Posted on 03/31/2008 10:30:31 PM PDT by neverdem
Insurers call them “young invincibles”: twentysomething hipsters who will spend $4 on a café latte or $80 on a monthly gym membership but won’t buy health insurance. “Health insurance wasn’t even an option,” 24-year-old aspiring designer Andrew Ondrejcak told the magazine New York in March 2007. “I was flying through my savings, trying to get a career started. . . . The last thing I’m going to do is spend $300 or whatever on insurance, you know?” Ondrejcak’s personal health plan: running, yoga, and vitamins. The cost: acute appendicitis and a $37,000 hospital bill. Ondrejcak and others like him are poster children for an individual insurance mandate, which would require all Americans to buy health insurance or pay a penalty. But mandates wouldn’t fix the nation’s health-care woes.
The debate over mandates makes for compelling political theater. It’s a bitter point of contention between the two Democratic presidential candidates: Hillary Clinton ridicules Barack Obama’s mandate-free health-care plan for leaving millions uninsured; Obama answers that mandates will force working-class Americans to buy policies that they can’t afford. But Republicans shouldn’t feel smug about the Democrats’ dustup, since mandates have become attractive to policymakers across partisan lines.
Liberal proponents think of mandates as social insurance. Many of the uninsured are younger and healthier, they note, so forcing them into insurance pools will result in lower average premiums. Some conservatives, meanwhile, argue that uninsured people use emergency rooms but often don’t pay, offloading their health costs onto the rest of us. It’s not simply about coverage, in other words; it’s also about personal responsibility. At a debate in Texas, Clinton made a similar argument, claiming that without mandates, “every one of us with insurance will pay the hidden tax of approximately $900 a year.” Conservatives like Duke University health expert Christopher Conover, former Massachusetts governor Mitt Romney, and former Republican National Committee chairman Ken Mehlman have all made some version of this claim.
But both the liberal and conservative arguments are less persuasive than they seem at first glance. Health-insurance companies pool risk in much more complicated ways than most people assume. Americans cannot be classified into one group for insurance purposes; every health-insurance company has numerous pools, dividing people by state, size of employer, and many other characteristics. Further, evidence shows that costs are influenced much less by mandates than by consumers’ ability to buy a broad range of competing health-insurance products. An insurance policy for a single male resident in mandate-enforced Boston, for example, costs five times more than a policy for his identical twin in mandate-free Tucson. This cost disparity is due in part to the Bay State’s many insurance regulations, which limit the types of policies that consumers can buy and drive up prices. As for the responsibility argument, uncompensated care costs federal and state governments roughly $40 billion a year—in a health economy that tops more than $2 trillion annually. That’s a very small percentage of the total expenditure and certainly doesn’t amount to a hidden tax of $900 per person.
Obama is right to oppose mandates. He’s right, too, in believing that one of the biggest obstacles to getting more Americans insured is the high cost of premiums. A third of uninsured Americans have family incomes greater than $50,000; 17 percent have incomes in excess of $75,000. They are opting not to buy coverage because they think that paying thousands annually, while perhaps not seeing a doctor for years on end, is a bad deal.
But Obama fails to live up to his own arguments when it comes to making the purchase of health insurance more attractive for individuals. He favors pouring additional federal funds into the health-care system, including subsidies for individuals and money to compensate employers for catastrophic health-insurance costs. Having Uncle Sam foot more of the bill is a nice gesture, but it doesn’t fundamentally change the way people obtain health care. Health costs are likely to keep rising.
Rather than handing out more government subsidies, we should inject more competition into markets by allowing people to buy health-insurance policies across state lines. This would give the uninsured a broader menu of affordable options and allow companies to market national plans. Hospitals and doctors could also be required to post their prices for common procedures, including rates that the uninsured will pay. Combined with medical malpractice reform and repeal of state regulations limiting the availability of inexpensive retail-care clinics, these reforms would help lower prices and give consumers greater access to basic and preventive care. An even bolder approach would be to end 60 years of bad tax policy and scrap the employer deduction for health benefits, replacing it with a tax credit for every individual and family. Notably, these are all ideas that John McCain, not known for his focus on domestic policy, has embraced.
