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Mandates, Which Is A Funny Word

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When I started thinking about responding to the comments on the last post, my original impulse was to strike at the argument about principles.

For instance–“our government” does indeed demand a lot of things from us, but the Constitution deliberately limits what those things can be, at least as far as the federal government is concerned.  State governments demand that people who want to drive have car insurance–actually, that people who own a car and want to drive it on the public roadways do, since you can have a license and no car, and then you can’t buy auto insurance even if you want to–but state governments are not the federal government. 

It took a Constitutional amendment to allow the federal government to impose an income tax on individuals, and another for it to institute a peacetime draft.  I could make a good case that there is nowhere in the Constitution where the federal government is authorized to impose such a mandate–and the lawsuits that will inevitably result from this bill are going to make exactly that case.

I could also go on at some length about the virtues of strictly limiting what actions a government is allowed to take, and at even more length about the incompatibility of a significant welfare state with large scale immigration.

And I may do all that at some point.

But the fact is this–even if we had a Constitutional amendment allowing it, I’d oppose this particular health insurance mandate, because it is what it is.

Why?  Well–

1) Because it’s not insurance.  Insurance is pool to spread the risk for things that are both relatively random and rare.  The “rare” part is important.  Most people who have car insurance will never have a major accident.  Most people who have house insurance will never have a house fire.  Even so, car accidents and house fires can happen for reasons almost entirely outside our control, and can happen to anybody at any time.  Therefore it makes sense to band together to pool our resources so that if that random chance happens to us, we have something to fall back on. 

If most people had car accidents, any car insurance scheme would bankrupt itself in no time.  The same for any house insurance scheme in a world where most people had house fires.

What insurance does not pay for is the routine cost of keeping up the car or the house.  Think of how expensive your car insurance would be if it was expected to pay for replacing your shock absorbers and fixing your flat tires, for your routine 3000 mile maintenance check-ups,  and for trips to the car wash.  Think of how expensive your house insurance would be if it was expected to replace your water heater when it got old and to pay for repainting the place every three years, never mind things like cleaning your gutters or getting the kitchen retiled when the tile got old and started to crack.

Health insurance is what we all had back in the Fifites–it covered things like hospitals stays and surgical procedures.  You paid for your yearly physicals, your routine check-ups. uyour vaccinations, and your routine medical problems (colds, flu, strip throat) yourself. 

What we call “health insurance” today is actually a comprehensive medical plan that covers every little thing we do and every visit we make to  a doctor.  It is not an insurance system, and couldn’t work as one–since it covers everything, everyone is drawing benefits from the system all the time.

That’s why “preexisting conditions” are so controversial.  Nobody expects your new car insurance, bought last week, to pay for fixing the damage caused in an accident you had a month before you signed onto the plan, and nobody expects your new house insurance to pay for damage that occurred to your house because you bought it, either. 

What we want from our health “insurance,” however, isn’t insurance, it’s a comprehensive payment system that will cover absolutely everything we need medically.

A government mandate to buy actual insurance would be relatively minor in terms of its impact–on an actual insurance model, as in the Fifties, it would be relatively cheap.

But a comprehensive payment system is going to be expensive.  Really expensive.

How expensive?

2) The costs are absolutely staggering.  In case you don’t know, the cost to buy comprehensive insurance–not a “cadillac plan,” but ordinary insurance–for a family where no one is over 50 is a little more than $900 a month.  The cost for a family where at least one member is over 50 is $1200 a month. 

And that’s assuming you can buy into a group plan at your place of work.  For self-employed people or people trying to buy insurance on the individual market, the prices are much higher, even in lightly regulated states.  (Regulations always drive up the costs of health insurance because they almost always mandate specific kinds of coverage.)

In a best case scenario, then, a family mandated to buy insurance under the new bill would be out between $10,800 and $14,400 a year–how many people do you know who can afford that? 

The bill is supposed to fix some of the problems with this–there’s a subsidy on a sliding scale, for instance, and individuals will be allowed to deduct the cost of their insurance on their income taxes.  At the moment, people with health insurance from their employers essentially receive an extra untaxed income in five figures, while people who must buy their own have to buy it with after-tax dollars or (if they’re self-employed) half with after-tax dollars, since the other half is deductible.

