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Health care and “broken markets”

Here is a different argument for the mandatory insurance requirement in Obamacare from Donna Dubinsky:

The private insurance market does not function as a normal market. If you are not employed and you want to purchase insurance in the private market, you cannot unilaterally decide to do so. An insurer has to accept you as a customer. And quite often, they don’t. Insurers prefer group plans, with lots of people enrolled to spread the risk. Can you blame them? The individual consumer is a lot of work, is a higher risk and produces relatively little revenue.

The Government Accountability Office studied this problem last year and found a range of denial rates that vary by state and by insurer. On average, 19 percent of applications nationwide are denied. One-quarter of insurers denied more than 40 percent of the applications they considered. These denials are not limited to deadly illnesses but include many minor reasons. Expect to be denied if you have asthma, if you take just about any prescription medication, if you are more than 15 percent overweight. Expect to be denied if a doctor has recommended any procedure for you, no matter how insignificant. Basically, expect to be denied.

I’m astonished that this information was not laid out in oral argument and that no questions were asked about it. I believe that lawyers on both sides of this argument, and the justices hearing the case, have always been employed and always been covered by employer-provided health insurance. Perhaps it simply does not occur to them that if they were to try to purchase insurance, they might not be able to.

The justices repeatedly asked: If the government can require you to purchase insurance, what else could it require you to do? What are the limiting conditions to this breadth of control?

The government muffed its response. To me, the answer is obvious. There are two simple limiting conditions, both of which must be present: (1) it must be a service or product that everybody must have at some point in their lives and (2) the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.

Let’s test the examples presented to the high court: Can the government force you to eat broccoli? This proposition fails on both counts. Nobody must eat broccoli during their lives, and the market for broccoli is normal. If you want broccoli, go buy it. Nothing stops you.

Can the government force you to join a health club? Again, double failure. You don’t need to join a health club. Maybe you should, but you don’t have to. And, if you want to join one, plenty of clubs would be happy to admit you. Indeed, can you imagine a health club turning people down because they are too fat, the way insurers turn people down because they are too sick?

How about burial services? While this example passes the first condition — it is a service that everybody will need — it fails the second. There is a clearly functioning market for burial services. If you want to purchase a burial or a cremation, no seller of those services will turn you away.

The health insurance market meets both criteria. Everybody will need health services at some point. And as long as the United States doesn’t provide national health care, the only reasonable method for most people to pay for those services is through insurance. But here, the market simply does not work. Sellers of health insurance turn away purchasers, and in great numbers.

Although the Affordable Care Act is huge and enormously complex, the point of the legislation is straightforward. It aims to fix the market for health insurance by prohibiting sellers of the service from declining buyers. Why did Congress not pass a simple law just requiring insurance companies to accept all applications? Because such a law would not repair the market and would probably make it worse. With only sick people seeking insurance — because healthy people would wait until they got sick, knowing that insurance was guaranteed — coverage would become overwhelmingly expensive and impossible for most Americans to afford.

The only answer is to expand the pool and spread the risk, which lets insurers have a rational business model. Short of government-provided health services or a government-sponsored national insurance plan, the Affordable Care Act is the next best shot at fixing this broken market.

via The case for Obamacare – The Washington Post.

Could you answer this argument for Obamacare?

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.

  • SKPeterson

    There are couple problems with this article.

    First, item #2 on limiting conditions:

    the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.

    Sellers can turn away buyers for many reasons. The prime example being auction markets – if you don’t meet the minimum asking price, then no matter how much you “need” something, the seller is not obligated to sell. Also, defining need is problematic. Needs do not exist in economics – wants are the operative feature of market economics and market structure.

    Actually, item #1 is problematic as well.

    it must be a service or product that everybody must have at some point in their lives.

    Really? I can think of several things that people need at some point in their life: food, for example, or clothing, or even shelter. All of these could be defined as needs. Who decides which needs are truly needs, what are the minimum standards for needs to be met, and how should resources be allocated best to meet and satisfy those needs?

    Well, you can have the government decide that they best know how to do this and you can fall somewhere along the socialist spectrum from full-blown communism to fascism to the interventionist, welfare state, in which the basic solution is generally, as the article suggests, a one-size fits all, everyone can have a car in any color as long as its black, we produce millions of pairs of shoes every year so everyone has a pair of shoes (I hope you wear size 9) type of system. Or, you look at the alternative mechanism for deciding those questions – the price system, where prices, the structure of prices, and the interactions of various actors supplying and demanding goods and services generates price information actually allocates goods and services to best meet the perceived needs, i.e. wants of the population.

