Health Insurance Mandates

by Brian on February 2, 2008

Barack Obama’s health care policy has come under a lot of blogworld attacks for not including “mandates”, i.e. fines for people who don’t buy health insurance. Here’s a typical passage from Ezra Klein.

A central tenet of his proposal is that ” No insurance companies will be allowed to discriminate because of a previous bout with cancer or some other pre-existing illness.” You literally cannot have that rule without some mechanism forcing everyone to buy in, as the healthy will stay out. … A mandate is not how you cover everyone, it’s how you force insurers to cover everyone, and discriminate against no one.

I don’t know what the force of that ‘cannot’ is supposed to be, but I know it isn’t historical impossibility. Australia for several decades did just the thing Ezra thinks that you can’t do. It had community rating of health insurance, and it didn’t have health insurance mandates. This was true of the periods 1953-1975, and again from 1981-1984. At other times it had compulsory universal basic health insurance. The system wasn’t perfect, bringing in compulsory public health insurance was a very good thing, but it wasn’t as bad as anything I’ve seen in America, and nor was it somehow an impossibility.

The argument for mandates is basically that without them you have adverse selection effects. I don’t particularly think those will be huge. In Australia we still had insurance levels of 70-80. That was with a pretty good level of public provision of emergency care, so you didn’t have to worry about needing health insurance if you were in a car wreck. And it was with a system of GPs where (at the time) the uninsured were charged about as much for a doctor’s visit as I now pay in my co-pay. Had the health options for the uninsured then in Australia been as bad as they are now in America, a huge percentage of people would have been insured. As it was, the system still more or less worked, at least compared to anything the U.S. has seen.

Even if there were adverse selection effects, it isn’t clear what the downside will be. Ezra links to this 3 page Urban Institute report that comes out for mandates, and seems to say the downsides are that we’ll need more government financing. I think anyone who thinks we’ll get a better U.S. health system without some extra government financing is basically living in a fairy tale, so I’m not at all sure why this is a problem. Perhaps mandates are supposed to be politically easier to sell than tax rises, but this seems nonsensical. Given the hideously unbalanced state of the U.S. tax system, we can quite justly have tax raises that cost the vast majority of people not one penny. It’s impossible to have health care mandates that do that.

Of course, without some form of subsidy for insurers, a few insurers will probably fail. Again, I’m not sure that this should be a problem, given the appalling state of the U.S. health insurance industry.

What’s quite irritating about this whole debate is that several writers (most notably Paul Krugman) have been insisting that Obama’s credentials as a progressive are somehow undermined because he doesn’t favour penalising people who decline to buy health insurance. I seem to recall a few years ago John Howard running on a policy of penalising people who decline to buy health insurance. We didn’t think this was a particularly progressive policy when he did it. (Though to be fair to Howard, his penalties only kicked in for people earning significantly above average earnings.) And we didn’t think it was a sign of creeping conservatism in the Labor Party that they opposed it. Quite the opposite; it was caving to Howard’s policies that was the sign of creeping conservatism. We thought, quite accurately, that what Howard was doing was trying to undermine public (i.e. universal) health insurance by propping up private (i.e. partial) health insurance. To see a candidate be smeared as a conservative for not being enough like John Howard, well it’s a bit galling.

Now some may say that there are differences between the Clinton mandate plan and the Howard mandate plan, differences that are big enough to make one plan the paradigm of progressive thought and the other a clearly anti-progressive plan. Personally I think the differences aren’t huge. Both plans let people fulfill their mandated duties by buying into a government plan. Perhaps Clinton’s government-run insurer will be preferable to Medibank Private, but we’ll have to see how that pans out. Both plans have some steps for making it affordable for low-income people. Though in this respect Howard’s plan, which didn’t apply to low-income people, was clearly preferable. Perhaps the penalties will be fairer in Clinton’s plan than Howard’s, though since Howard’s penalty was an extra 1c on the tax rate, it’s hard to imagine that Clinton will suggest a more progressive penalty. Anything not income-tied would clearly be much less progressive.

