Michael Maiello's picture

    The Mandate Stinks Anyway

    While I’m definitely not for the GOP ironically using the courts to reverse Obama’s signature accomplishment, I’ve never been a believer in the morality or necessity of the health insurance mandate.

    First, I’m skeptical because the industry demanded it.  Obviously anyone in the business of selling a product would love to have the government declare that everyone must buy it.  I’m sure Burger King would say yes to a whopper mandate.

    Health insurers argue that if everyone isn’t required to buy at once and they’re required to sell to anyone who wants in, that nobody will buy insurance until they get sick or injured.  It’d be like selling life insurance to a dead man.  This is known as the free rider problem and it does show up in lots of nifty academic studies.  But in real life, so far as we know, it’s a myth.

    In Massachusetts insurers are required to sign up anyone who wants coverage.  The state has a mandate but it’s considered a weak one because the penalties of not complying are far less than the cost of insurance.  Basically, a rational person in an economic model would suck it up and pay the fine while refusing to purchase insurance until they got ill.  This is exactly what insurer Harvard Pilgrim claimed happened to them.  Between March 2008 and April 2009, claims its former CEO, 40% of the people who purchased Harvard Pilgrim insurance kept it for only 5 months and used $2,400 worth of services.  They were six times more expensive than the actuaries thought they’d be.  This data became the basis for a big Oliver Wyman study that was very influential in getting the mandate accepted into the health care debate.

    But it turns out that the Harvard Pilgrim data isn’t as revealing as it seems.  This 40% number seems high, right?  But 40% of what?  It turns out that Harvard Pilgrim sold, at maximum, 5,000 plans in that period.  40% of that is 2,000 people.  Harvard Pilgrim covers 1 million people.  So even if these people were all gaming the system the way Harvard Pilgrim suspect they are 0.2% of the customer base.  It turns out that people want the security of owning health insurance and they are willing to pay reasonable prices for it.  It certainly beats trying to find an insurance provider while you’re in an ambulance after being hit by a bus.  It beats trying to buy coverage after you find out you’ve come down with a disease.  Sure, the insurer has to cover you if you ask but they can also charge you a lot more.  People know this and the vast majority of them act accordingly.

    I believe that people will purchase health insurance voluntarily if they believe that the premiums are reasonable compared to the services offered.  It’s not rocket science.  If you need a law to make people buy your product, you’re either charging too much or your product stinks.

    Another argument that the industry has made is that under the pre-reform system free riders were already a problem.  This is because hospitals are forced to treat people whether or not they can pay.  We hear tales of wasteful emergency room visits to deal with common afflictions and point to it as proof of people gaming the system.  Not so fast, though.  People without insurance are far more likely to forego medical treatment than to try to free ride the system.  That’s not a good thing, but it’s a true thing.  The uninsured spend 38% less on medical services than insured people.  They pay out of pocket and they tend to pay their bills.  In 2008, the last full year before the reform debate, the uninsured had only stuck the system with $7 billion in unpaid bills.  That’s nothing in a $1.1 trillion industry.

    Then we get to the moral aspect.  I think I could swallow the morality of the mandate if and only if the government offered a robust public option available to anyone who wants it.  The addition of a publicly run insurance company, accountable to voters, would at least give people the option of not supporting large corporations that have in the past behaved quite badly.  It would also bring much needed competition into the space.  I suppose there’s still some sort of right to go without health insurance that would be violated even if a public option existed, but I find it hard to get excited about that particular right.  But a mandate without a public option, a law saying that you must buy something from these companies whether you like them or not, isn’t something I can get behind.

    The health reform law tries to mask this by presenting it as a tax that’s actually charged to everyone but that you get credited for when you show proof of insurance.  That’s clever and it will probably see the act through its final court challenges.  But it really was a mistake not to tie the mandate, which the insurance companies wanted desperately, to a public option, which they desperately didn’t want.


    I don't know why that came out blue but I know gasket isn't going to like it.

    I'm pretty keen on your "every industry would love a mandate" idea. 

    Can't wait for the "Hookers-In-Schoolgirl-Uniforms-Bearing-Trays-Of-Coke" Mandate. 

    Though there's likely to be some impingement upon my freedom.

    "Ouch, ouch, stop that impingement!"

    You know when I was younger I just loved to be impinged. It was sooooooooooo exhilarating. Really.

    I do not recall any school girl uniforms--oh except in the gay bars on campus...I mean I was a school reporter at the time and...

    Bemember candidate Obama wasn't very into a mandate either? Other candidates didn't like that about him, thought he didn't "get it"--that universal coverage had to come all at once, that if not all the current costs problems and other problems would continue and plans that didn't do it therefore would be doomed.

    The problem is that while Obama initially opposed the mandate he also initially supported a public option.

    There is no way of getting around the fact that universal health coverage involves a shift of wealth from the younger and healthier members of a society to the older or sicker members of society.  This can be made politically palatable if it is accompanied by a concurrent shift of wealth from the exploitative, wasteful and overpaid parasites who currently plague our delivery system - in other words, serious measures to drive down costs.  That was one reason it was so vital to get the public's foot in the door with a public option.

    Since Obama surrendered the public option in a deal with Big Pharma, then the mandate was the only alternative to pay for universal coverage.  If one is not very serious about driving down costs, then the only other way to effect such a redistributive shift in a manner that is politically acceptable to a sustainable majority is to make sure the burdens of the shift are distributed as broadly as possible.  Hence the mandate.

    There are only two options left if the mandate goes down:

    1. Republican Social Darwinism - i.e., the old system.

    2. Either 100% public health care or mostly private health care with a strong public component.

    I wonder if we can't just do what the insurance companies fear -- no mandate and still force them to take all comers and to cover pre-existing conditions.  Let them eat that.