Mandates offer the illusion of fixing our health-care problems by extending insurance to all. The truth is that there is no silver bullet for reform, and one national “fix” will probably make things worse. Rather than mandate participation in a broken system, Washington should concentrate on basic, sensible reforms and then let markets experiment. For our health-care ailments, competition is the best medicine.
David Gratzer, a physician, is a senior fellow at the Manhattan Institute. His latest book is The Cure: How Capitalism Can Save American Health Care. Paul Howard is the managing editor of MedicalProgressToday.com and a senior fellow at the Manhattan Institute’s Center for Medical Progress.
This guy is right. Any sane person can see that a uniform, easily understood health insurance plan that can be sold across multiple states without changes, would drop health insurance greatly and allow many more insurance companies to compete, while at the same time greatly increasing the risk pool.
One of the major reasons for the health care crisis is the practice of allowing insurance companies to negotiate discounts for their covered patients.
The problem is that the actual cost of caring for an insured patient is higher than for an uninsured one, simply because there is so much more paperwork that someone in the doctor's or hospital's office has to fill out.
If I could pay the "insurance negotiated" rate, I could easily go uninsured and pay from my own resources. Instead I am charged more, in order to subsidize those with insurance.
The only law we need is one which forbids the practice of charging different patients different amounts for the same procedure, but allows substantial discounts for prompt payment in cash...
There is a medical lab in my area that operates on this principal. If you pay at the time of service the rate is quite reasonable. Howevere, if you want to be billed, the rate is more than double. Thus, only the other patients who insist on being billed pay for the deadbeats who were billed but never paid or never evem intended to pay.
I’d consider options which could reduce premiums. I’d like to hear some suggestions from the insurance industry on what they’d like to see removed in the system which would allow their costs to go down so they can reduce costs to consumers. And I’d like to hear from the medical providers about scams they know of which are costing us all money.
But when the Feds get involved it drives up prices because it adds money to the system just like higher education. Everybody knows that if the government will pay for something then the price will be X + Gov subsidy.
Having D.C. subsidizing my health insurance via anything other than a tax deduction will negatively affect what I will be able to purchase.
Agree, maybe not the only law, but this aspect of the system is crazy and unfair to uninsured.
There is another fly in the ointment regarding health insurance, IMO.
The illnesses being diagnosed today are being treated with DRUGS FOR LIFE... No matter what any doctor prescribes for you to take, it is most likely going to be “for life”.
I can remember when you had a problem and you took a prescription for 7 or 10 or 14 or 21 days, and then only got a refill if there wasn’t enough improvement.
Today, any doc out there flippantly says- take this medicine- you have XXXX or XX or we THINK you have XXXXXX, but here’s pills to take for life.
I was told to take Pisinopril—for life. The list of contra-indicatives was scary enough, even realizing that the drug companies have to protect themselves in case of a lawsuit, to scare the heck out of me before I even swallowed one pill.
Then, dissyness and very slight nausea didn’t make me any more inclined to continue, as getting dizzy on the top of my hay stack isn’t a good deal. A header off the stack I probably won’t survive.
I took the pills for 3 weeks, and quit cold turkey, as the bothersome symptoms didn’t reduce.
I will work harder to lose weight and get more exercise, but I won’t take a “pill for life” again.
These kinds of costs are driving health insurers into the sky with costs. Even if Wal-Mart charges $8 for 60 pills, which they do, the local pharmacy wanted $46.30 for the same 60 pills. No thanks.
Agree, maybe not the only law, but this aspect of the system is crazy and unfair to uninsured.
Pisinopril ooop
LISINOPRIL sorry
LOL
Ondrejcak's personal health plan: running, yoga, and vitamins. The cost: acute appendicitis and a $37,000 hospital bill.Acute appendicitis is no more expensive than an ugly one.
I'd say that's half right. Yes, eliminate the employer deduction, but why the tax credit? Any preferential tax treatment of medical expenses is going to lead to overconsumption of medical care and hence higher prices.