    This is a case of cart and horse. The article is complaining about the current system, without asking why we have the current system in place. The author mentions it even: most people are “covered by employer-provided health insurance.” Why? Maybe, just maybe, the problem resides right there: large, well-bureaucrated healthcare delivery systems, with built in risk dynamics and the ability to impose one-size fits all solutions, while providing a convenient tax deduction for corporations. If I’m an insurance company, why should I bother with an individual trying to buy insurance? I can land all of Apple with about the same amount of effort. I mean, if Apple didn’t have that tax deduction, there’d be thousands of individual Apple employees that we’d have to try and actually service and provide all sorts of different healthcare options and plans. It would be chaos! We’d actually have to work at making our insurance products responsive to different people, at different points in their lives, and they might even be tempted to obtain coverage from other companies. This free market stuff is for the birds! Give me a nice, safe, guaranteed, fixed government established market so I can keep the revenues humming along, I don’t have to work so hard, and everyone can be treated equally, regardless of their desire or ability to pay. It’s a win-win (for the insurance companies and government bureaucrats), and who really cares about the people? Most of them are getting from their employers, and if they’re not. Well, that’s a different question.

  • SKPeterson

    There are couple problems with this article.

    First, item #2 on limiting conditions:

    the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.

    Sellers can turn away buyers for many reasons. The prime example being auction markets – if you don’t meet the minimum asking price, then no matter how much you “need” something, the seller is not obligated to sell. Also, defining need is problematic. Needs do not exist in economics – wants are the operative feature of market economics and market structure.

    Actually, item #1 is problematic as well.

    it must be a service or product that everybody must have at some point in their lives.

    Really? I can think of several things that people need at some point in their life: food, for example, or clothing, or even shelter. All of these could be defined as needs. Who decides which needs are truly needs, what are the minimum standards for needs to be met, and how should resources be allocated best to meet and satisfy those needs?

    Well, you can have the government decide that they best know how to do this and you can fall somewhere along the socialist spectrum from full-blown communism to fascism to the interventionist, welfare state, in which the basic solution is generally, as the article suggests, a one-size fits all, everyone can have a car in any color as long as its black, we produce millions of pairs of shoes every year so everyone has a pair of shoes (I hope you wear size 9) type of system. Or, you look at the alternative mechanism for deciding those questions – the price system, where prices, the structure of prices, and the interactions of various actors supplying and demanding goods and services generates price information actually allocates goods and services to best meet the perceived needs, i.e. wants of the population.

    This is a case of cart and horse. The article is complaining about the current system, without asking why we have the current system in place. The author mentions it even: most people are “covered by employer-provided health insurance.” Why? Maybe, just maybe, the problem resides right there: large, well-bureaucrated healthcare delivery systems, with built in risk dynamics and the ability to impose one-size fits all solutions, while providing a convenient tax deduction for corporations. If I’m an insurance company, why should I bother with an individual trying to buy insurance? I can land all of Apple with about the same amount of effort. I mean, if Apple didn’t have that tax deduction, there’d be thousands of individual Apple employees that we’d have to try and actually service and provide all sorts of different healthcare options and plans. It would be chaos! We’d actually have to work at making our insurance products responsive to different people, at different points in their lives, and they might even be tempted to obtain coverage from other companies. This free market stuff is for the birds! Give me a nice, safe, guaranteed, fixed government established market so I can keep the revenues humming along, I don’t have to work so hard, and everyone can be treated equally, regardless of their desire or ability to pay. It’s a win-win (for the insurance companies and government bureaucrats), and who really cares about the people? Most of them are getting from their employers, and if they’re not. Well, that’s a different question.

  • Tom Hering

    “Sellers can turn away buyers for many reasons.”

    Sure, like bartenders, but a gin and tonic isn’t a matter of life and death.

  • Tom Hering

    “Sellers can turn away buyers for many reasons.”

    Sure, like bartenders, but a gin and tonic isn’t a matter of life and death.

  • http://enterthevein.wordpress.com J. Dean

    Funny question: how many who advocate universal health care have put their money where their mouths are and written out a personal check to help out somebody in need of medical treatment?

    Just curious..

  • http://enterthevein.wordpress.com J. Dean

    Funny question: how many who advocate universal health care have put their money where their mouths are and written out a personal check to help out somebody in need of medical treatment?

    Just curious..

  • Tom Hering

    Uh, J. Dean, private charity and universal health care are two very different things. Why do you assume that those who support universal health care don’t engage in private charity? And what do you really expect to learn by polling the limited number of commenters/respondents on this blog? Very few of us here support universal health care, as you well know.

    Ah, but now I get it – you were trying to make a valid point with your rhetorical question. Fail.

  • Tom Hering

    Uh, J. Dean, private charity and universal health care are two very different things. Why do you assume that those who support universal health care don’t engage in private charity? And what do you really expect to learn by polling the limited number of commenters/respondents on this blog? Very few of us here support universal health care, as you well know.