Obviously Howard was proposing this mandate in a different context to the current American system. But the Clinton/Obama debate is taking place in a different context to the current American system. Both suggest making a range of changes to health insurance, with community rating being the key. The big question is whether we should make all those changes, or make them all and fine people who don’t buy in. I think adding the fines is no better than what Howard did, and I opposed that at the time (and still do), as did many people from the left, so I oppose the Clinton mandates. I could be convinced that there are deep reasons to support the mandates, but I doubt I could be convinced that it is the lefty thing to do. That wouldn’t be John Howard’s style.

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{ 43 comments }

1

tib 02.02.08 at 4:15 pm

I can see where one could add mandates to a public universal insurance system in an attempt to favor private insurers, but there is no public universal insurance in the United States. It is worth comparing how the Clinton and Obama plans deal with that fact to understand the politics here better.

The Obama plan prohibits the public insurance provider from competing with private insurance for the bulk of profitable customers, those insured through medium and large businesses. This is a sop to private insurers, in an effort to ease passage of his plan. It also cuts off the possibility that Obama’s plan could evolve into single payer, since the public plan will always have more expensive customers and thus higher premiums. The bulk of Obama’s plan is the National Health Insurance Exchange, which is designed to control costs by encouraging competition among private insurers. Given that Obama’s advisers prefer market-based solutions to most problems all of this makes sense.

The Clinton plan’s public insurance provider is set up to compete for all customers, as was Edwards’s. Clinton does not believe market-based solutions can solve the health insurance crisis, so her focus is on expanding government programs to crowd out private insurers through competition. Universal coverage is critical to the political survival of these government programs, since in the U.S. social insurance survives Republican attacks where entitlements do not. Given the reforms around pre-existing conditions and risk pools that all the plans include, and in the absence of public universal insurance, mandates are required to achieve the universality of social insurance and to prevent the Republicans from using free-riders as an excuse to revert to market based solutions.

Note that in the last debate Obama admitted that his plan would require a mandate, in the form of a fine of back-premiums, to work.

2

P O'Neill 02.02.08 at 4:23 pm

Obama is not helping himself by not being fully committed to his proposal. In the LA debate, he said that if someone who did not have insurance got sick, they’d get a bill for the premiums that they should have paid:

OBAMA: If people are gaming the system, there are ways we can address that. By, for example, making them pay some of the back premiums for not having gotten it in the first place.

So is that a fine or not? And anyway, someone without insurance gets a cancer diagnosis and you’re also going to land them with a bill for thousands of dollars of retroactive premiums?

3

Brian 02.02.08 at 5:16 pm

I don’t know why there’s this widespread usage (tib and p o’neill being just 2 examples) of referring to retroactive premiums as a mandate.

By definition almost, mandates make people who would otherwise not want to buy insurance worse off. They have to make a trade they don’t want to make, or pay a penalty.

Having the option of retroactively purchasing insurance if you turn out to need it makes people who would otherwise not want to buy insurance better off. Indeed, having an option to retroactively insure against losses is one of the most valuable kinds of option you can have.

So we’re looking at a certain class of people, those who don’t want to buy insurance. Obama in effect says they’ll get a valuable option. Hillary says they’ll have to pay a penalty. And these are somehow both usefully described as the same thing, i.e. mandates? I’m really missing something.

Having said that, I didn’t know a lot of the other details that tib points out about the different roles of the govt insurers in the Hillary and Obama plans. It does sound like in those respects, Hillary’s plan is preferable. But they seem to me to be independent of the point of mandates.

Tib’s argument is that without a mandate the govt plan won’t be universal, and hence will be politically vulnerable. But with a mandate it won’t be universal (plenty of people in other plans after all) and hence will be politically vulnerable. If it’s a govt plan competing with private plans, even on a level playing field, that’s sounds a lot like the Social Security plans that let people transfer money out of SS into private accounts. We all called that privatisation, and said it would undermine, perhaps fatally, universality. I don’t see how, on a political level, Hillary’s plan is better. If you want a universal plan for political reasons, you have to make it universal, not one that people can opt out of, either by going private or by paying a penalty.

