Skip to comments.Mandating a Health Care Solution
Posted on 04/14/2006 10:13:12 AM PDT by neverdem
Youve got to hand it to Mitt Romney and the Massachusetts Legislature. Last week they adopted a plan that will attempt to solve the health insurance problem by requiring people to buy insurance.
If it were any other state, Ralph Nader and Barbara Boxer would already by howling at the moon. Solving healthcare by mandating people buy insurance! Why dont we just reduce unemployment by mandating people get jobs or solve poverty by mandating people stop being poor?
However, because its the reliably liberal Massachusetts Legislature, liberals have to hold their fire. The Cato Institute has raised objections, but everyone else seems curious enough to wait and see what happens.
In fact, Romney and his cohorts have hit the nail on the head. It is very difficult if not impossible to set up insurance pools unless there is widespread participation. Insurance means spreading risks, and the wider you spread the risks, the better it is for everyone. Healthy people pay the costs for those who are sick. The problem is that people generally dont like to buy health insurance until they realize theyre going to need it. People in their 20s rarely think about it unless they get coverage at work. Young married couples often hold off until the wife gets pregnant. But thats just when insurance companies dont want them.
We dont have a crisis in auto insurance or homeowners insurance in this country because coverage is essentially mandatory. Nearly all states require drivers to buy auto insurance. Those who have bad driving records are put in special high-risk pools that the insurance companies share. The idea isnt to protect these bad drivers, but to protect the people they may harm.
The same thing applies to homeowners insurance. If you have a mortgage, the bank will require it. Consequently, only about 5 percent of the real estate in this country doesnt have coverage. Because the risks are spread so widely, it remains reasonably cheap.
Health insurance in this country is so screwed up that its hard to know where to begin to repair it. We have a mandatory situation, but it only covers about 60 percent of the population: Those who get insurance through their jobs. Theres a long list of reasons why health insurance has become job-relatedWorld War II wage controls come to mindbut the truth is insurance companies like it that way. Employer-based insurance brings them large pools of relatively healthy applicants so that they dont have to go selling door-to-door. You rarely hear the insurance companies complaining.
The problem falls on people left out of this system: freelancers, employees of smaller firms (or Wal-Mart), and the unemployed. If youre poor, you get Medicaid. Sixteen percent of the population was uninsured when Bill Clinton was trying to create national health care in 1993, and the figure hasnt changed much today. We laugh at the way the French have created labor immobility, but the truth is weve done a pretty good job ourselves through tying health insurance to work. How many people are afraid to change jobs or strike out on their own because they fear theyll lose their benefits?
As John Goodman and Gerald Musgrave pointed out a decade ago in their book Patient Power, health insurance is expensive mainly because of the state legislatures. They mandate coverage for various providers, almost always in response to the providers themselves. (Chiropractors are the champs with coverage in 42 states.) This eliminates no-frills policies and makes insurance generally unaffordable. When half the employees in the state have already excluded themselves from the general pools by joining employee self-insurance pools, there arent many people left to share the costs.
We could reform this system by taking it apart state-by-state, but thats not likely. Representative John Shadegg of Arizona and Senator Jim DeMint of South Carolina are sponsoring the Health Care Choice Act, which would allow people to buy health insurance across state lines. Such a move would introduce competition and break up the fiefdoms of the state insurance commissioners, but it hasnt happened yet.
So the Massachusetts approach isnt bad. Granted, the bill has a few leaking gaskets that could turn it into an outright state subsidy. People below the poverty level would pay no premiums and only be responsible for small co-payments. People making up to three times the poverty level would pay adjusted premiums that may not run more than about $250 a month. And the fine for not buying insurance is only $150 on your state income tax, which hardly seems draconian. Finally, companies that dont provide insurance for their employees will have to pay a $295-per-head annual fee that could create a big pot of money for legislators to play with. It could be one of many state efforts to provide universal coverage that quickly mushrooms out of control.
The opportunity, however, is for insurance companies and money management firms to begin providing health savings accounts that meet peoples requirements. HSAs have long been the free-market solution, but generally havent sold well in the market. One early effort by Newt Gingrich in 1998 fell flat. President Bush has revived the program, and money management firms such as Bank of America, J.P. Morgan, and Fidelity have started offering attractive products. But these are mainly for middle-class people savvy about managing their money. With the Massachusetts mandate, somebodyperhaps H&R Blockmay come up with a budget HSA that almost everyone can afford.
The Massachusetts plan seems to confirm one thing: government seems to work better when both parties are forced to compromise. The truth is, we accomplished an awful lotbalancing the budget, passing welfare reformwhen Bill Clinton was President and the Republicans controlled Congress. The record under President Bush has been less spectacular in no small part because Republicans have gotten lazy about controlling spending, and Democrats are so powerless that the only thing they can do is obstruct everything.
Mitt Romneys ability to work with a heavily Democratic legislature is a good harbinger about the kind of President he might make. It also suggests that a shakeup in Washington wouldnt be such a bad thing.
If there were a loyal and competent opposition, maybe I could agree with him. Otherwise, as an analysis of health insurance, he's on the money.
Any time government puts a charge on businesses the costs get passed on to the consumer or people lose their jobs. This is grossly unfair to small business owners who provide the bulk of the jobs out there. Not only do I have to pay a 10% premium on an employee I would hire, you are telling me that I have to pay an additional $300 so some politicians can have more money to play with?
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
I propose we end homelessness by ordering people to buy houses. And hunger by ordering people to buy food.
You took the thoughts right out of my head. :)
The solution is a 100% tax credit (not a deduction) borne by the states and or the feds for insurance premiums.
It would be a lot cheaper than HMos or any other plans and gets the government out of health care decision making.
Jim DeMint ping.
I live in Mass. This bill is Garbage. If I dont get health insurance I have to pay FINES. So if you make over a certain amount(i believe its 48k for a family with 2 kids), you are over the threshold and have to pay 1000 bucks a year because you DONT have insurance.
I am so pissed about this I now have a move in date of June 1 to Nashua NH. Screw MASSGANHISTAN.
$30,000 if you're single. That's the gross. It takes no consideration if you are barely scraping by on the mortgage. So people will have to decide between paying the mortgage or buying health insurance. You'll live in a refridgerator box, but you'll have good teeth.
Damn that pisses me off.
Thats why the poplulation is dropping here. Fools.
Marriage of Medicine and State is a very unhealthy precedent; genetic statistical "science" (yes, it's an oxymoron) will ultimately favor euthenasia for economic reasons. Very ominous development.
Finally, Romney's move is so overwrought a political orchestration that it's as nauseating as it is audacious.
"The House approved the bill on a 154-2 vote. The Senate endorsed it 37-0."
Romney has nothing to loose by signing it, IMHO. If he was perceived as a hard core conservative, he never would have been elected Governor in MA.
I'm sure you've all probably heard this from the self-annointed elite. HSA's are a good thing. And not really complicated at all.