    Ah, but now I get it – you were trying to make a valid point with your rhetorical question. Fail.

  • Michael B.

    We force drivers to buy insurance. Imagine if we just let everyone drive and if they got into an accident, they just figured somebody else can pick up the tab.

  • Michael B.

    We force drivers to buy insurance. Imagine if we just let everyone drive and if they got into an accident, they just figured somebody else can pick up the tab.

  • http://homewardbound-cb.blogspot.com ChrisB

    If you move the insurance industry away from the employer-purchased model, they would have to accept more individual customers or die.

    Also, if you go to a catastrophic-only model, it’s not as expensive for insurers to cover people who have minor conditions. It is when we expect insurers to cover every conceivable medical condition that patients with asthma are expensive for them to insure.

    Most of our health care problems would go away if we treated medical insurance like car insurance. Or, better, if all health care was funded like eye care.

  • http://homewardbound-cb.blogspot.com ChrisB

    If you move the insurance industry away from the employer-purchased model, they would have to accept more individual customers or die.

    Also, if you go to a catastrophic-only model, it’s not as expensive for insurers to cover people who have minor conditions. It is when we expect insurers to cover every conceivable medical condition that patients with asthma are expensive for them to insure.

    Most of our health care problems would go away if we treated medical insurance like car insurance. Or, better, if all health care was funded like eye care.

  • SKPeterson

    Tom – Who says a doctor will refuse to render aid to a person who needs it? I mean I suppose you can look to American history before 1950, when tens of thousands of Americans died every day for lack of medical care. There were no hospitals, no pharmacies, maybe only one doctor for every 1.5 million people. America was full of the sick, the dead and the dying, until the government granted special tax privileges to the large companies of the nation. Now to complete the task at hand, to completely eradicate sickness, death and dying, we need to have the government take over the responsibilities given to America’s big businesses so that everyone regardless of age, religion, income, or need, can be forced to buy insurance.

    But, to your point. Should grocery stores be compelled to provide food to the hungry? Or clothing stores to provide clothes to the naked? Or should home builders provide homes at no cost to those who need shelter? If not, why not? Because there is some sort of market for those goods and services?

    Why is the market for healthcare different from these other “needs”? The answer, like it or not, is that it is not fundamentally different except where, when and to what extent the government has allowed, encouraged and explicitly supported the very same distortions and market “failures” that it, and the blind little minds that blithely follow its reasoning, now complains of.

    That is probably the central failing of the author of the article. They say “the market is broken, we need government provided universal healthcare” without asking the critical questions of 1)How is it broken? 2) Who broke it? and 3) What alternatives to the current broken system exist?

    To question 1) they simply note that some individuals cannot obtain insurance. Why? Because firms do not have an incentive to serve individuals. Why? Because the government has already interfered in the provision of healthcare to such an extent that it has rendered it unprofitable for insurance companies to serve many individuals; the government has effectively shielded insurance companies from competition and encouraged them to deny coverage to individuals or to price it at very high levels.

    As to 2) Who broke it? The government in collusion with its corporate friends. Healthcare is now viewed as an integral part of most people’s compensation packages. It is so tied up in corporate tax law and regulations that it has over the last 50 years or so, completely distorted the market for healthcare insurance. The government sold individuals out long ago and gave market protections to firms who provide healthcare insurance to large companies and to the large companies themselves. Not only does it squeeze out individuals from the market for health insurance, it also hampers small and medium sized businesses. Just another burden to saddle those pesky upstarts so the large companies can avoid a little potential downstream competition.

    3) What alternatives exist? The author just simply assumes that government created market failure requires additional government interference. Sort of like the concept of promoting the least competent people to positions of power and responsibility. Instead, maybe an actual market might be an alternative, as terrifying as the prospect might be to bureaucrats in government, industry and insurance. How about allowing more FSA’s for starters to be used without the whole host of government regulations and restrictions that currently limit their effectiveness. I mean how can Congress raid the funds or regulate the decisions of tens of millions of Americans if they can make their own decisions and spend their own money using FSA’s or other means? I mean, how fair is that? Letting people make their own decisions without Congressional or Executive Branch oversight will lead to nothing but chaos. Companies may actually have to compete for people’s healthcare dollar expenditures. And if there’s one thing the U.S. government is against it’s unrestrained competition that provides greater choice, lower costs, and a range of healthcare options to the American peasantry citizenry.

    If you want more choice, more accessibility, and more accountability in the provision of healthcare in the United States, keep the entity known as the U.S. Federal Government as far away from it as possible. Your long-term health likely depends on it.