4

abb1 02.02.08 at 5:16 pm

Aren’t they all just blowing smoke with these proposals? It’s not like whoever is elected will actually have a chance to implement anything even remotely resembling any of these plans. It’ll be between the lobbyists and their clients in congress.

5

rootlesscosmo 02.02.08 at 5:39 pm

Given the hideously unbalanced state of the U.S. tax system, we can quite justly have tax raises that cost the vast majority of people not one penny.

Explaining tax progressivity to Americans is practically impossible; I’ve tried, lord knows. They believe there is a single thing called “taxes” and these can be raised (bad) or lowered (good), and there’s an end on’t. (This is why “flat tax” proposals, which deserve only hoots of derision, get taken seriously by large numbers of voters.) And trying to show that (for example) the tax increases to finance single-payer would be more than compensated by savings elsewhere is likewise a hopeless task.

6

tib 02.02.08 at 5:44 pm

brian, your last paragraph seems to be a repeat of your argument from the post. I probably haven’t articulated how the current state of U.S. health insurance changes the parallel to Social Security.

There is no public insurance to privatize in the U.S. There is a private system we want to turn public. Mandates can work either to move toward private or public depending on initial conditions and the regulatory environment. Since the initial conditions in the U.S. are almost exclusively private insurance (the only populations covered by public insurance are expensive populations that cannot afford private insurance), and since the rule changes both plans propose favor public solutions, a mandate will move the system away from private insurance and toward public insurance.

7

tib 02.02.08 at 5:47 pm

abb1, if you feel all this policy talk is just smoke blowing then Obama is probably the candidate for you. At least he gives you the feel-good anti-lobbyist rhetoric.

8

PAG 02.02.08 at 6:24 pm

Without some sort of mandate those choosing to be uninsured will either require public funding of care for health emergencies or spend from their own savings.

I don’t worry about the wealthy. They always have the option to spend from their savings.

The problem lies with the poor and working poor, as it does now. Should they be uninsured and have a health emergency it’s certain that they will turn up at ER’s, hospitals and clinics that cannot turn them away. Guess who pays in that situation? Is a system without mandate significantly different from the chaos we currently have? Shouldn’t we go for a more complete solution with the 2 trillion we spend on health care?

See medicynic.com for further discussion on a national health care system.

9

abb1 02.02.08 at 6:38 pm

Tib, their prescription drugs bill prohibits the government from negotiating discounts with drug companies. Congressman Billy Tauzin, the main force behind the bill, has become the CEO of PhRMA. How can anyone take this “policy talk” seriously?

10

Brian 02.02.08 at 6:47 pm

@tib(6),

I must have written badly, because I intended to make a new point! I thought you were making the following argument.

1. With mandates we’ll have a universal system, and without mandates we won’t.
2. Universal systems are more politically stable than non-universal system.
3. It’s good to have reforms that last!
4. So mandates are (ceteris paribus) good

That sounded like a pretty interesting argument, and I was trying to say something useful in reply to it. And my reply was that there was an equivocation on ‘universal’ that undermined it.

If by ‘universal’ we mean everyone has *government* insurance, then obviously premise 1 is false, since the mandate plan will allow people to buy private insurance instead.

If by ‘universal’ we mean everyone has some insurance or other, then I think (though this is much less clear) that premise 2 is false. There isn’t any record that programs that allow people to opt-out if they use a similar private rival are more politically stable than merely programs that are simply voluntary.

And the reference to SS here was meant to be pushing the line that a lot of people thought that govt programs that allow opt-out are much weaker than govt programs that don’t.

Now it’s possible that programs that have an unconditional opt-out (a la Obama-care) are even less stable than programs that only allow opt-out if you replace the govt service with a similar private service (a la Clinton-care). But I don’t see much reason to believe that. I think that when you’re looking at political stability, just like when you’re looking at efficiency, or justice etc, there’s no substitute for real universality. Obama’s certainly not better than Clinton in this respect, but I’m still not convinced he’s much worse.

