - are saying "We shouldn't have to pay for anyone except the poor!"
It doesn't work that way. You have no right to sharply reduce the standard of living of the elderly because you do not want to share the same burden your previous three generations have shared.
If you want to argue that the younger generation should not have to pay any more than their parents paid, I can understand that. But the resulting reduction in medicare benefits needs to be applied across the board. We should not penalize those seniors who were thrifty and saved.
Many of today's Boomers played around, spent all their incomes, and put off saving until they were old. Most of my siblings fall into that category. It will royally piss me off if they get a free ride as seniors.
By the way, you are probably grossly underestimating the cost of health insurance for the elderly. In fact, many of us are considered to be uninsurable because of diseases such as diabetes. Stripping away Medicare because we have a couple of million dollars in assets just may be a death sentence for some.
Posted by: John Dewey at Oct 11, 2007 3:29:28 PM
I read your article. It provides good information about health insurance.which is provide very good plan of health insurance.most large employers see their Health insurance plans as a key benefit for attracting employees.
Posted by: Medical insurance plans at Jan 31, 2008 3:46:27 AM
We can not force people to take health policy.I think Health insurance plans is a necessary part of life like other thing.
Posted by: Health insurance plans at Feb 3, 2008 8:19:02 AM
Posted by: 鑽石 at Apr 2, 2008 10:29:08 PM
