Health Insurance Mandate is not the same as Health Care Mandate

The Supreme Court has ruled that the federal government can try to coerce Americans into buying health insurance. What I haven’t seen in the news articles covering this event is a comparison to other things that the government tries to get Americans to do. The government tries to get teenagers to graduate from high school, but about 20 percent fail to do so. The government tries to get Americans to stop smoking marijuana, but about 20 percent light up periodically, despite the criminal penalties that attach to this activity. The government tries to get Americans to drive more fuel-efficient cars, and has various tax penalties associated with gas guzzlers, but SUVs and pickups clog our highways (I parked next to a monster one yesterday that had an “Eco Boost” badge on the side!).

The penalty for those who don’t buy health insurance is an extra tax, but http://www.slate.com/articles/news_and_politics/explainer/2009/04/taxes_schmaxes.html notes that roughly 7 million Americans (out of about 150 million civilians in the labor force)  don’t bother to file tax returns.

Was it really worth two years of drama to turn America from a country in which millions of people lack health insurance into a country in which millions of people lack health insurance?

I’m still a fan of my own health care reform plan, which provides universal coverage, not just a nagging scolding nanny state that has proven itself to be incapable in the past of nagging and scolding with sufficient effect.

What will happen in 5-10 years when we discover that America still has a huge population of uninsured folks? The currently approved law does not seem to be a great stepping stone to universal coverage.

[Separately, if I were not a taxpayer, I would have been amused to see that each state got $8 million to do planning, but not actual programming, for a Web site to serve as a health insurance exchange. In other words, the federal government spent $400 million (50 states times $8 million) to do planning for the kind of Web service that a private start-up would build with five young people sharing an apartment and coding for three months.]

25 Comments

  1. Ryan

    July 2, 2012 @ 8:57 pm

    1

    If our nation is truly failing to collect taxes from millions of people, maybe we should fix that, instead of writing off the government’s ability to extract money from its citizens?

    I mean, if the U.S. government’s coercive powers go no further than “nagging and scolding” then your alternative health care plan looks like a mere stopgap before the country descends into mass sedition and looting.

  2. J. Peterson

    July 2, 2012 @ 9:00 pm

    2

    The Obama “health” plan is exactly what you’d expect from a couple years of full-court lobbying by the health insurance industry: Legislation that forces everybody to buy their product.

    Health insurance is not health care.. A fair amount of the money spent on insurance goes towards administrators profit-motivated to provide as little health care as possible.

    Unfortunately we’ve let the US health insurance industry balloon into a multi-billion $ industry with infinite resources to lobby for their continued existence. This puts a single-payer plan (a la Canada, UK, France, etc.) out of reach in the US.

  3. Joshua Levinson

    July 2, 2012 @ 11:59 pm

    3

    I think the idea is, there’s no need for a health care mandate. That already exists as an element of existence. If you get sick, you go to a hospital. If you have insurance, you pay for it, if you don’t the hospital / government / other taxpayers pay for it. The fact is, life itself imposes a health care mandate. The insurance mandate is there to try to get people to pay for their own care more than they already do.

    Of course, the penalties for not having coverage are probably far lower than the insurance premium would cost, with a similar level of access. Most of the uninsured now are either young-and-healthy folks whose only potential health care needs are the emergency room, or people poor enough that hospital services are essentially unavailable anyway.

  4. Lawrence

    July 3, 2012 @ 6:59 am

    4

    How does your health care reform plan discourage clinics from planning their services to be appealing just to healthy people? Sure, they’re not allowed to reject unhealthy people, but why not just discourage expensive patients? Say, print all literature in micro-print, and make it unappealing to older patients, or only provide dialysis services between 5 and 7 AM. Are you relying on the government to micromanage everything so that all these things are controlled by the “minimum standard of care” or relying on the government to price the vouchers high enough that all classes of patients are worth competing for?

  5. philg

    July 3, 2012 @ 10:27 am

    5

    Ryan: Our government is not failing to collect taxes from millions of people. Workers who don’t file tax returns will still pay (1) payroll and income tax withheld (if they receive W2 wages), (2) sales tax, (3) gasoline tax, (4) alcohol tax, (5) property tax (maybe through their landlord, if they are renting), (6) import duties (when the buy imported products), etc. It is unclear what the government will do with these folks as far as health insurance goes. Will it presume that they did or did not obtain health insurance somehow?