Having said all this, I did write this before seeing that Jonathan Gruber has argued that the cost differences could actually be quite large. Perhaps I was much too flippant about the extra costs to govt of no mandate. I’d have to read (and even more, understand) his paper to be more sure about this.

11

terence 02.02.08 at 6:49 pm

Brian,

The trouble with no mandates it that people can free ride – not have insurance until something goes wrong. Or, at least they could unless you allow insurance companies to prohibit coverage of pre-existing conditions. But if you do that then you get adverse selection problems. I know little of the Australian experience but on paper this seems like a real issue to me.

12

chuck 02.02.08 at 7:30 pm

OK so if no mandates then let the uninsured go broke from medical bills or not depending on their luck but let the rest of us get health care at flat rate prices. That is way better for anyone sick but the healthy will complain and the insurance companies will probably bill the healthy on two lines; one with their healthy rate and one with the “govt mandated” subsidy to the folks with above average needs.

The HMO’s will fight this to the end. I don’t think there is a series of steps that get us to universal single payer without bold strokes against them.

And meeting the GOP half way to hell in order to be “bipartisan” isn’t going to work either.

13

GMFORD 02.02.08 at 7:33 pm

I have to agree with Obama regarding health care. I know lots of people without health insurance (I’m in IT and many of us are still working as contractors). We don’t have it either because the cost is exhorbitant or because we can’t get anyone to take us. If those barriers were removed we’d buy it.

Not sure why people think that there are lots of people who fall in the ‘other’ category — those who won’t buy it anyway even if barriers are removed. It’s kind of a conservative talking point to assume that those ‘others’ are so different from the people we know.

Sure there are people who will try to game the system but I just don’t think the numbers are significant enough to worry about.

14

max berkowitz 02.02.08 at 7:36 pm

why can’t they have health insurance similar
to medicare.I will soon be 75 and been on
medicare for 13 years.I get 4 drug medications
a 3 month supply cost me $8.00 each.
The administration cost is 3% to me that is
very low.I get to pick my oun doctor my oun
hospital.What is wrong with these goofballs
in Washington?

15

California Nurses Association 02.02.08 at 8:00 pm

Thank you!

That was about as clear an analyis of mandates as we’ve seen.

Let’s look at the political realities: caregivers and patients in California just helped defeat the mandate plan pushed by Governor Arnold and the Democratic Speaker. They picked the plan up from Mitt Romney’s Massachusetts, where it was pushed hard by insurance lobbyists and is now failing. It is a step backward to increase the role of insurance corporations, and that policy would probably fail at the national level.

Our real advances will be made as we replace for-profit insurance corporations with guaranteed, universal, non-profit, single-payer health coverage.

16

Steve LaBonne 02.02.08 at 9:17 pm

CNA, that’s why I think we should just leave badly enough alone until the current “system” completely collapses of its own weight, which can’t be too many years off. Only then will it be possible to build enough public support to enact a workable European-type system over the (figuratively of course) dead bodies of the insurance lobbyists.

17

Kathryn in California 02.02.08 at 9:47 pm

People outside of the US might not know what self-pay insurance is like for people with pre-existing conditions.

Control group: me. I’m in my 30’s and have a individual-pay (not through a group/company) plan at Kaiser (an HMO) for $320/month. I’ve had this since 2000, and it’s the top priority payment- the car or housing can be late, or unpaid. Not this.

It goes up by about 15% a year. I have fairly low deductibles, and will likely spend an extra $200-400 on copays ($20/visit, $20/pharmacy, $200 for an ER visit, etc.). Say about $4,000 this year.

$320/month is potentially doable even by someone at minimum wage.

My best friend is younger than me and has a pre-existing conditions that makes her ‘uninsurable’ if she applies to insurance companies. Nothing like cancer, either, but just a combinations of small illnesses.

She pays $950/month (up from $890 last year) for Californias “high risk” (if all else fails) insurance.

$11,400 a year. AND it has a 20% deductible.

If she goes to the ER ($2000+) hospital ($2000/day) or the ICU ($10,000/day) she’ll be paying $500 or $2000/day on top of her monthly payments.