I like all his other reform proposals: free interestate insurance markets and deregulation. I disagree with his opposition to an individual coverage mandate. It is interesting that he doesn't provide a single argument against it.
It's necessary for life, so you can keep paying other taxes. When shopping at a supermarket, I don't pay a sales tax for food, but I do pay sales tax for non-food or junk food items in NY.
Okay, but you don't get an income tax credit for your food expenses. Why should you get one for your health care costs? At best, you are giving an argument as to why health care costs should be exempt from sales tax.
Do you want to tax rights? They are not discussing cosmetic surgery. Do you want income tax to apply to the preservation of someone's life? It's already taxed on both of the other ends, the employer's business tax and healthcare providers income tax.
Ideally, I'd like to tax consumption. However, under the assumption that we are stuck with an income tax, I don't want the tax code distorted to encourage any one form of consumption over another.
Do you want income tax to apply to the preservation of someone's life?
No. In fact, I'd rather have no income tax at all. However, if we have to have one, I want it to apply equally to everyone's income regardless of their consumption patterns or source of income.
It's already taxed on both of the other ends, the employer's business tax
Nope. The employer gets to deduct it as a business expense, just like cash wages.
and healthcare providers income tax.
Any activity that generates income is taxable, and that includes all activities, even those necessary to sustain life. Are you seriously suggesting that farmers ought to exemt from the income tax, or that we ought to be able to deduct our food expenses from our taxable income?
Are you against the rationale for Health Savings Accounts? Tax deductability is its main attraction. It encourages patients to shop for bargains. Do you think the country has too much healthcare? Then why is it so expensive? The one definite way to have less of anything is to tax it.
Are you seriously suggesting that farmers ought to exemt from the income tax, or that we ought to be able to deduct our food expenses from our taxable income?
That's a red herring. Healthcare is a different animal. The poor is this country are obese.
I support medical savings accounts (MSA's), but only so long as we also have deductibility of premiums from of employer-based plans. Right now MSA's are needed in order to reduce the bias in the tax code in favor of employer based plans.
My first choice, however, would be to eliminate all healthcare-related payroll tax and personal income tax deductions, whether they are from employer sponsored plans or individual plans. If we are going to have an income tax, it ought to be low, flat and with as few deductions as possible.
Tax deductibility is its main attraction.
The tax deductibility of MSA's is attractive only in so far as it removes some of the favorable tax treatment of employer-based plans.
MSA's would not be necessary, nor attractive, if employer-based plans were not deductible.
It encourages patients to shop for bargains.
You would have the same effect if you simply removed the deductibility of employer-based plans.
Do you think the country has too much healthcare?
Yes. We have overconsumption of healthcare.
Then why is it so expensive?
Because demand is artificially inflated through distortions in the tax code driving people into employer-based plans that cover way too much. Increases in demand move you up the supply curve, resulting in higher prices. Econ 101.
The one definite way to have less of anything is to tax it.
I don't want to tax healthcare. I simply do not want it subsidized via the tax code.
That's a red herring. Healthcare is a different animal.
Why? Food is an expense necessary for living, yet it is not deductible. Rent and payment of principal on your mortgage are necessary for living, yet not deductible (mortgage interest is also something that shouldn't be deductible). Clothing is necessary and yet not deductible.
Why do you wish to use the tax code to subsidize healthcare, and yet not use it to subsidize these other things?
The poor is this country are obese.
Why do you think that is relevant to this discussion?
Much of the demand comes from various government mandates.
Why? Food is an expense necessary for living, yet it is not deductible. Rent and payment of principal on your mortgage are necessary for living, yet not deductible (mortgage interest is also something that shouldn't be deductible). Clothing is necessary and yet not deductible.
Why do you wish to use the tax code to subsidize healthcare, and yet not use it to subsidize these other things?
Because health and healthcare are valued differently. How many variations are there of "As long as you have your health, you're OK"? If you have your health, you have everything, etc.
Why do you think that is relevant to this discussion?
Without food we starve, but we have so much cheap food in this country, the poor are obese, some morbidly so. Can you find that in another country?
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