Who Pays for Health Care?
February 6th, 2008 by Peter SudermanIt strikes me as sort of amazing how increasingly brazen universal health-care advocates are in what they really want. Here, for example, is Dean Baker at The American Prospect:
The simple story is that any effort to establish national health insurance will require some anti-free loader mechanism to prevent gaming. The logic is straightforward. Everyone agrees that we want to get rid of the current practice under which insurers are allowed to charge fees based on people’s health. Under this system, people with serious illnesses either must pay exorbitant fees or are unable to get insurance altogether. (Insurance companies lose money if they insure people with high bills.)
Under a reformed system, we will require a standard fee under which everyone pays the same rate regardless of their health history. However, this creates a situation in which it doesn’t make sense for healthy people to pay for insurance. Why not just deal with minor health related costs out of pocket? You can wait until you get sick and then buy into the system and pay the standard rate.
That works for healthy people, but it would destroy the system because the only people buying insurance would be those with relatively high bills. This means that insurance would be very expensive, which of course encourages more people to play the “wait till I’m sick strategy.” The end result is that the system collapses, because only the very sick would ever find it worthwhile to buy insurance.
Shorter Dean Baker: Healthy people need to be required to pay for the health care of the sick. Typically, this is phrased a little more delicately –”people working together to provide affordable health care for everyone” or the like. But no, these days, folks like Baker and Ezra Klein just come right out and say it: If you’re healthy and don’t want to pay insurance premiums, too bad! The government needs to come and make you pick up the tab.
Universal health care advocates like to talk about the issue in moral terms, but the moral logic here seems extremely questionable. Forcing healthy people to open up their checkbooks whenever someone else gets sick seems mighty questionable. Perhaps I’m an outlier, but I wonder how popular insurance mandates and other requirements would be if, say, top-tier political candidates explained the policy on similar terms — especially when reminded, as Megan McArdle points out, those programs almost always cost far, far more than projected.
February 6th, 2008 at 11:15 am
Ah this is a great subject with many angles to it, however because of lack of time I leave a question for Mr. Suderman.
What is the difference between healthy people paying for the sick, and good drivers paying for the ones that get into accidents?
I think that is the whole purpose of the insurance bussiness no ?
February 6th, 2008 at 12:22 pm
Well, in this case, the difference is the requirement to do so. Driving is an integral part of the lives of most Americans, but it’s still a choice. Being alive, on the other hand, isn’t.
While it’s admittedly not always feasible for those who don’t live in major urban areas to do so, one can make the choice not to own a car — and thus not be required to pay for insurance.
Additionally, while it probably isn’t politically feasible at this time, and therefore not an issue that FreedomWorks works on, I oppose compulsory car insurance. Two states — Wisconsin and New Hampshire, in fact, don’t require drivers to be insured.
This isn’t to say I oppose the concept of insurance; insurance, left to the market, can be a useful tool for checking risk. But I do oppose forcing people into insurance schemes.
February 6th, 2008 at 2:04 pm
Aha! you nailed the point that I was trying to make with my question Mr. Suderman. Which is that the concept of insurance in general is at great odds if not outright incompatible with the concept of a free Market.
It seems that you think that insurance can be used as a tool for risk assesment, but it is not, risk assesment exists on its own. The insurance industry must be the only one (other than the classical monopolistic ones) that makes money no matter what (even on the face of unpredictable conditions like the asbestos crisis, hurricane katrina and such).
This is just one of the angles of the subject. Do americans really need insurance to pay for healthcare ? Where is the free market here?, where in theory each individual is responsible for paying for any services he or she receives including medical ones.
If we get rid of medical insurance as a whole, then we will not need to pull our hairs looking for ways to create a Universal Healthcare system. However, vanishing the healthcare insurance industry is such a daunting task (because of what it entails, like reducing the cost of medical services and depriving those poor HMO’s and PPO’s from the billions of dollars a year they are used to) that I doubt any US politicial will ever suggest it.
February 6th, 2008 at 9:02 pm
The only way to get our health care system to work properly is to have everyone engaged in it. The Romney MA experiment has and is proving this very point. I don’t think that there’s much consensus otherwise at this point in the game. Pooling resources together doesn’t sound evil to me…just smart.
“Being alive, on the other hand, isn’t.”
Ah-ha indeed! This is why the rest of the western world realized a loooong time ago that access to quality health care is a human right. Welcome to the “right” side of the argument! We will get a single-payer system in this country the same that Canada did…through the individual states (provinces in their case) trying it out. Watch the U.S. states for more on this…not the federal govt..
FYI, I remember having to purchase auto insurance when I moved to NH in the 1990s. In fact, I had to change companies because the one that I was on previously wasn’t accepted in NH.
February 7th, 2008 at 10:44 am
THe Question I have and will always ask. What will it cost. How much will this forced Insurance cost a Divorced Man, WHo has Children but they live with ex wife. DO I have to file for Bankruptcy to be able to afford providing insurnace for my daughters.
The cost is critical. I have great insurance with my job. IF it goes away. and I am forced to use the Government insurance to save them money What will I be forced to pay. I have not gone to the doctor in nearly 2 years and I am 52 years old and very overweight. The only thing wrong is my weight. No high pressure, No diabites. Blood work perfect. But there is talk in Britian if you are overweight you get no health care even though they pay for it. Politicians decieded who can an can not get health care. It is too expensive to run we have to make cuts.
Universal Health Care sound great. But will it mean I have to pay double in my taxes to support the system. I Make over 75K a year and if I have to pay 15K more a year in funding health Care I will not have enough money to pay CHild support, Apartment or eat. WOuld I have to sell my car to just stay home and never do anything. to survive. Yes I make good money but my budget has only $500 a month I can use for taking my daughters out and to have some fun for myself. I would have to move to the worse part of town to be able to support any major increase in Taxes to pay for Medical coverage. And Because I am overweight will they say you have to pay but you get to see no doctor. I could be shot and will they still say you can not use the Hospital because you are over weight. An interesting question.
February 7th, 2008 at 9:07 pm
“Do I have to file for Bankruptcy to be able to afford providing insurance for my daughters?”
No. Under any of the plans that I’ve seen, if you have a health care insurance plan that you like, you can keep it, period. This isn’t the UK.
“But will it mean I have to pay double in my taxes to support the system?”
No, any other questions? Don’t bendover to fear…
February 19th, 2008 at 1:54 pm
I think that a better answer to Leonardo’s original question is that good drivers do not pay the full cost of bad drivers getting into accidents because bad drivers pay higher insurance premiums that good drivers. Even though most states require all drivers to carry auto insurance, good drivers pay lower premiums for that insurance because they avoid accidents and do get tickets. In addition, good drivers have an incentive to decrease their premiums further by choosing a higher deductible.
This is totally different from the plan advocated by Baker which calls for mandatory coverage with a fixed premium regardless of health and a fixed low deductible. This type of plan turns out to not be insurance but rather a kind of head tax that will be devoted to everyone’s health care.
February 19th, 2008 at 6:45 pm
But the bad drivers don’t pay those higher premiums until *after* they’ve become bad drivers (had accidents and tickets and such). Mandatory health care insurance only works when you help people that can’t afford the coverage in the first place, which costs a lot of money. Getting rid of health care insurance altogether will get rid of the middle man I think.
April 15th, 2008 at 2:20 pm
insurance major medical…
Didn’t realise there was this type of information out there…