Her life is far more contrained by her insurance than mine will ever be. Sad part is she’s probably more healthy than I am, but it’ll be a few years yet before insurance companies will care, and by then she’ll be in her 40’s and that’s expensive regardless.

18

christian h. 02.02.08 at 10:31 pm

I’m with abb1. I guess that makes me “cynical” again. I do think some progress on health insurance may be possible if the pressure is kept up, but given how everyone already accepts any old plan even during primary season, that doesn’t seem likely.

19

david mizner 02.02.08 at 11:03 pm

“What’s quite irritating about this whole debate is that several writers (most notably Paul Krugman) have been insisting that Obama’s credentials as a progressive are somehow undermined because he doesn’t favour penalising people who decline to buy health insurance.”

Actually, this is false. Obama has said that he’s open to fine people who wait to sign up for insurance till they’re sick–a backdoor mandate, in effect. This debate may not reveal that Obama is a bad progressive but it does reveal that he’s not a new kind of politician. As if I’d ever thought otherwise.

Al Gore attacked Bill Bradley’s health care mandate from the left in 2000, but that was before a consensus among experts had emerged that a mandate was a prerequisite for universal coverage. There might be a principled libertarian argument against a mandate, but Obama isn’t making it. He’s claiming against all evidence that his plan would lower costs more than Clinton’s and that the lowered cost would lead everyone to buy insurance. Not so, and he knows it. The experts say 15 million people would be left uninsured by his plan–a figure uncontested by Obama’s policy team. Now the term “expert” should be treated with skepticism, but the lack of social science evidence cited by Obama and his defenders is striking. Where are the studies showing you can get universal coverage without a mandate? I haven’t seen one.

A principled argument would be: “I think the moral problem of making everyone buy insurance outweighs the moral benefit of covering everyone.” He dares not make that argument.
Clinton (and Edwards before her) make the opposite (and superior) argument: that the moral problem of making people buy insurance is outweighed by the moral (and financial and logistical) advantage of universal coverage.

There are things so important that we have to share cost and risk. If health insurance isn’t one of them, I don’t know what is.

20

dana in chicago 02.02.08 at 11:09 pm

$320 a month is potentially doable for someone making minimum wage? I respectfully disagree.
Right now, the Federal Minimum Wage is $5.85.
If you work 40 hours/week, that’s about $900-$1000 a month. Spending a third of your monthly income on health insurance is doable?

21

zyx 02.03.08 at 1:45 am

1. Using health insurance examples from the FIFTIES or even the eighties seems, um, flawed. Insurance premiums/health care costs were very low then compared to now. Absorbing a number of free riders then would not be nearly as problematic.

2. Under the Obama plan, people who “can’t afford” health insurance, and then, surprise! they are diagnosed with diabetes or cancer or something else that is nasty, expensive, and dire are going to have to pay some kind of back premiums, or higher premiums, he says. If they really couldn’t afford it (or have spent all the money on Toys for TwentySomethings), and now they are sick, where are they going to get that money?

3. If people like my soon-to-be-25-year-old son, who is as healthy as they make ’em, doesn’t have to buy insurance and is assured of being able to get it if he DOES get sick, why should he bother to buy insurance now, at all?

22

Adam 02.03.08 at 1:55 am

Ok people, mandates don’t lead to universal coverage. We have simple example in the US already – Massachusetts. If you can’t afford insurance, you have to apply for a waiver to be exempted from the mandate. Roughly 20% of people in Massachusetts are eligible for the waiver – that hardly enforces universal coverage.

Finally, tib’s assertion that Obama’s plan prohibits the public plan from competing with private plan’s is patently false. While Obama’s plan does mandate that employers provide health insurance to their employees, it allows all people, regardless of their employment status to buy into the public plan.

