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December 07, 2007

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Comments

Other Tom

Sorry to go instantly off-topic, but I wanted to report that the shrill banshee has dropped to 64 on Tradesports.

Now I'll butt out and wait for others to educate me on health care.

michaelt

You may be waiting a while, OT, I don't think Krugman comments here that often.

michaelt

(There was supposed to be a sarcasm tag at the end.)

MayBee

If you don’t buy it, then you’ll be penalized in some way

The only way you can give people incentive to buy health insurance and punish people that don't buy health insurance in a way that will truly work is to deny care to anyone that does not buy insurance.

That won't happen.

cathyf

Even that won't work, MayBee. People take risks all the time. For example, examine this "prediction":

The only way you can give people incentive to quit smoking and punish people that don't quit smoking in a way that will truly work is to make lung cancer fatal.

MayBee

Yeah, I don't think it would actually make everybody get insurance.
It would be better incentive than the current system for people who can afford insurance that just don't want to pay for it.
It would also reduce the costs of health care for everyone.
I don't see how we can have a mandate that imposes financial penalties if one of the arguments against our current system is that it sends too many people into bankruptcy.

Paul Zrimsek

Back in my high-school debate days there was a vogue for "checks and balances": every affirmative team would promise that their plan for fixing whatever problem was the topic that year would include "a system of checks and balances"-- end of description. I'm afraid I wasn't a good enough debater to drag out of them who would be checking whom, or what would be balanced against what. I don't know if debaters are still relying on checks and balances, but the now middle-aged ones of my day have apparently gone to work for Hillary and placed their trust in "mandates" that are just about as specific.

cathyf

Well, I claim that bankruptcy is insurance. We know that health insurance is not for guaranteeing access to health care -- because you get health care whether you have insurance or not. No, the purpose of health insurance is to insure you against financial catastrophe if you get sick with something catastrophically expensive to treat. From that point of view, it is clear that bankruptcy is a form of catastrophic health insurance. You can even argue that there are insurance premiums on the bankruptcy "insurance" -- declaring bankruptcy is all about partially shielding assets in a financial catastrophe, and those assets would have all been generated via taxable economic activity, and the taxes form a built-in insurance premium.

MayBee

Well, I claim that bankruptcy is insurance.

Right. So as PaulZ says, we have a kind of a "checks and balances" situation.
Bankruptcy spreads the cost of the uninsured to everyone, and is personally devastating to the individual. To solve that, we will mandate people pay for their own insurance. If they don't, we will treat them anyway and charge them more as a penalty.
In which case, they will probably just have to declare bankruptcy. It doesn't solve the problem we have been presented with.

The only way to do that is to either not give people the medical treatment, or to not make people pay for their treatment, insurance, or any financial penalties.
The only one of those two solutions that doesn't increase medical costs (another problem we're told about) it to not give the medical care in the first place.

DavidL

Heck, no we won't pay.

Helen Thomas

Why argue the details on this? All variants of the Democratic plan involve telling people what to do with their own property. That's what the Republican party was founded to fight. 150 years age, the Democrats wanted to take all money away from some of the people in the country. Now they want to take some money away from all of the people in the country. Letting the government have 100% control over 15% of the population is now recognized as the worst mistake America ever made. How is the idea of giving the government 15% control over 100% of the population acceptable in polite society?

bgates

Damn sticky joke names. That last comment was me.

clarice

Sounds unassailable to me, cathy.

jimmyk

It would be better incentive than the current system

Denying care is not really credible, though. This is the same argument used to justify S.S.: We can't credibly say we're going to let people who didn't save enough starve in their old age, so we make them do it. It's a reasonable argument for mandatory insurance, but there's no reason to get the government involved beyond setting up the mandate. A way to make it cheap enough is to make it only for catastrophic care (like expenses greater than $10,000 in a year, no psych expenses allowed). Then there's the payroll/welfare check/unemployment insurance deduction method to get most people who can't prove they have insurance.

Walter

CathyF,

Bankruptcy as the health insurance of last resort, while a good analogy, points out a huge flaw in our current system.

As you pointed out earlier, the option to fully 'self-insure' exists only to those with sufficient assets. [We do not require the posting of a bond or other security to self-insure for medical costs--though states may impose such a requirement on entities that (probably through lack of competent advice) elect to self-insure outside of an ERISA-qualified health and welfare plan, which need not meet any asset test for the health-care portion of benefits. But I digress.]