  • SKPeterson

    Tom – Who says a doctor will refuse to render aid to a person who needs it? I mean I suppose you can look to American history before 1950, when tens of thousands of Americans died every day for lack of medical care. There were no hospitals, no pharmacies, maybe only one doctor for every 1.5 million people. America was full of the sick, the dead and the dying, until the government granted special tax privileges to the large companies of the nation. Now to complete the task at hand, to completely eradicate sickness, death and dying, we need to have the government take over the responsibilities given to America’s big businesses so that everyone regardless of age, religion, income, or need, can be forced to buy insurance.

    But, to your point. Should grocery stores be compelled to provide food to the hungry? Or clothing stores to provide clothes to the naked? Or should home builders provide homes at no cost to those who need shelter? If not, why not? Because there is some sort of market for those goods and services?

    Why is the market for healthcare different from these other “needs”? The answer, like it or not, is that it is not fundamentally different except where, when and to what extent the government has allowed, encouraged and explicitly supported the very same distortions and market “failures” that it, and the blind little minds that blithely follow its reasoning, now complains of.

    That is probably the central failing of the author of the article. They say “the market is broken, we need government provided universal healthcare” without asking the critical questions of 1)How is it broken? 2) Who broke it? and 3) What alternatives to the current broken system exist?

    To question 1) they simply note that some individuals cannot obtain insurance. Why? Because firms do not have an incentive to serve individuals. Why? Because the government has already interfered in the provision of healthcare to such an extent that it has rendered it unprofitable for insurance companies to serve many individuals; the government has effectively shielded insurance companies from competition and encouraged them to deny coverage to individuals or to price it at very high levels.

    As to 2) Who broke it? The government in collusion with its corporate friends. Healthcare is now viewed as an integral part of most people’s compensation packages. It is so tied up in corporate tax law and regulations that it has over the last 50 years or so, completely distorted the market for healthcare insurance. The government sold individuals out long ago and gave market protections to firms who provide healthcare insurance to large companies and to the large companies themselves. Not only does it squeeze out individuals from the market for health insurance, it also hampers small and medium sized businesses. Just another burden to saddle those pesky upstarts so the large companies can avoid a little potential downstream competition.

    3) What alternatives exist? The author just simply assumes that government created market failure requires additional government interference. Sort of like the concept of promoting the least competent people to positions of power and responsibility. Instead, maybe an actual market might be an alternative, as terrifying as the prospect might be to bureaucrats in government, industry and insurance. How about allowing more FSA’s for starters to be used without the whole host of government regulations and restrictions that currently limit their effectiveness. I mean how can Congress raid the funds or regulate the decisions of tens of millions of Americans if they can make their own decisions and spend their own money using FSA’s or other means? I mean, how fair is that? Letting people make their own decisions without Congressional or Executive Branch oversight will lead to nothing but chaos. Companies may actually have to compete for people’s healthcare dollar expenditures. And if there’s one thing the U.S. government is against it’s unrestrained competition that provides greater choice, lower costs, and a range of healthcare options to the American peasantry citizenry.

    If you want more choice, more accessibility, and more accountability in the provision of healthcare in the United States, keep the entity known as the U.S. Federal Government as far away from it as possible. Your long-term health likely depends on it.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Once again, we have the problem of misunderstanding that health insurance = medical treatment.

    Also, the label “denied” is very misleading.

    Notice she doesn’t define what she means by “denied” coverage.

    What the person with asthma cannot get is a plan that will insure his known medical condition at the same rate as someone who doesn’t have this known condition, aka “denied” coverage. He can still get insurance, it just won’t cover asthma. If he wants that he will have to pay a higher premium that is going to be slightly higher than the cost of his asthma management costs. Duh.

    Should grocery stores be compelled to provide food to the hungry?

    Nah, just “food insurance” that will allow people to have as much food as the industry thinks they need at a cost to the consumer that maximizes profits for the industry.

    Health insurance ≠ medical treatment.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Once again, we have the problem of misunderstanding that health insurance = medical treatment.

    Also, the label “denied” is very misleading.

    Notice she doesn’t define what she means by “denied” coverage.

    What the person with asthma cannot get is a plan that will insure his known medical condition at the same rate as someone who doesn’t have this known condition, aka “denied” coverage. He can still get insurance, it just won’t cover asthma. If he wants that he will have to pay a higher premium that is going to be slightly higher than the cost of his asthma management costs. Duh.

    Should grocery stores be compelled to provide food to the hungry?

    Nah, just “food insurance” that will allow people to have as much food as the industry thinks they need at a cost to the consumer that maximizes profits for the industry.

    Health insurance ≠ medical treatment.