In essence, both plans will achieve basically the same thing. Some people are going to fall through the cracks in both plans, and those numbers are roughly equal. Obama’s plan proposes mechanisms for catching people who fell through the cracks – possibly retroactive premium payments. It’s not perfect, but it’s at least equivalent, if not a little better than Hillary’s plan. The only plans which will catch everyone are ones which automatically enroll everyone in the public plan with the premium being paid through taxes. Neither Hillary or Obama have proposed that system. If that difference were there, I could see this argument making sense, but as it stands, it’s all a bunch of hot air.

23

max berkowitz 02.03.08 at 2:25 am

OK let’s talk realities yes I get great coverage
I pay nothing for it.5 yrs ago I was with Kaiser
Health I get a semi-annual blood test Kaiser
automaticaly checks PSA mine was 6.5.Kaiser
assigned me to a specialist he took samples from
my prostrate and it came out I had cancer on
both sides of my prostrate.With the help of
Kaiser I decided to go with 40 radiation
treatments.Guess what the whole thing cost me
$1.00 in reality the cost was $125,000.

24

Zora 02.03.08 at 2:31 am

Dear Mr. Labonne,

Those of us without insurance who will die or go broke in the absence of SOME changes, even if they aren’t perfect, will doubtless object to being used as human minesweepers to clear the ground for the perfect health insurance you envision.

25

aretino 02.03.08 at 3:22 am

I’m not convinced that Clinton’s public plan will compete with private plans to insure medium and large businesses. If it is so, she keeps it exceptionally well hidden. I’ve read through all the information the candidates have about their health care plans on their websites. I didn’t find anything in the Clinton policy statements about offering the public plan to any businesses, even small ones.

Of course, there are a number of things left out of Clinton’s policy statements — not least is omission of even a hint of how she would enforce her mandates. For a supposedly all-important element of her plan, this really is shockingly cavalier, since it leaves us without any means of assessing whether we could really expect a broader take-up than a purely voluntary plan.

Furthermore, crowding out private insurance is neither a stated goal nor a plausible outcome of any of the Demcratic plans, including Clinton’s. The existing inefficiencies of private insurance are largely a function of the bureaucracy involved in rating and selecting customers. Community rating and guaranteed issue eliminates those inefficiencies. So those policies will actually make private insurance more competitive with a public plan.

26

Jason 02.03.08 at 3:36 am

Under the Obama plan, people who “can’t afford” health insurance, and then, surprise! they are diagnosed with diabetes or cancer or something else that is nasty, expensive, and dire are going to have to pay some kind of back premiums, or higher premiums, he says. If they really couldn’t afford it (or have spent all the money on Toys for TwentySomethings), and now they are sick, where are they going to get that money?

Obama’s plan does not call for penalties or back premiums. He has just suggested those mechanisms as a possible solution if there is a serious adverse selection problem. We don’t know that there will be.

Furthermore, a similar problem may arise under a mandate. How do you propose to handle people who fail to comply with the mandate and then get sick with cancer or diabetes or whatever but have no insurance? Presumably, you would not deny them the health care they need. So either they would get a free ride, or you would impose some kind of fine or other financial penalty on them for failing to comply with the mandate.

27

Adam Stephanides 02.03.08 at 4:38 am

“The argument for mandates is basically that without them you have adverse selection effects.”

No, the argument for mandates is that without them, and with community rating, there is no reason for healthy people to buy health insurance, since they lose nothing by waiting until they get sick. Requiring people to pay back-premiums, as Obama proposed, still wouldn’t make it rational for healthy people to buy insurance, since they wouldn’t pay more in total than they would have paid anyway.

As for Australia, I don’t know the situation during the periods you cited; but currently (according to Wikipedia) Australia has community rating, but it also allows insurers to impose a twelve-month waiting period before the newly insured can receive benefits for pre-existing conditions. This makes it rational for healthy people to buy insurance, but I don’t see anything like that in the Obama plan.

28

Adam Stephanides 02.03.08 at 4:42 am

27.

“The argument for mandates is basically that without them you have adverse selection effects.”

To be specific, the argument for mandates is that with community rating but without mandates, there is no reason for healthy people to buy health insurance, since they lose nothing by waiting until they get sick. Requiring people to pay back-premiums, as Obama suggested, still wouldn’t make it rational for healthy people to buy insurance, since they wouldn’t pay more in total than they would have paid anyway.