Thus the expected costs of 'self-insurance' do not include the costs of catastrophic injuries or illness. But if we treat bankruptcy as one of those costs, we see that it is a only practical deterent to those without significant financial resources.

Per this Federal Reserve analysis (.pdf, Table 4, p10), some thirty percent of the population had net assets under $25K in 2001. Since it is fairly easy to get to that amount even under the federal bankruptcy exempt amounts, and households at that level tend not to have terribly good credit anyway, bankruptcy imposes only trivial costs on many of the uninsured.

Odd question for the day: Is the plural of aircraft 'aircrafts'? The multiple? (see link)

Charlie (Colorado)

Does anyone else suspect that Paul Krugman, the respected economist who's been suggested for the Nobel Memorial Prize, has been kidnapped and is being held incommunicado while his columns are written by Rahm Emmanuel?

Charlie (Colorado)

Why argue the details on this? All variants of the Democratic plan involve telling people what to do with their own property. That's what the Republican party was founded to fight.

Um, well, no, the Republican Party was founded specifically to tell people what to do with their own property, ie, free "it".

Walter

... is a only practical deterent to those without with significant financial resources.

Walter

That last comment was me.

Alright, I'm confused again. I've always thought bgates was male.

And not a loon.

MayBee

Denying care is not really credible, though. This is the same argument used to justify S.S.: We can't credibly say we're going to let people who didn't save enough starve in their old age, so we make them do it. It's a reasonable argument for mandatory insurance, but there's no reason to get the government involved beyond setting up the mandate.

I completely agree it isn't credible. I don't even agree with the concept of it.
Comparing it to Social Security is interesting, though. Note that the government didn't just mandate people begin saving for their retirement. They actually set up a government program that you can't opt out of. An individual may set up a retirement account, but by doing so you can't petition to be excused from SS.

All I'm really trying to say anyway is that it is stupid for Krugman to be arguing about what mandates work, and if there have to be any, because none of the currently proposed solutions actually solve the problem they define. They are making the case for universal, single payer, government health care- and proposing another "solution" entirely.

Ed McClelland, Albuquerque, NM

Actually, SS does a lot more than provide a forced retirement savings plan, think about all the folks who, thru no fault of their own, draw a SS check for being disabled. Many are children. SS provides a BASE under all of us, which lifts the unfortunate ones up to a liveable level.

bgates

Walter - On another day, on another site, I made a joke comment signing in as Helen Thomas. On this thread, Firefox made a joke by keeping the name. Yes I'm male.

Walter

And, as long as we're doing statutory analysis in the health insurance context, I should point out that, if you find yourself facing bankruptcy and want to shelter some money, make sure to discuss 11 USC 522 (d)(10)(E) with a qualified attorney:

(d)The following property may be exempted under subsection (b)(1) of this section:
...
(10)The debtor's right to receive
...
(E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless -
(i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.

Charlie (Colorado)

I'd like to crankily point out that we're to a great extent not talking about "insurance" any more.

Insurance is a scheme of shared risk through which a large pool of people pay a relatively small amount into a common fund, from which the costs of improbable but expensive events are paid.

That means all insurance has to have two common properties: the net income over some length of time has to meet or exceed the total claims expense, and the claimed events have to be at least *somewhat* improbable.

If the claimed events are probability one for every member of the pool, then all you're doing is paying someone else additional costs to do with your money what you'd be doing anyway.

Well, all the health "insurance" schemes we're talking about are not for catastrophic medical expenses, they're primarily ways to ensure (not "insure") that everyone has access to basic medical care.

Observation one: under the definitions we're talking about, eg with the mandate schemes, the definition of "basic care" includes so many things that the probability of needing that coverage is very close to one.

Observation two: with observation one, we immediately see that any such scheme, to be solvent, will require net revenues greater than total medical costs; the difference accounts for administration costs. Since we know some people at the bottom end of the income distribution won't be able to pay their share of the overall medical benefit plus costs, it must necessarily be paid by everyone else in the system.

Conclusion: mandate schemes, whether Romney's or the Democrats, are effectively taxation to pay for universal health care.

Correlary: this mandated health insurance wil inevitably cost *more* than the medical benefits paid out.