  • http://enterthevein.wordpress.com J. Dean

    Tom @4, my point is that it’s easy to call for something when you aren’t footing the bill for it.

  • http://enterthevein.wordpress.com J. Dean

    Tom @4, my point is that it’s easy to call for something when you aren’t footing the bill for it.

  • Steve Billingsley

    sg @ 8 hits the nail on the head.

    The writer (Ms. Dubinsky) answers her own question in the article without realizing it.

    “The health insurance market meets both criteria. Everybody will need health services at some point. And as long as the United States doesn’t provide national health care, the only reasonable method for most people to pay for those services is through insurance.”

    Setting aside that the only “reasonable” method to pay for health care services is through insurance (not necessarily true, but for the purposes of this discussion I won’t challenge it)- she admits that health insurance is only a means to pay for health care services. Anyone can get health care services without insurance – just go to an emergency room and you will get treated – in fact, it is illegal for these facilities to deny you service, regardless of your ability to pay. So in effect, we already have some degree of universal health care. What we don’t have is a universal health insurance plan. The quality of care one receives in these circumstances may or may not be satisfactory (though generally the professionals who provide these services do the best they can) – but it is better than the services that are available to a large portion of the world’s population. People who receive care via this method are essentially just shifting the costs of this care to taxpayers already. Costs will be shifted in some way regardless of how health care is delivered. The question before Court isn’t whether the current system or Obamacare is better. The question is whether it is constitutional.

    Congress has every constitutional right to regulate commerce, including health care and health insurance. What it cannot do is create commerce in order to regulate it. Just because most everyone uses health care services doesn’t mean that the government can require you to purchase health insurance as a means to pay for that service. It is akin to requiring you to pay someone (a third party) to go to the grocery store to buy your groceries. You can do that if you want to, but it shouldn’t be required.

    Congress just didn’t have the guts or political will to use its constitutional power (the tax code or regulatory power) to achieve its goal of universal coverage, so it just put in a mandate to try to coerce younger, healthier people into the market to offset the costs of older, less healthy people.

  • Steve Billingsley

    sg @ 8 hits the nail on the head.

    The writer (Ms. Dubinsky) answers her own question in the article without realizing it.

    “The health insurance market meets both criteria. Everybody will need health services at some point. And as long as the United States doesn’t provide national health care, the only reasonable method for most people to pay for those services is through insurance.”

    Setting aside that the only “reasonable” method to pay for health care services is through insurance (not necessarily true, but for the purposes of this discussion I won’t challenge it)- she admits that health insurance is only a means to pay for health care services. Anyone can get health care services without insurance – just go to an emergency room and you will get treated – in fact, it is illegal for these facilities to deny you service, regardless of your ability to pay. So in effect, we already have some degree of universal health care. What we don’t have is a universal health insurance plan. The quality of care one receives in these circumstances may or may not be satisfactory (though generally the professionals who provide these services do the best they can) – but it is better than the services that are available to a large portion of the world’s population. People who receive care via this method are essentially just shifting the costs of this care to taxpayers already. Costs will be shifted in some way regardless of how health care is delivered. The question before Court isn’t whether the current system or Obamacare is better. The question is whether it is constitutional.

    Congress has every constitutional right to regulate commerce, including health care and health insurance. What it cannot do is create commerce in order to regulate it. Just because most everyone uses health care services doesn’t mean that the government can require you to purchase health insurance as a means to pay for that service. It is akin to requiring you to pay someone (a third party) to go to the grocery store to buy your groceries. You can do that if you want to, but it shouldn’t be required.

    Congress just didn’t have the guts or political will to use its constitutional power (the tax code or regulatory power) to achieve its goal of universal coverage, so it just put in a mandate to try to coerce younger, healthier people into the market to offset the costs of older, less healthy people.

  • DonS

    This is a poor argument, relying on the typical bootstrap logic we so often see today, namely, the government has distorted and ruined a market through its past actions, so we must permit it to intervene further to “fix” it.

    1. The first premise (” it must be a service or product that everybody must have at some point in their lives”) is misleading as applied to the issue of Obamacare. Medicare, which is not part of Obamacare, covers everyone beginning at age 65. Most people do not need expensive health care prior to this age, and, in fact, could probably get away with being uninsured, though I don’t recommend it.

    2. The second premise (“the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.”) is true, in part. But the reason it is true in part is two-fold, both owing to past government interference. First is the problem of employer-provided healthcare, caused because of the poor policy of strict wage controls imposed by the federal government during WWII, with loopholes that allowed companies to circumvent the wage controls by offering tax-free fringe benefits, such as health insurance. Second, government-mandated comprehensive benefits coverage is driving up the cost of insurance at five or more times the national inflation rate, making it unaffordable to many people. The second problem, incidentally, vitiates the “solution” of mandated coverage which Ms. Dubinski somehow thinks will magically solve the problem. People can’t afford the expensive insurance that the government is (unconstitutionally) forcing them to buy. So, they will be forced to pay the small fine, leaving them uninsured. Obamacare makes this problem even worse, not only because of all the mandated expensive benefits, but because it further shifts health costs from the older to the younger. Yet another way in which we are forcing our children to subsidize our own extravagance and selfishness.