    Lawrence: You raise a point that I hadn’t considered. I guess HMOs could also take government vouchers and promise a free trip to Hawaii to anyone who didn’t use services, other than a checkup, for three years. But on balance, yes, I’m assuming that the voucher amount is large enough that most people would be profitable enrollees.

  6. George

    July 3, 2012 @ 3:14 pm

    6

    Here is my long version of the classical quote “Give a man a fish”:

    Give a man a fish and you feed him for a day and he will come back for more fish the next day. He will also eventually start complain that you are not giving him variations of fish and may eventually revolt on you. Teach a man to fish and you teach him how to live his life and prosper. If he hates you for it, it should for that one day. If he hates you for it for a life time, feel good about it because the alternative could mean you could ruin your own prosperity AND the good of the society.

    The Patient Protection and Affordable Care Act (PPACA) is just like the “fish” — it’s yet another “entitlement” giveaway by the government and it discourages responsibility and prosperity.

    A very small percentage of the population who don’t have health insurance and cannot afford one are the ones who need it. Those are the ones with critical lifelong issues, and they need every help they can get. The focus need to be on why a Dr. or ER visit, is so expansive. Why in the recovery room it cost $10 for one Advil pill. Why a Dr. needs 2 or more secretaries (excluding nurses) in his/her office. So on and so forth.

    PPACA does not address any of those issues; in fact it encourages more of it.

  7. DT

    July 3, 2012 @ 4:29 pm

    7

    “The insurance mandate is there to try to get people to pay for their own care more than they already do.”

    No. On the surface the insurance mandate is there to try to get people who need little or no care to pay for care for those who cannot afford all the care they consume. But a deeper analysis forces one to the conclusion that the PPACA law is designed to drive private insurance out of business thereby leaving the U.S. with no choice but a single payer plan. (See below.)

    “Of course, the penalties for not having coverage are probably far lower than the insurance premium would cost, with a similar level of access.”

    Yes. Now throw in the fact that you cannot be refused for coverage for any reason at any time, and you cannot be charged more for a preexisting condition. Any business run by someone with a brain will drop coverage for its employees and pay the tax. Any individual or family that’s reasonably healthy will drop their coverage and pay the tax. You don’t need to actually pay for insurance until you get sick, and in fact doing so is the same as lighting your money on fire.

    As people figure this out the number of uninsured will skyrocket, as will insurance premiums. The increasing premiums will serve as a feedback loop, forcing more people to opt out and pay the tax. It will take 5 years or so after the law goes into full effect, but you can kiss private insurance goodbye in America.

    To those who ultimately want a single payer system, this is good news. To those of us who would rather not trust our health care to the masterminds behind the drug war, the war on terror, the housing crisis, and the national debt, this is bad news indeed.

  8. Federico

    July 4, 2012 @ 9:02 am

    8

    Is there a convenient to print pdf of your health reform plans? ideally with comments included? I could print to pdf and whatnot, but it would still look crap. And since you make a number of fair points in your plan, I’d rather read it on *decent* printed pdf. I’m jus’ sayin’

    Uh, and if the US of A do manage to kill the middle layer of insurance (which does cost more than 0, and inflates prices more than 0), and get to a state provided tax paid universal healthcare chances are yo’d be saving quite a lot of money — and cover more people in the bargain.

  9. Glenn Stauffer

    July 4, 2012 @ 2:07 pm

    9

    Health Insurance is the antithesis of health care. I have employer provided health insurance and it is a horrible pain to deal with the insurance company when I try to get real care – tons of mystery, uncovered charges for fairly simple procedures (like an x-ray). If I was 20 years younger, I would seriously be looking to relocate to another country in which to raise my daughter and work out the rest of my career. The two biggest factors in my desire to relocate are health care and real wages neither of which are all that good in the US these days.

  10. DT

    July 6, 2012 @ 1:58 pm

    10

    “Uh, and if the US of A do manage to kill the middle layer of insurance (which does cost more than 0, and inflates prices more than 0), and get to a state provided tax paid universal healthcare chances are yo’d be saving quite a lot of money — and cover more people in the bargain.”

    This is based on the false assumption that the state is not a middle layer. It is. And the state not only costs more than 0 and inflates more than 0, it invariably costs and inflates more than free market solutions. Profits are not evil. In a free, competitive market profit is the incentive which drives companies to meet consumer demands as quickly, effectively, and efficiently as possible. The state has no such incentives, and in fact is guided by quite perverse incentives away from efficiently performing its duties.

    People falsely assume that profit is what’s making health care so expensive in America. It’s not. The American health care market is not a free and competitive market thanks to the very government most people are looking to for a solution. Turning to the government for a solution is like turning to a drug dealer for help with a drug addiction.