As for Australia, I don’t know the situation during the periods you cited; but currently (according to Wikipedia) Australia has community rating, but it also allows insurers to impose a twelve-month waiting period before the newly insured can receive benefits for pre-existing conditions. That provides an incentive for healthy people to buy insurance, but I don’t see anything like it in Obama’s plan.

29

Adam 02.03.08 at 4:53 am

Even healthy people need to go to the doctor occasionally. We’re not just talking about cancer and things like that. Even the average healthy person will need antibiotics. And office visits are not cheap at all. You don’t have to have a chronic disease to see that you win by having health insurance.

30

Steve LaBonne 02.03.08 at 1:06 pm

zora, I’m not unmoved by your predicament, but whatever’s being proposed now is undoubtedly, in the current climate, pretty far from what can actually be enacted, and I would be wary of assuming that any “changes” enacted with the participation of the health-insurance mafia will actually improve anyone’s situation. They could easily make things worse while blunting any momentum for genuine reform.

31

Katherine 02.03.08 at 6:25 pm

Could I ask for a translation please? Is “co-pay” the US version of the UK “excess” – ie you have insurance, but you have to pay the first $X of any charge?

If so, those co-pay figures that I’ve seen quoted by people in debates about the US system seem ridiculously high – you have insurance and you STILL have to pay, say, $200 for an ER visit? That sucks mightily.

32

abb1 02.03.08 at 6:58 pm

There’s this thing called ‘deductible’ – that’s the amount you pay yourself in a calendar year, starting from January 1st before the insurance kicks in and starts paying anything at all. That could be $1000 or so. And then there is a ‘co-payment’ – that’s the portion of every bill that you have to pay, could be $10 or $15 or could be 10% or 20%. For ER it’s usually higher.

33

Kathryn in California 02.04.08 at 12:06 am

Katherine,

In any system a small set of co-payments is useful to let people know the relative cost of an ordinary doctor’s visit vs. an ER visit.

If it costs the same to visit each (including 0), then people will end up overusing the ER. This happened in Ontario, Canada, for example.

If the ER costs 10x, then set up the system so people recognize it. But it could be $1 / $10, not the $20/$200. The signal and ratio is key, not the absolute amount. One could even have coupons–sent in unlimited amounts. 1 silver coupon for an ordinary visit, 3 gold coupons for the ER.

My $200 will be all I pay.

My best friend–detailed in the example above–will pay 20%, so at least $400 for an ER visit and $400/day for being in the hospital.

34

SG 02.04.08 at 3:21 am

Adam at 28, wiki isn’t giving you the full story about health insurance in Australia, so your comparison is misleading. All the people in Australia who pay for private insurance also have the national insurance scheme – they are buying private health insurance on top of this. For the 12 month waiting period there is no risk that they will be unable to get health care, just not the private care they want.

Because we have a national system with no opt-out, everyone has health insurance. Some rich people buy private insurance so they can have their own room in a snazzier hospital, or so they can get elective surgery without a waiting period.

Given the examples I see all the time from the US in threads like this, I don’t understand how there can possibly be a debate. If a normal person on minimum wage is paying 30% of their before tax income on health care, it seems obvious to me that you should just raise taxes by 10% and make everyone pay for national health care. Then the private industry will have to offer similar insurance to the Australian style – boutique hospital access insurance. Everyone is covered, the private insurers and hospitals can’t game anyone for extra cash, and anyone who wants to jack up the price has to negotiate with the government.

I know it probably makes me seem like a naive furriner, but why is there even a debate?

35

cl 02.04.08 at 4:26 am

It’s quite simple, really. It’s the Republican “I’ve got mine, so the hell with you” attitude. Even if it helps everyone else, by God, they want that tax money to spend on a Hummer, and they’re ENTITLED to it. You can’t convince them that something that benefits EVERYONE isn’t going to make them suffer. It’s a zero-sum game to them.