    The first distortion government imposed should be remediated by taxing fringe benefits in the same way as wages. Let’s move away from employer-provided coverage to individual portable coverage, which people can buy when healthy at low rates, and keep forever, no matter where they work. Give taxpayers a full deduction for their premium purchases, without limitation of any kind. The second part of the equation is to get rid of mandated benefits. Catastrophic coverage, with high deductibles, is very cheap, when it is available, particularly for younger people. I think the health exchanges the Obamacare legislation authorized, at the state level, could be a useful mechanism for creating the groups that would no longer be available at the employer level, allowing people to purchase insurance without onerous pre-existing condition limitations, as people can now do when they take a new job.

  • DonS

    This is a poor argument, relying on the typical bootstrap logic we so often see today, namely, the government has distorted and ruined a market through its past actions, so we must permit it to intervene further to “fix” it.

    1. The first premise (” it must be a service or product that everybody must have at some point in their lives”) is misleading as applied to the issue of Obamacare. Medicare, which is not part of Obamacare, covers everyone beginning at age 65. Most people do not need expensive health care prior to this age, and, in fact, could probably get away with being uninsured, though I don’t recommend it.

    2. The second premise (“the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.”) is true, in part. But the reason it is true in part is two-fold, both owing to past government interference. First is the problem of employer-provided healthcare, caused because of the poor policy of strict wage controls imposed by the federal government during WWII, with loopholes that allowed companies to circumvent the wage controls by offering tax-free fringe benefits, such as health insurance. Second, government-mandated comprehensive benefits coverage is driving up the cost of insurance at five or more times the national inflation rate, making it unaffordable to many people. The second problem, incidentally, vitiates the “solution” of mandated coverage which Ms. Dubinski somehow thinks will magically solve the problem. People can’t afford the expensive insurance that the government is (unconstitutionally) forcing them to buy. So, they will be forced to pay the small fine, leaving them uninsured. Obamacare makes this problem even worse, not only because of all the mandated expensive benefits, but because it further shifts health costs from the older to the younger. Yet another way in which we are forcing our children to subsidize our own extravagance and selfishness.

    The first distortion government imposed should be remediated by taxing fringe benefits in the same way as wages. Let’s move away from employer-provided coverage to individual portable coverage, which people can buy when healthy at low rates, and keep forever, no matter where they work. Give taxpayers a full deduction for their premium purchases, without limitation of any kind. The second part of the equation is to get rid of mandated benefits. Catastrophic coverage, with high deductibles, is very cheap, when it is available, particularly for younger people. I think the health exchanges the Obamacare legislation authorized, at the state level, could be a useful mechanism for creating the groups that would no longer be available at the employer level, allowing people to purchase insurance without onerous pre-existing condition limitations, as people can now do when they take a new job.

  • BS in Texas

    I don’t think the author fully understands how risk is financed in the real world. When it comes to funding risk of any kind, employers, large and small, private and public, have two basic options – retain risk or transfer it. Within each of these broad funding options, an individual entity may choose a variety of funding techniques that run along the spectrum of fully-insured to fully self-funded. Very few employers opt to fully insure (i.e., completely transfer) risk any more. Doing so is not financially efficient, and in many cases is not desirable or necessary. Many, many employers, including private and public sector employers, choose to retain some portions of risk, including their employees’ health insurance coverage. In the case of self-funding, insurance companies provide a layer of protection, called re-insurance, that provides a financial backstop for both individual as well as aggregate claims. However, in some cases, companies or even government entities may choose to fully retain all risk associated with employee medical coverage and avoid paying any re-insurance premiums at all. In essence, the individual employer’s appetite for risk greatly influences where it will fall along the risk funding spectrum.

    Individuals have choices, as well. SKPeterson in #7 above identifies one in particular, the FSA. Other options include health savings accounts (HSA) and health reimbursement accounts (HRA). Within employer-provided plans, employees may select a wide range of options, including preferred provider options (PPO) and health maintenance organization options (HMO). Not only that, employees are often able to choose a variety of individual funding options based on the amount of out-of-pocket expense they are willing to take on (i.e., their own individual appetite for risk).

    The point of all this is to simply note that the insurance market is pretty efficient all on its own, and operates effectively for the benefit of most people who use it. Being efficient and effective does not mean its perfect (or cheap). It means it just does what it has been designed to do.