  11. Master of Disaster

    July 7, 2012 @ 7:28 pm

    11

    All of our so-called, self-given “rights” are nothing but artifice. In the face of nature’s crushing force, these ephemeral notions disappear in moments. The wise among us realize this, and are focused on what will matter most in the near future: Elemental survival.

  12. MW

    July 8, 2012 @ 3:07 am

    12

    Notably, the only areas of healthcare to actually have prices decline are cosmetic procedures and LASIK — since they are not covered by insurance or government, they are subject to more normal market forces.

    For reference (not the best source, but the graphic displays the facts): http://sayanythingblog.com/entry/obama-administration-how-come-health-care-prices-havent-fallen-like-prices-for-phones-and-televisions/

  13. Mark Lin

    July 9, 2012 @ 10:19 am

    13

    @MW
    This analogy of healthcare to phone and TV prices has only very limited application to the problems faced by the healthcare system as a whole.

    A phone or television vendor is not required to give away product to anyone who walks in the door. Similarly, a LASIK or plastic surgeon is not required by law or moral conscience to improve the vision of or give a chin tuck to anyone regardless of ability to pay.

    However, hospitals, especially their ER operations, are required by law and moral conscience to provide medical care to anyone who comes in the door regardless of ability to pay. As such medical treatments are in fact expensive to provide, someone has to pay for them if the patient either cannot or will not. That “someone” ends up being the general public, either through taxes (e.g. Medicaid) or by inflating costs on patients who can pay (i.e. the insured and the wealthy).

    Going to a system where “normal market forces” control healthcare costs, as the article you cite advocates, would require ending the legal and moral requirement that hospitals provide at least minimum treatment to anyone, with the consequence that hospitals will be demanding up-front payment before rendering even emergency care and limiting medical treatment to the exact extent that a patient can pay for.

    Until the prevailing social ethos is willing to go that far, it’s not useful to compare the healthcare market to the cell phone market.

  14. Ed

    July 9, 2012 @ 2:35 pm

    14

    All theory aside, here are some of the comps:

    From http://www.kff.org/insurance/snapshot/oecd042111.cfm

    Health care as % of GDP:

    US: 16%
    France: 11.3%
    Germany 10.5%
    Japan 8%

    What does that buy us?

    Life expectancy: http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

    US: 77
    France 80.7
    Germany 79.4
    Japan 82.6

    Infant mortality (deaths / 1000 live births): http://en.wikipedia.org/wiki/List_of_countries_by_infant_mortality_rate

    US 6.81
    France 3.54
    Germany 3.71
    Japan 2.62

    Other metrics are pretty consistent. We do pretty well in some forms of cancer, but, across the board, our outcomes are pretty crummy considering what we spend.

    Don’t want to start a holy war, but will note that most countries attempt to control cost by using either a single payer system, or allowing tightly regulated competition between non-profit insurance companies, and by instituting price controls on what doctors and hospitals can charge.

    (Yes, price controls often do generate shortages, and that is something that some systems, such as Canada’s do struggle with. The shortages are apparently not severe enough to reflect badly in the outcome metrics).

    Clearly, no system is perfect, but, by the numbers, as a matter of public policy, it certainly looks like we have room for improvement.

  15. Mannerheim

    July 9, 2012 @ 2:56 pm

    15

    Ed:

    Good stats, but I’d be interested to see them broken out by race; I suspect white Americans are much closer to our European counterparts, and that the high costs are disproportionately concentrated in minority populations that are much less likely to take care of themselves and more likely to rely on emergency care for minor ailments.

    You see this misleading effect in education statistics: overall America looks like it’s falling behind other first-world nations, but once you back out the minorities it’s actually highly competitive. If this is also true for health care, it would certainly have major implications for immigration policy, amongst other things.

  16. MW

    July 10, 2012 @ 3:39 am

    16

    @Mark Lin – first, I’m not advocating the full article , it was a handy reference from a quick google search. The fact is market forces work. The open dilemma is exactly what you eloquently state – where is the moral line?

    The current system (even pre-Obamacare) so heavily insulates patients from the cost of their healthcare that the market is broken. There is a big middle ground to bring back more normal market forces before we cut out emergency healthcare for those that cannot afford it, which is the moral line that we had set. For example, I am an intelligent, price conscious consumer in most areas of my life, but I have no idea what it costs to see our family doctor. It’s just a $20 copay.