I call bullshit.

MayBee

Correlary: this mandated health insurance wil inevitably cost *more* than the medical benefits paid out.

Indeed. As I understand it, Edward's plan calls for taxpayers subsidizing insurance for those making up to $100,000/year

According to Barak Obama in the Social Security discussion, that is the top 6% of wage earners, and quite possibly upper middle class.

TM

Well, all the health "insurance" schemes we're talking about are not for catastrophic medical expenses, they're primarily ways to ensure (not "insure") that everyone has access to basic medical care.

Consider the likely cost of auto insurance if said "insurance" covered oil changes, spark plugs, new tires, etc.

Ramesh P made a point that was obvious as soon as I read it, although it had been opaque previously - since health care was originally set up as a way to circumvent wage/price controls during WWII, and since the premium is deductible to the employer in as way it would not be if it were paid by the employee, having a generous insurance plan is a great way to let your employees cover their health care with pre-tax dollars.

And back when company cars were allowed, companies played the same game there, so I'll bet that if employers were allowed to provide auto insurance and deduct it, we would see auto insurance that covered routine maintenance. File that under "Social experiments we are unlikely to see".

Charlie (Colorado)

Consider the likely cost of auto insurance if said "insurance" covered oil changes, spark plugs, new tires, etc.

Precisely correct and a great point, which I'm gonna steal as I write about this over the weekend.

Walter

I'll bet that if employers were allowed to provide auto insurance and deduct it ...

I know of only one company that includes $500 luxury box seats in the recipient's income. The vast majority consider their tickets 'de minimus' benefits not worth the trouble of tracking. (Of course, the vast majority of corporate tickets are only in the $100 range, but a few games with guests and it does add up.) So far, it hasn't been on the Service's radar screen.

I miss the 2.4 martini lunch. 1.5 just doesn't pack quite the punch.

Michael Smith

There is no such thing as a right to healthcare, because there is no such thing as a right to any amount of uncompensated, involuntary servitude on the part of those who must work to pay for that healthcare. No amount of need, medical or otherwise, entitles one man to steal another man's property -- or have the government do the stealing for him.

jimmyk

I'd like to crankily point out that we're to a great extent not talking about "insurance" any more.

You're right. And it's largely because of the tax system, which allows employers to take most of the premiums from pre-tax income. So the incentive is to put everything possible into the health plans.

Charlie (Colorado)

Michael, I'm sympathetic, but even Ayn Rand allowed that some level of taxation, use fees, etc, were needed, for example to pay for enforcement of contracts and provision of national defense.

Ed McClelland, Albuquerque, NM

I still think it is a good idea to outlaw all health insurance. Then prices would fall and people could afford to purchase health care services again....just like they used to.

Michael Smith

Charlie, Rand advocated a system of voluntary financing for the government by charging user fees to businesses and individuals that want access to the civil court system. Her point was that:

a) The volume of business contracts that depend on the courts as an enforcement mechanism is huge -- and individuals and businesses would be willing to pay a fee -- a fixed percentage of the contract's value -- for access to the courts to insure the contracts are enforcable.
b) It would nonetheless be voluntary because no one would be forced to pay. Those that didn't pay simply could not use the courts.

However, Rand stressed that no such mechanism would work to finance the sort of welfare state we have now. "Switching to a voluntary system of financing...", to quote Rand, "..is the last, not the first change to advocate." So I acknowledge that we are stuck with taxation for the foreseeable future.

I'm simply making the point that those who advocate universal health care are essentially advocating that a portion of the population -- namely, the upper income taxpayers -- be sentenced to whatever amount of involuntary servitude is required to earn enough to pay the taxes it will take to finance the whole system.

We fought a horrific war to put an end to the idea that some individuals are entitled to benefit from the involuntary servitude of other individuals -- and yet here we are slowly but surely erecting another such system.

The old system was based on the false notion that the blacks were inferior and thus did not possesses rights. As evil as that notion was, the current system is based on an even greater evil -- it is based on the notion that the men of superior ability, ambition, productivity, creativity and rationality should be forced into some amount of involuntary servitude precisely because of their abilities.

If it is evil to punish a man because of his allegedly inferior talents, how evil is it to punish a man for his demonstrably greater talents? What happened to equal rights for all?

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