  • BS in Texas

    I don’t think the author fully understands how risk is financed in the real world. When it comes to funding risk of any kind, employers, large and small, private and public, have two basic options – retain risk or transfer it. Within each of these broad funding options, an individual entity may choose a variety of funding techniques that run along the spectrum of fully-insured to fully self-funded. Very few employers opt to fully insure (i.e., completely transfer) risk any more. Doing so is not financially efficient, and in many cases is not desirable or necessary. Many, many employers, including private and public sector employers, choose to retain some portions of risk, including their employees’ health insurance coverage. In the case of self-funding, insurance companies provide a layer of protection, called re-insurance, that provides a financial backstop for both individual as well as aggregate claims. However, in some cases, companies or even government entities may choose to fully retain all risk associated with employee medical coverage and avoid paying any re-insurance premiums at all. In essence, the individual employer’s appetite for risk greatly influences where it will fall along the risk funding spectrum.

    Individuals have choices, as well. SKPeterson in #7 above identifies one in particular, the FSA. Other options include health savings accounts (HSA) and health reimbursement accounts (HRA). Within employer-provided plans, employees may select a wide range of options, including preferred provider options (PPO) and health maintenance organization options (HMO). Not only that, employees are often able to choose a variety of individual funding options based on the amount of out-of-pocket expense they are willing to take on (i.e., their own individual appetite for risk).

    The point of all this is to simply note that the insurance market is pretty efficient all on its own, and operates effectively for the benefit of most people who use it. Being efficient and effective does not mean its perfect (or cheap). It means it just does what it has been designed to do.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Okay, I looked up Ms. Dubinsky on wiki

    http://en.wikipedia.org/wiki/Donna_Dubinsky

    She worked for Apple. She seems like a shrewd business person who just wants someone, anyone, to get insurance off the back and expense column of businesses.

    Far more interesting is what actuaries have to say about the health care act.

    http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=237205

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    Okay, I looked up Ms. Dubinsky on wiki

    http://en.wikipedia.org/wiki/Donna_Dubinsky

    She worked for Apple. She seems like a shrewd business person who just wants someone, anyone, to get insurance off the back and expense column of businesses.

    Far more interesting is what actuaries have to say about the health care act.

    http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=237205

  • Gary

    Steve (@10) : “Anyone can get health care services without insurance – just go to an emergency room and you will get treated – in fact, it is illegal for these facilities to deny you service, regardless of your ability to pay. So in effect, we already have some degree of universal health care. ”

    Hey, I like Steve’s proposal! Seriously. People who have individual plans should drop their coverage, and just use the emergency rooms at hospitals! Steve, that’s brilliant! In fact to underscore how good your suggestion is, I think we should encourage all the elderly and all the poor and all people who have been putting off getting treatment because they can’t afford to see a doctor to get to their closest ER for medical services. Preferably on the same day. Like a staged event.

    Never mind that a lot of actual emergencies aren’t going to get attended to, as Steve’s idea clogs the tubes of ERs across the land. Some people may die, but you know what taking Steve seriously would demonstrate? That we DO NOT have a handle on this, not by a long shot. What we have now is an inadequate and inequitable system that mostly serves to enrich insurance corporations. Criticizing Obamacare is fine, but it’s unacceptable to leave things as they are.

  • Gary

    Steve (@10) : “Anyone can get health care services without insurance – just go to an emergency room and you will get treated – in fact, it is illegal for these facilities to deny you service, regardless of your ability to pay. So in effect, we already have some degree of universal health care. ”

    Hey, I like Steve’s proposal! Seriously. People who have individual plans should drop their coverage, and just use the emergency rooms at hospitals! Steve, that’s brilliant! In fact to underscore how good your suggestion is, I think we should encourage all the elderly and all the poor and all people who have been putting off getting treatment because they can’t afford to see a doctor to get to their closest ER for medical services. Preferably on the same day. Like a staged event.

    Never mind that a lot of actual emergencies aren’t going to get attended to, as Steve’s idea clogs the tubes of ERs across the land. Some people may die, but you know what taking Steve seriously would demonstrate? That we DO NOT have a handle on this, not by a long shot. What we have now is an inadequate and inequitable system that mostly serves to enrich insurance corporations. Criticizing Obamacare is fine, but it’s unacceptable to leave things as they are.

