Forcing people to buy insurance

Lawmakers now are worried about the consequences of requiring everyone to buy health insurance. That will mean lots of people are going to have to come up with the equivalent of another month’s rent in their monthly budgets:

But even after Max Baucus (D-Mont.) spoke optimistically of gaining bipartisan backing, lawmakers continued to haggle over a question at the heart of the debate: How can the government force people to buy insurance without imposing a huge new financial burden on millions of middle-class Americans? . . . .

Under the Baucus plan, described in a “framework” he released last week, as many as 4 million of the 46 million people who are currently uninsured would be required to buy coverage on their own, without government help, by some estimates. Millions more would qualify for federal tax credits, but could still end up paying as much as 13 percent of their income for insurance premiums — far more than most Americans now pay for coverage.

People further down the income scale would receive much bigger tax credits, effectively limiting their premiums at 3 percent of their earnings. But experts on affordability say even those families could find it difficult to meet the new mandate without straining their wallets.

“We’re talking about the equivalent of a middle-class tax increase,” said Michael D. Tanner, a health-care expert at the libertarian Cato Institute. “Yes, they’re paying it to an insurance company instead of to the government. But, suddenly, these people are paying more money to somebody.” . . .

Under the Baucus plan, subsidies would be offered to people who earn up to 400 percent of the poverty level ($43,000 for an individual or $88,000 for a family of four) in the form of tax credits that would be paid directly to the insurance company of the person’s choice. The credit would be calibrated on a sliding scale to ensure that people at the bottom of the income range paid no more than 3 percent of their earnings for premiums while those at the top would be liable for as much as 13 percent.

That would amount to more than $700 a month for a family of four making $66,000 a year — significantly more than most people at the same income level now pay, according to research conducted by Linda Blumberg, a senior fellow in the Health Policy Center at the Urban Institute. Families earning less than 300 percent of the poverty level also would be eligible for assistance with deductibles and other out-of-pocket expenses, but families who earn more would be on their own.

Again, if your income is low, you will get a subsidy to help pay for it, but still it’s going to mean a big hit on the household budget. The theory is to help pay for older people’s medical expenses by bringing in all these young and healthy folks who don’t have that many medical bills and who don’t currently have insurance. But is that fair? And are those who are going to be forced to pay insurance premiums which may be close to what they are currently paying for rent willing to go along with this scheme? Do any of you fall into this category? How are you going to swing paying that premium?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • womanofthehouse

    My family falls into this category. If we could afford to buy insurance, we would, believe me! Forcing us to buy it is not going to magically make us able to afford it. $700 a month is 20% more than we pay for our mortgage and more than twice (almost three times) what we pay for food each month. Our budget is tight and under control, but I have no idea where we would come up with the money. Still, I don’t want the government involved in healthcare.

  • womanofthehouse

    My family falls into this category. If we could afford to buy insurance, we would, believe me! Forcing us to buy it is not going to magically make us able to afford it. $700 a month is 20% more than we pay for our mortgage and more than twice (almost three times) what we pay for food each month. Our budget is tight and under control, but I have no idea where we would come up with the money. Still, I don’t want the government involved in healthcare.

  • http://capnsaltyslongvoyage.blogspot.com Dave Spotts

    @#1 Really, even talking about adding an expense that would be three percent of a lower-income person’s pay is a tremendous burden. I remember vividly a time when my wife would teach piano lessons to help make our ends meet. I ended up being her bill collector. Know who had trouble paying? It was the doctors and lawyers. To them the check for the music lessons was small potatoes. It was easily forgotten. To us it was the difference between paying a utility bill on time or not. It could represent a week’s groceries. While I’m genuinely concerned about the impact such a requirement would have on my family’s budget, I am even more concerned about the impact it would have on people who have more limited means than we do.

  • http://capnsaltyslongvoyage.blogspot.com Dave Spotts

    @#1 Really, even talking about adding an expense that would be three percent of a lower-income person’s pay is a tremendous burden. I remember vividly a time when my wife would teach piano lessons to help make our ends meet. I ended up being her bill collector. Know who had trouble paying? It was the doctors and lawyers. To them the check for the music lessons was small potatoes. It was easily forgotten. To us it was the difference between paying a utility bill on time or not. It could represent a week’s groceries. While I’m genuinely concerned about the impact such a requirement would have on my family’s budget, I am even more concerned about the impact it would have on people who have more limited means than we do.

  • Pingback: Forcing people to buy insurance — Cranach: The Blog of Veith | Insurance Expert

  • Pingback: Forcing people to buy insurance — Cranach: The Blog of Veith | Insurance Expert

  • Joe

    This demonstrates that the current ideas are not really about cost savings – they are about cost shifting.

  • Joe

    This demonstrates that the current ideas are not really about cost savings – they are about cost shifting.

  • CRB

    What I continue to wonder (and sofar have not
    heard the answer) was raised by a U.S. soldier
    in one of those town hall meetings:
    The constitution has NOTHING to say about the
    government running a health care system.
    In other words, such a government take over
    IN ANY WAY is blatantly unconstitutional!
    Why are we not getting any response to this truth?!

  • CRB

    What I continue to wonder (and sofar have not
    heard the answer) was raised by a U.S. soldier
    in one of those town hall meetings:
    The constitution has NOTHING to say about the
    government running a health care system.
    In other words, such a government take over
    IN ANY WAY is blatantly unconstitutional!
    Why are we not getting any response to this truth?!