The mandate is just as bad for businesses–if my business is required to spend an extra 10 to 14 K a year on every employee, I’m going to hire fewer employees.  I’m going to have to.  The money available for salaries for staff is limited.  How do you figure the little Mom and Pop places are going to do under this kind of mandate?  On a business level, this damned thing is welfare for large corporations, effectively restricting the ability of their small competitors to grow and therefore challenge them.

3) The corporate practices of most US health insurance companies amount to legally sanctioned organized crime.  I’ve said this before, but I’ll say it again.  I had a cousin who worked in claims for one of the country’s largest health insurers.  She and her fellow workers were told to automatically deny certain claims even though these were explicitly covered under their health plans, because a good hunk of people wouldn’t dispute the denial, thereby saving the company millions of dollars by making it unnecessary for them to pay off on what they were contractually obligated to do.

This was not a single instance of bad management.  This is a fairly routine practice throughout the industry.  And it’s only one of a list of things these companies do to escape from paying off on what they have agreed to pay off on–and taken your money on your assumption that they would pay off on. 

If this was any other industry, these guys would be in jail.  The other side of the constant niggling interference of state regulation of insurance companies, however, has been both federal and state hands-off, look-the-other-way policies about corporate abuses and outright fraud.

I have nothing at all against people making lots and lots of money, as long as they earn it.  I figure Bill Gates deserves every cent he has, and Warren Buffet, too.  I don’t think there’s any such thing as “obscene” profits or “out of control” bonuses as long as companies aren’t using my tax money to pay them.

But this is not earned money.  The health insurance companies make most of their money these days by a form of bait and switch, by denying their customers what their customers are paying them for.

I’ll sit still for the mandate if there is a public option that allows me to refuse to deal with these people.

If there isn’t, what this thing amounts to is nothing better than government mandated rape.

Written by janeh

March 12th, 2010 at 12:22 pm

Posted in Uncategorized

8 Responses to 'Mandates, Which Is A Funny Word'

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  1. I wonder exactly how concerned the 46.3 million people without health care are with rhetoric and statistics regarding the current health care bill. They want treatment for those medical necessities (heart disease, liver disease, cancer, parkinson’s disease, etc) treatment that they do not have. I am certainly not a cheerleader for large health insurance providers. But I have not been burdened with enormous debt after receiving good medical treatment paid for through my health insurance providers. Nor have the monthly premiums been outstandingly expensive. A public (or single payer)option is never going to pass. So, what is alternative if no health care bill, even the flawed one now proposed, is enacted?

    jem

    12 Mar 10 at 4:13 pm

  2. Well, a couple of things here.

    One, I HAVE been left with staggering medical bills–if you have an individual (rather than a group) plan, insurance companies can drop you if you get sick.

    So, when Bill got cancer, the company he’d paid premiums to for a decade declared him “no longer insurable,” and kicked him off.

    Which meant I was left holding a quarter of a million dollars in medical debt plus another sixty thousand in prescription drug debt when he died.

    I coped.

    Second, I assume that your job provides you with medical insurance and you’re asked to pay part of the premiums–that’s what happens with most of the people I know.

    The entire premiums are what I quoted. I know, because, at the moment, I’m one of those 46.5 million people without medical insurance.

    And, in fact, the premiums may be higher, because what I quoted was the amount you pay if you’re working for the state of Connecticut but not covered (because, for instance, you’re part time), but are allowed to buy into the system if you want.

    The state of Connecticut is a huge group, so premiums per person are actually lower than they would be if you were buying on the individual market, assuming you could get somebody to insure you at all if you were over fifty.

    The health care bill as now written won’t cover even half those who are uninsured–it won’t cover me.

    It does not provide a single option for people who cannot afford the high premiums on the individual market–it just says they’d damned well better pay them, or they’ll get fined.

    It does not provide a single option for people making between 50K and 80K a year who do not get insurance from their employers–and those are the MAJORITY of the uninsured.

    It demands that companies no longer exclude previously existing conditions–but it doesn’t regulate the amount they’re allowed to charge, which means that you will now be able to sign up for insurance and get hit with a bill for even more than the standard rate as quoted above.

    (CT has a guaranteed issue statue for the self-employes. If you’re self-employed, the companies have to sell you a policy–but they can charge anything they want. A friend of mine who had breast cancer twenty years ago is now doing $2100 a month in premiums, and it’s going up when her policy renews in June.)