    Simply bringing price transparency and advocating catastrophic care policies such as HSA accounts would be big wins. We need to set the expectation that people should understand their healthcare – just as they take the time to understand the intricacies of iPhones vs Android devices.

    @Ed – your stats are correct at the most basic levels. We call numbers like those “vanity metrics” as they make your point look good but are absolutely meaningless if you really want to understand an issue.

    1) healthcare as % GDP: the US healthcare market creates cutting edge treatments, pursues cases most other countries consider hopeless and don’t bother with, and subsidizes most other countries drug usage to pay R&D costs.

    2) life expectancy: US life expectancy is lowered not due to healthcare prowess, but due to a different societal issue, violence. The youth mortality rate (largely due to gang killings) lowers the overall number. Try looking at mortality rates for specific illnesses instead and you will see the difference.

    3) infant mortality: is an especially troublesome statistic. First, countries methods for calculating the number vary widely. Second the US takes on premie cases and birth defects with extreme measures in ways no other country does; further, it counts those cases as part of the infant mortality rate – which few (if any) other country would do. The impact of these actions is to make the “vanity number” look worse than others.

    If you correct for these issues, the picture changes significantly.

    The core issue will always be limited supply vs infinite demand. The question will always be – what is the most equitable way to determine who gets treatment. Time and again throughout history “normal market forces” have proven to be the right way to encourage responsible behavior and most efficiently handle supply and demand.

  17. Senorpablo

    July 10, 2012 @ 3:07 pm

    17

    Ed & MW,

    You’ve taken the long way to say that Americans are very healthy, except for those that aren’t.

  18. Steve P

    July 11, 2012 @ 7:14 am

    18

    Mark, if correcting for those issues really changes the picture significantly, why don’t you give us the corrected statistics and let us judge for ourselves if the change is significant?

  19. Jim B

    July 11, 2012 @ 4:03 pm

    19

    Phil I agree that universal coverage would be better. Before declaring the ACA a complete failure though why not wait and see what results? You ask, rhetorically:

    “Was it really worth two years of drama to turn America from a country in which millions of people lack health insurance into a country in which millions of people lack health insurance?”

    I’d think most folks who have kids in the 22-26 year old range appreciate the provision in the ACA that allows them to continue carrying their kids on employer-based health insurance until their children reach the age of 26. Another provision apparently makes it illegal for insurers to deny coverage based on a preexisting condition. I think that’s an improvement over what we had.

  20. George

    July 12, 2012 @ 10:22 am

    20

    @Jim B: Someone who is 22-26 year old is NOT a kid and should NOT be relying on their parents any more. If such a person is a kid, then maybe the parent(s) should stop demanding rent from their “kid” as soon as s/he turns 18. Beside, have we forgot the days when we use to send our kids on dangerous sea journey with strangers at the age of 10 or younger to learn the trade? Or have the “kids” work on the field, factory, etc.? How about today, at the age of 17, our government gives them machine guns to fire at the enemy (but yet they cannot drink till they are 21 years old)?

    With regards to the preexisting condition, that’s something the market need to decide, not the government. Why? What will prevent the government from classifying as “preexisting condition” issues like obesity due to over eating and unhealthy life style, or lung cancer due to smoking? There are many such categories now fall under government control which the market has no say in.

  21. Steve P

    July 12, 2012 @ 3:01 pm

    21

    George, I don’t care much if obesity is classified as a preexisting condition–there are much bigger fish to fry. I’m referring to insurance dollars that treat people who get heart attacks after living a type-A lifestyle: that’s a free will decision much more a matter of choice that sexual orientation for example, or libertines who get the clap or get pregnant after leading an immoral lifestyle (another lifestyle decision), and most especially drivers who have accidents after flouting the traffic laws!

    There are many others like these who live off the rest of us and don’t even dream of paying for their own health care (yet another lifestyle decision). Three examples of free will lifestyle decisions that abuse of the health care system in stark contrast to obesity which is caused by factors the poor victim has no control over. Please, think before you start hate-talking on obesity–we all know that that kind of talk is how antisemitism got traction.

    If we have to pay so much more and get so much less (see Ed’s post) for no more reason that to provide insurance fatcats with luxurious lifestyles, it seems to me that we should at least have the option of buying insurance that excludes type_A parasites, diseases caused by immorality, and injuries that occur not only in the course of crimes but specifically because of the crime.

  22. jim

    July 12, 2012 @ 5:16 pm

    22

    Trying to establish what sort of “lifestyle” one is leading is pointless. The fact is that all body types and lifestyles suffer from the same diseases. And the other fact is that all of us will need care at one time or another.