  • Orianna Laun

    Requiring people to buy car insurance has worked so well, that I’m sure this will work equally as well. Sorry for the facetiousness; however, too many drivers are on the roads un- or under-insured, and many auto insurance companies promise low rates. How on earth does anyone expect these same people to buy much health insurance which is much more expensive? It seems like it’s time to go back to the drawing board on health insurance. There must be something between forced healthcare for which the government only pays (governmen-run healthcare)and forced healthcare for which the citizen pays (unfunded mandate).

  • Orianna Laun

    Requiring people to buy car insurance has worked so well, that I’m sure this will work equally as well. Sorry for the facetiousness; however, too many drivers are on the roads un- or under-insured, and many auto insurance companies promise low rates. How on earth does anyone expect these same people to buy much health insurance which is much more expensive? It seems like it’s time to go back to the drawing board on health insurance. There must be something between forced healthcare for which the government only pays (governmen-run healthcare)and forced healthcare for which the citizen pays (unfunded mandate).

  • DonS

    The problem is that if you are going to require insurance companies to fully insure, without limitations, people with pre-existing health conditions, then you must mandate everyone to have insurance. Otherwise, you have created a system where everyone could go uninsured while healthy, then sign up for insurance only when something goes wrong. Obviously, that is an unsustainable system, actuarily, since the principle of insurance requires that many people pay premiums to cover the cost of those who need the insurance.

    We have to decide whether we are willing to continue to be a free country that permits people to make adult choices. If a person decides to take a calculated risk not to have health insurance, because of its relatively high cost, then that person needs to accept the consequences if they fall ill or get injured. They will have to pay for their own care, or rely on charitable care. Unfortunately, our government does not seem to be willing to permit this free choice. It insists on paying for care for those who shun insurance, or, worse yet, to require caregivers to provide care free of charge, heaping the cost burden for that care on others.

    My question is how you can enforce an insurance mandate, if that’s the route you choose. From what I can gather, the mechanism will be the IRS. Presumably, we will have to provide evidence of insurance when we file our tax returns, or pay a penalty on the return. But, many people below certain income thresholds do not file returns. Also, just as in the auto insurance industry, there will no doubt be fraudulent schemes for meeting the proof requirement, or people who take insurance, get the proof of insurance, and then stop paying their premiums after the tax return is filed. This “mandate” is completely unworkable, in my view.

  • DonS

    The problem is that if you are going to require insurance companies to fully insure, without limitations, people with pre-existing health conditions, then you must mandate everyone to have insurance. Otherwise, you have created a system where everyone could go uninsured while healthy, then sign up for insurance only when something goes wrong. Obviously, that is an unsustainable system, actuarily, since the principle of insurance requires that many people pay premiums to cover the cost of those who need the insurance.

    We have to decide whether we are willing to continue to be a free country that permits people to make adult choices. If a person decides to take a calculated risk not to have health insurance, because of its relatively high cost, then that person needs to accept the consequences if they fall ill or get injured. They will have to pay for their own care, or rely on charitable care. Unfortunately, our government does not seem to be willing to permit this free choice. It insists on paying for care for those who shun insurance, or, worse yet, to require caregivers to provide care free of charge, heaping the cost burden for that care on others.

    My question is how you can enforce an insurance mandate, if that’s the route you choose. From what I can gather, the mechanism will be the IRS. Presumably, we will have to provide evidence of insurance when we file our tax returns, or pay a penalty on the return. But, many people below certain income thresholds do not file returns. Also, just as in the auto insurance industry, there will no doubt be fraudulent schemes for meeting the proof requirement, or people who take insurance, get the proof of insurance, and then stop paying their premiums after the tax return is filed. This “mandate” is completely unworkable, in my view.

  • Jon

    I really appreciate the writer whose novel we’re living in writing the Don S. character.

  • Jon

    I really appreciate the writer whose novel we’re living in writing the Don S. character.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Forcing people to buy insurance does exactly the wrong thing. Specifically, it tells those who have taken good care of their health that they will be less able to profit from that. From a mere economic standpoint, it sets up colossally bad incentives.

    It’s also got some very interesting 1st Amendment implications regarding people like the Amish and Christian Scientists, as well as some 10th Amendment issues, as Article 1 does not spell out a government role in healthcare at all, and the 10th Amendment makes it pretty clear that if it’s not in the Articles, it’s not among the powers of government.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Forcing people to buy insurance does exactly the wrong thing. Specifically, it tells those who have taken good care of their health that they will be less able to profit from that. From a mere economic standpoint, it sets up colossally bad incentives.

    It’s also got some very interesting 1st Amendment implications regarding people like the Amish and Christian Scientists, as well as some 10th Amendment issues, as Article 1 does not spell out a government role in healthcare at all, and the 10th Amendment makes it pretty clear that if it’s not in the Articles, it’s not among the powers of government.

  • http://www.oldsolar.com/currentblog.php Rick Ritchie

    “I really appreciate the writer whose novel we’re living in writing the Don S. character.”

    From what I’ve heard, he wasn’t part of the Disney Ride upon which the novel was based. But the novel allowed much more development. What bothers me is that most of us are characters based on re-used animatronics from America Sings. Though the change did offer me a break from “learning new vices, all the night long, tempted to all that’s sinful and wrong.” Oh, wait. Am I thinking of the other novel I’m in? Or was this a novel within the novel?

  • http://www.oldsolar.com/currentblog.php Rick Ritchie

    “I really appreciate the writer whose novel we’re living in writing the Don S. character.”

    From what I’ve heard, he wasn’t part of the Disney Ride upon which the novel was based. But the novel allowed much more development. What bothers me is that most of us are characters based on re-used animatronics from America Sings. Though the change did offer me a break from “learning new vices, all the night long, tempted to all that’s sinful and wrong.” Oh, wait. Am I thinking of the other novel I’m in? Or was this a novel within the novel?


CLOSE | X

HIDE | X