    An employer mandate to provide insurance won’t cover any more people either–companies not now providing insurance will cut back their workforces to accommodate the new expense.

    So you’ll have more people unemployed, which means more people without the means to buy any insurance at all.

    If you think the bill before Congress will provide insurance for those without it, you’re mistaken.

    Congress gave up on that goal months ago.

    What they’re now after is “containing costs,” which they think they can do by forcing young, healthy uninsured people (prime meat for the insurance companies) to buy insurance.

    My guess is that the number of uninsured in the US will grow every year whether they pass this bill or not. In fact, it may grow faster if they pass this bill, see above.

    A “public option” is the only thing that won’t get you higher costs and more uninsured in the long run.

    And a public option is not a single payer system–in a single payer system, like Canada’s, there are NO private insurance companies, just government insurance.

    In a public option, there’s one government run insurance plan and all the private ones you want out there. You have the option of choosing one or the other.

    There might be some excuse for the present bill IF it covered the people who are now uninsured.

    But it won’t.

    It isn’t even trying to.

    janeh

    12 Mar 10 at 7:48 pm

  3. Oh, I forgot to say.

    If we can’t get a public option–never mind a single payer–then there is one way to make health care more affordable.

    BAN all health insurance except catastrophic policies with high deductibles, and institute an ACTUAL free market in health care.

    That would bring the cost of health care down. A public option would insure the uninsured.

    This bill is corporate welfare for insurance companies, and helps the uninsured not at all.

    janeh

    12 Mar 10 at 7:51 pm

  4. I am an employer (of my husband and myself) and we do provide our own insurer. We’re an S corp, which means we get group rates. Blue Cross rolls us into a large group of other small corporations. That means that our rates are slightly lower, our raises in rates also slightly lower than single insureds, and we cannot be cancelled.

    But. For the last 10 years, we have insured ourselves ONLY for catastrophic events. We have an extremely high deductible, so basically we pay for all our drugs, doctor visits, etc, and only after we hit that deductible ($5000 now) does the insurance kick in. To us this makes sense, since we treat it AS insurance, rather than maintenance compensation.

    However, even those costs are getting out of hand. Our business (which is us, of course) is currently paying $1000 a month in premiums for what most people would consider very minimal coverage. It paid off two years in a row during which I had 5 hospitalizations, though.

    I do not expect my premiums or the costs I cover myself to go down under any government “reform” program. The best we can hope for is opening up competition between states, so there might be some motivation for insurers to bring costs into the reasonable range.

    Lymaree

    12 Mar 10 at 11:31 pm

  5. Minor nitpick – you do have health insurance in Canada, because I have it, two lots, in fact, from two different group plans I belong to. It doesn’t cover essential health care as defined by the government. That is, if I break a leg, the hospital treatment will be covered, and so will visits to the hospital physiotherapists, but my insurance will cover part of the cost if I go to a private physiotherapist, just as it will if I have a minor ache or sprain and self-refer or are referred by my doctor to a physiotherapists (the hospital ones being rather to busy with people with serious problems to have much time for such things). Routine eye exams are paid by the patient (or partly by private insurance); treatment of eye disease or injuries due to accident are under medicare, and so on and so forth. I don’t think either medicare or most insurance plans will pay anything towards procedures considered strictly cosmetic; there you are on your own. Some things are covered in some provinces and not others – children sometimes have routine eye or dental care covered when adults done, IIRC.

    We do have a rule that except for a very few cases – I think there’s a hernia hospital in Toronto that was grandfathered in, and various doctors are trying to set up private clinics or testing facilities in some provinces – you can’t work in both systems. That is, if you take private patients, your entire practice must include only private patients, and you won’t have access to public facilities, which includes just about all hospitals – all hospitals in many if not most provinces. This naturally practically eliminates private doctors (although not dentists, physiotherapists, optomotrists etc). I think some of the European countries (not including the UK) take another approach – it’s been a while since I heard about it, but I think public and private patients must be treated side-by-side; that is, private hospitatls must take public patient. Without such a restriction, you end up with the public system treating only the really difficult and expensive cases, plus, of course, the poor, and the private ones doing the easy and more highly profitable things, causing higher per-patient costs in the public system than you would otherwise have, and even longer waiting lists as some specialists devote more of their time to their more lucrative private patients (if they can participate in both systems).