    Thinking you are immune because you lead a “healthy” lifestyle is foolish. You could trip over a crack in the street today and require extensive, long-lasting care. Care that could bankrupt you if not for insurance.

  23. George

    July 13, 2012 @ 2:32 pm

    23

    @Jim: Eating Big Mac with a extra large sugary drink (even once a week), playing video games (even few hours a day), smoking a pack (even 1 a week), having to depend on your parents (past your childhood age), etc, IS a lifestyle you can choose to have OR not. And if you DO choose such a lifestyle, based on the PPACA, you can now qualified for a preexisting condition for which you MUST be treated even if you go back to your “healthy” lifestyle after your treatment [1].

    Born blind, losing / missing a limb, tripping over a crack, etc. are God acts and has nothing to do with “healthy” lifestyle. If you are in this category, than yes you need all the help you can get. And guess what, we already have systems in place for such long term need. Our transportation system can move you around, your employer cannot discriminant against you, you are given discounts and preferences, you are subsidized, etc. No, it’s not prefect, but it works. And no, you won’t go bankrupt, but yes, you will lose your normal lifestyle.

    Am I immune from a Big Mac lifestyle? You betcha. Do I want to give a hand to a Big Mac lifestyles? No, and neither should the government because by doing so they are simply handing out more fish vs. how to fish [2].

    @Steve P: I’m not picking on obesity when it is due to biological condition, but I’m when it’s as a result of a lifestyle choice.

    [1] This is where the free market dies.
    [2] Read my earlier comment.

  24. MW

    July 14, 2012 @ 1:03 am

    24

    @Steve P – my preference is always to provide references for statements; however, my assertions deal with facts and it’s easy to determine if they are right or wrong using Google searches. But here you go:

    1) % of GDP – this is a good overview from Forbes:
    http://www.forbes.com/sites/toddhixon/2012/03/01/why-are-u-s-health-care-costs-so-high/2/

    Basically, other countries restrict spending by using price controls (what Doctors can charge and what drug cost) and limiting access to procedures. If you restrict supply and set prices, then things can be forced to cost less – resulting in lower expense/GDP.

    2) Life expectancy – Adjusted US rate is 76.9 (#1 in World, based on 2004 WHO data so numbers vary slightly from the ones listed above) when fatal injuries (Car Accidents, Homices, et al) are removed.

    This article from Forbes gives the basic overview and a link to the full Texas A&M/U of Iowa study:
    http://www.forbes.com/sites/aroy/2011/11/23/the-myth-of-americans-poor-life-expectancy/

    This UPenn article goes into extensive detail on life expectancy and survival rates of cancers and other illnesses in the US vs Other Countries:
    http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=14&ved=0CFwQFjADOAo&url=http%3A%2F%2Frepository.upenn.edu%2Fcgi%2Fviewcontent.cgi%3Farticle%3D1012%26context%3Dpsc_working_papers&ei=8JX_T9jrC8aA2wXn4bymBA&usg=AFQjCNF9fSwbPBuu34w-sX_Oyf_fhLNxCA

    3) Infant Mortality rate – Adjusted US rate is “tied with Norway” or about ~3.0/1000 live births. This ranks the much larger, more diverse population in the US as tied with the small, homogenous population that is ranked top in the world.

    Infant Mortality rates have bee widely written about and much information can be found via Googling “US infant mortality rate vs world.” A short writeup of the issue can be found from US News:
    http://health.usnews.com/usnews/health/articles/060924/2healy.htm

    Raw (unadjusted) statistics for several countries can be seen at:
    http://www.infoplease.com/world/statistics/infant-mortality-life-expectancy.html

    So, @Steve P, after being exposed to more nuanced analyses of the “vanity metrics” (which happen to show the US healthcare system in a far more positive light), does it in anyway affect your perspective?

  25. Jim B

    July 16, 2012 @ 12:30 pm

    25

    @George. You write: “Beside, have we forgot the days when we use to send our kids on dangerous sea journey with strangers at the age of 10 or younger to learn the trade?” I too miss the days when kids were considered the father’s property and could be shunted off into the care of others like ship’s captains when the child became too burdensome for the family to deal with. What a wonderful system, especially for the child, who probably thought it was all so fantastic, leaving home with a stranger for a life of adventure! While that was no doubt excellent, factory labor and coal mining is even better for a youth’s character than a stint at sea. Thanks for your timeless contribution to the discussion of the ACA!!

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