36

abb1 02.04.08 at 8:32 am

There’s no debate, it’s just the usual ‘the jury’s still out on the question of Earth’s shape’ bullshit.

37

GreatZamfir 02.04.08 at 9:46 am

@ sg: Similar thought here from Europe. As far I can tell, health care insurance systems are different in almost every (rich) country, none of them perfect, with their own problems, free-riders, or big bureaucracy, or unchecked costs, or uninsured people, or long waiting lists.

But the US seems to have ALL the problems, and high cost to boot. Are they really too stubborn to look around and see what works and what doesn’t?

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Roy Belmont 02.04.08 at 10:41 am

#37 – Well, high cost, that would mean a lot of money going somewhere, right? Not just being paid, but being received? So…maybe, just maybe, all that moolah is actually creating a kind of inertia in people that know better? People that know health care in the United States is a disease in itself. But they’re, oh say, making too much money? Conflict! So that blinds them to what’s right, maybe.
And then they have these sort of servants on the payroll, whose job it is to blind in turn the very people who are giving them all that high-cost money, which they’ve been convinced they have to pay in order to stay alive and to keep their loved ones healthy. So this vague amorphous entity “the US” is really not present here in a way that allows us to say “are they ‘really too stubborn to look around’?”. There’s at least two thems involved in that “US” “health care”, each with diametrically opposite interests in the debate.
One them’s got all that bank coming in from the way things are, and they understandably feel that that’s “working” for them. Plus with all that money coming in they can buy great medicine without much trouble.
The other them’s are the ones paying all that money not making it, or suffering because they can’t pay it. They’d certainly change the whole setup, if they knew they could. But they’ve had their eyes poked out by the television’s blinding arc, and their brains softened, and their hearts made small and timid.

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Doug K 02.04.08 at 4:22 pm

“why is there even a debate ?”

there really isn’t a debate as such. What there is, is the highly-paid lackeys of the highly-paid CEOs of the ‘healthcare industry’: who spread enough FUD (fear, uncertainty, doubt) that those who aren’t paying attention and have insurance, think there is a debate. Follow the money. That trail leads through the dank swamps from the ‘healthcare industry’ to the politicians. John Edwards was our best hope of a change, since he’s used to fighting the bastards, but now he’s out of the running, dangnabbit.

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Nell 02.04.08 at 8:27 pm

@greatzamfir #38: Are they really too stubborn to look around and see what works and what doesn’t?

No — too sold out to or intimidated by giant corporate insurers, drug companies, “free enterprise”-minded American Medical Assn (doctors lobby), etc. in a political system where our Supreme Court has decided that money = speech.

Public campaign financing will be necessary to make the sane solution politically possible, but the already sold-out pols won’t vote for it. Our gigantic chicken/egg problem…

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No Preference 02.05.08 at 3:39 pm

I live in Massachusetts, where mandates were implemented last year. I don’t think that mandates are an answer, at all.

My wife and I are temps. We can only afford the $950/mo health insurance premium if the two of us are both working. Last year I worked 11 months, my wife 8 months. We had insurance for 10 months. (That was an unusually good year for us in terms of employment).

Our income fluctuates widely. The state measures our affluence according to what we earned last year rather than what we’re earning now. Under the current system it’s very difficult for us to avoid being penalized, despite our desire to be insured. The mandate just adds further to our anxiety over health.

The Massachusetts plan was designed by hospitals and insurers to solve their own problems, not those of the public. I am strongly convinced that as long as public policy bows to the wishes of private insurers our health system will be a source of pain rather than support for an ever-growing number of Americans.

Écrasez l’infâme.

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No Preference 02.05.08 at 4:07 pm

A followup to my previous post – all of our premium payments are made with the knowledge that if one of us gets really sick, so sick that he or she cannot work, then we will lose our insurance and will be liable for all of the enormous expenses anyway.

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SG 02.06.08 at 2:01 am

you pay $950 a month for nothing? As a temp worker? That is ridiculous. In Australia you would have to be earning $25000 a month before you had to pay that much money for your health insurance. And you would be guaranteed treatment no matter what.

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