    Of course, many people in Australia and the UK, where they have parallel systems, and some in Canada (especially doctors, although often not patients) disagree with my views on the matter.

    Cheryl

    13 Mar 10 at 7:16 am

  6. The Australian system only works because there is a strong private health insurance system running nowadays as a supplementary system to the government system. But that private system, mostly not for profits, was the only system until the early 70s, although previously the Federal government used the private system as agents to pay Commonwealth benefits in addition to the private funds’ benefits for whatever services were covered.

    The real problem with health insurance schemes, government or private, is that they inflate the overall cost of medical care. In Oz, people go to the doctor for trivial complaints which, in the past, they would have ignored. The demand for basic health services sky-rocketed, and people left the private funds in droves, believing, as so many do, that if there was no up-front charge that the service must be free.

    It’s hugely ideological sacred cow down here and a disaster at all levels, precisely because the governments’ involvement in the health delivery system is hampered by the enormous bureaucracy that is sucking it dry. I see Americans say that the private health insurers have huge bureaucracies to and that they would rather a government bureaucracy than a private one. Be careful what you wish for.

    Mique

    13 Mar 10 at 8:34 am

  7. That’s what happens, Mique, when you try to use a private system to run health care – in whole or in part – while guaranteeing access to everyone. And having had members of my immediate family go through chronic and life-threatening illnesses (including those that were indeed fatal) in both the US and Canada, I can say that if you haven’t experienced the bureacracy of the US health care system – and at that, with very good health insurance and a more or less healthy family member to act as an advocate – you haven’t encountered a system that makes the most arcane government bureaucracy – taxation, perhaps, or import/export or immigration regulation – seem like child’s play in a cut-rate day care by comparison. I’ve seen how they handle paperwork etc behind the scenes in the public system; it’s dead simple, doesn’t bill you for stuff you didn’t have done or refuse to pay for stuff you did have done (it’s just about all covered, the essential stuff anyway) and requires the hiring of far fewer people and therefore far less housing and equiping of offices. Not to mention that the insurance company offices I’ve seen have been far more expensively decorated than any government office.

    And if my mother’s cancer had recurred – which seemed very likely at the time – her insurance wouldn’t have paid towards her treatment because there was a cap on what they would provide.

    Health care is a bit of a sacred cow here, too, although there are increasingly (and scarily) loud and influential voices calling for private provision for essential health care.

    However, the hypochondriacs are always with us. I remember some from my old home town in pre-medicare days – I lived opposite the local hospital for years and sometimes one of the doctors would chat with my parents in my hearing.

    Standards of care vary from doctor to doctor anyway. My mother complains because the young family practicioner she’s seeing here insists on actually seeing her in person and doing blood tests every so often to track her response to her medication rather than calling in a new prescription like the old one in Ontario did. I try to tell her that nowadays, doctors expect to monitor their patients more closely, but I’m not sure she believes me, especially after she found out that my doctor doesn’t insist on seeing me so often and sometimes phones in prescriptions.

    Of course, the fact that I’m a generation younger than she is, am on fewer medications and have fewer health issues is irrelevant!

    Cheryl

    13 Mar 10 at 10:36 am

  8. There are a few states which do permit the selling of insurance as Jane defines it as opposed to health care policies, and which permit competition acorss state lines. I don’t have the figures in front of me, but I remember them as being startlingly lower than the CT ones quoted.
    But it’s tricky to maintain. Every in-state insurance company bribes or cajoles state legislatures to give them monopolies, and all the medical providers want mandatory coverage of their pet conditions. (This is especially true of the marginal ones where diagnosis is uncertain or the benefit of treatment debatable.)
    “Pre-existing condition” is an inevitable mess. If I total my car on the 24th and file a claim, the insurance people should–and mostly will–write a check even if I switch insurance companies on the 30th. But for most medical conditions, it’s not a matter of cutting one check, but of a series of bills which will go on for months or years. I can see two possible solutions: either a single-payer plan for any condition which renders the victim “uninsurable” or a rule that whoever has insured the person when the condition is diagnosed is liable for all subsequent costs relating to that illness, even if the insured later drops the policy–as though I struck someone with a car at that date, and the insurance company was still on the hook for payment due to my liability coverage.

    robert_piepenbrink

    14 Mar 10 at 1:35 pm

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