  • http://www.redeemedrambling.blogspot.com/ John

    1) Steve @10 perpetuates a common myth. Any ER can deny any procedure for any reason, unless the person is deemed to be at immediate risk of death. They do this all the time – it’s called “triage”.
    2) The key provisions of the ACA are from the Chicago school of economics – a very conservative school, but the most important part of the ACA, the single-payer system, was scrapped. This actually wrecks pretty much the whole thing.
    3) I often have conversations about this with my sister (a doctor), and she is convinced that only two things can be sustainable long term – fully socialized medicine, or fully non-socialized medicine. This “halting between two” approach is a disaster. And for all the “wealthy doctor” rhetoric out there, they are being cheated (i.e. robbed) by both medicare/caid and by may who never pay for services rendered (raising costs for everyone).
    4) Socialized medicine has inherent moral issues (not moral hazards – that’s something else entirely) – in LA, for example, state medicaid will pay for “sexual realignment” surgeries (and the lifetime of drugs it takes to maintain this kind of illusion).

  • http://www.redeemedrambling.blogspot.com/ John

    1) Steve @10 perpetuates a common myth. Any ER can deny any procedure for any reason, unless the person is deemed to be at immediate risk of death. They do this all the time – it’s called “triage”.
    2) The key provisions of the ACA are from the Chicago school of economics – a very conservative school, but the most important part of the ACA, the single-payer system, was scrapped. This actually wrecks pretty much the whole thing.
    3) I often have conversations about this with my sister (a doctor), and she is convinced that only two things can be sustainable long term – fully socialized medicine, or fully non-socialized medicine. This “halting between two” approach is a disaster. And for all the “wealthy doctor” rhetoric out there, they are being cheated (i.e. robbed) by both medicare/caid and by may who never pay for services rendered (raising costs for everyone).
    4) Socialized medicine has inherent moral issues (not moral hazards – that’s something else entirely) – in LA, for example, state medicaid will pay for “sexual realignment” surgeries (and the lifetime of drugs it takes to maintain this kind of illusion).

  • formerly just steve

    John, #15, +1

  • formerly just steve

    John, #15, +1

  • Michael B.

    “Any ER can deny any procedure for any reason, unless the person is deemed to be at immediate risk of death. They do this all the time – it’s called “triage”.”

    If an insurance company does the same thing, what’s it called then?

  • Michael B.

    “Any ER can deny any procedure for any reason, unless the person is deemed to be at immediate risk of death. They do this all the time – it’s called “triage”.”

    If an insurance company does the same thing, what’s it called then?

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    If an insurance company does the same thing, what’s it called then?

    Protecting the bottom line.

    ER’s do triage to treat the most serious first based entirely on the actual medical conditions of the patient. I have been to ER’s when I was very ill and other times with my kids. They never assessed anything about us except our medical condition and only asked about our ability to pay after all services were rendered.

    Insurance companies collect their $$ first. Then they decide whether or not to authorize payments for services. In the health care act, they team up with the government to claim that everything is hunky dory. When insurance is independent and government is its regulator the relationship is fundamentally different from the situation created by the health care act which aligns the political interests of some with the profit motive of insurers.

    So, only two things can be sustainable long term – fully socialized medicine, or fully non-socialized medicine. This “halting between two” approach is a disaster.

    Free market and single payer each have some flaws and some strengths, but a compromise has all the flaws of both and none of the strengths.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    If an insurance company does the same thing, what’s it called then?

    Protecting the bottom line.

    ER’s do triage to treat the most serious first based entirely on the actual medical conditions of the patient. I have been to ER’s when I was very ill and other times with my kids. They never assessed anything about us except our medical condition and only asked about our ability to pay after all services were rendered.

    Insurance companies collect their $$ first. Then they decide whether or not to authorize payments for services. In the health care act, they team up with the government to claim that everything is hunky dory. When insurance is independent and government is its regulator the relationship is fundamentally different from the situation created by the health care act which aligns the political interests of some with the profit motive of insurers.

    So, only two things can be sustainable long term – fully socialized medicine, or fully non-socialized medicine. This “halting between two” approach is a disaster.

    Free market and single payer each have some flaws and some strengths, but a compromise has all the flaws of both and none of the strengths.

  • Michael B.

    @sg

    “I have been to ER’s when I was very ill and other times with my kids. They never assessed anything about us except our medical condition and only asked about our ability to pay after all services were rendered. ”

    But what if you had a condition that you couldn’t pay for? Or it was a choice between treating one kid or another? If this were buying the kids a car or vacation, I wouldn’t mind a little haggling. But if it’s a life and death situation, I feel otherwise.

  • Michael B.

    @sg

    “I have been to ER’s when I was very ill and other times with my kids. They never assessed anything about us except our medical condition and only asked about our ability to pay after all services were rendered. ”

    But what if you had a condition that you couldn’t pay for? Or it was a choice between treating one kid or another? If this were buying the kids a car or vacation, I wouldn’t mind a little haggling. But if it’s a life and death situation, I feel otherwise.


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