    How will that hurt insurance companies, destor?  They will just pass the additional costs on to the rest of us.

    The reason insurance companies excluded people with pre-existing conditions is because those people are expensive to cover, and covering them eats too much into their margins.  It costs a lot of money to provide health care for people with cancer, diabetes or innurerable other diseases and ailments.  But if we force the insurers to cover everyone who wants health care coverage without making sure that everyone is participating in the program, then the coverage will become drastically more expensive than it is now, and even more people will opt out.   The people who keep their coverage will become even more heavily weighted toward the sick and the elderly, and their insurance plans will cost a fortune.

    So sure, we can "force" the health insurance industry to take everyone who asks for a plan.  But that does nothing to address the fundamental question of how our society is to pay for health care.   There really are only two coherent and economically viable philosophical approaches: There is the conservative approach that says health care should just be an unequally distributed option in life, like owning a car or a swimming pool or an iPad, and you're on your own where health is concerned.  If you're sick or old, then tough shit - you lost the lottery of life.

    Or there is the social democratic approach that says that health care, at least at some level or degree, is something that everyone should have an equal entitlement to, and the costs of which should be borne by the whole society with the pay-in based on a person's ability to pay - not their health condition.

    Personally, I think we all need to pitch in for health care, just like we do for education - even if we don't have any kids.  Now we can pitch in through a mandate with a private insurance system.  Or we can build a strong public component into the health insurance system and pay for it through taxes.  If the Supreme Court upholds this new decision, then a public option is where we are headed - maybe even single payer eventually.

    I'm with ya.  The only answer is to make this a social services question rather than an insurance one.

    Currently it is one. It is just that it is the private sector funding a non-profit/government partnership. It is incredibly an inefficient, duct-taped system where so much of the energy is directed at finding and filling the gaps (when there are enough resources) because there is no overall coordination and comprehensive planning.  One of the bizarre facets of American society is the individual who will fight to save $500 on his or her taxes (and balk at nationalized health care), but then turn around and write a check for $5,000 to the local free health clinic. 

    I've never understood that at all.  Or people who don't want the government to tax them more in order to provide health care but don't mind a private company taking money out of their checks every two weeks (and for the amount of money they take to go up every year while services are cut... presumably the government could do that to but it's easier to take out your frustrations on your congressional rep than on the executives of a private company... oh... I can't stand it anymore...)

    I did not like it either. It gave too much ammo to the repubs.

    You can always nail those without insurance at the ER anyway.

    I thought Henry Hudson was from New York. (oops, wrong blog).Anyway, about the "mandate". Whose word is that? Luntz?  It's an incentive and small fine.

    I really don't like the individual mandate without a public option or Medicare buy-in provision. Joe Lieberman killed the Medicare buy-in and the HCR debate drug on for 3 more months.

    No other country in the world would have spent millions, tens of millions or hundreds of millions hiring lobbyists, buying off politicians, and funding PAC's to stop efforts by the government to provide medical coverage for all citizens, and on top of that, follow up with spending millions more on legions of lawyers, ranks of judges and endless court cases to overturn a law on the same, just passed, yet not in effect. All while people in the country are dying or getting sicker from the lack of funding for necessary care. I guess that is American exceptionalism in action.

    In other countries people demand health care.  We demand it not be given to us.

    No, we demand it not be given to other people.

    The American religion - especially the depraved post-Reagan version of that religion - is "you're on your own."  It is a sick, demented and profoundly anti-social orientation.  Many Americans don't even seem to think they live in a society anymore.  They just live in a wild kingdom of roaming sovereign individual agents, where they are all "free" to enter into which ever personal arrangements strike their fancy at any given time, and  "free" to opt out of any that don't.  No society can survive this way.  We're doomed.

    Maybe that's the point.  People who hate the country and harbor a burning, simmering resentment of the United States, its people and its government are pursuing a passive-aggressive strategy of destroying the country by unraveling its social fabric.  Jefferson Davis couldn't bring down the US government by force of arms - so his descendants want to kill it by drowinging it in a bathtub and canceling most of the social contracts that hold it together.

    What's remains of the national American community is rapidly unraveling.   All that is left is a debauched and decadent wasteland, with a competitive class and personal war of everyone against everyone.

    Yes, it's not only highly unlikely, but fundamentally unAmerican to think the United States would ever institute a health system with equality of access for all. I did say "provide medical coverage for all citizens",which includes 'others', a socialist concept if there ever was one.The Virginia judge also thinks it is unconstitutional.

    This is a free market capitalist society where everyone succeeds or fails without government assistance, as proven by the recent multi-trillion dollar taxpayer funded bailouts of every kind of corporation in America, from McDonalds to Bank of America

    We can be sure that the end result we get will when it's all over, will be the one that prioritizes corporate profits over health care.

    I don't think that's fair to say in this context. It's one thing to ask me to throw in with society and pay a tax and get a benefit and have it administered and controlled by an entity that ultimately can be checked through a democratic mechanism.

    You are arguing that the arrangements of society that in America typically are constitutionally bestowed on our democratic institutions can be made into a hybrid beast of indecipherable distinction between private-sector free-market corporatism which can only work in a situation where all parties are free to take a deal or leave it and institutional organs that exist for the exclusive purpose of servicing a shared need of society in which we all participate. That is the republican dream. And now by some twisted double-jedi-mind-fuck Obama has every liberal in America frothing at the mouth trying to ensure it's solidified.

    But ... it can't possibly be the Republican dream ... it's being opposed by Republicans!!! [gaaaagh.]

    See Dan, the problem is that our government is too intrusive into people's social arrangements, but in the wrong places.  There are mant victimless social arrangements that the government should get out of.  If the government showed more restraint when some one wanted to smoke an effin' joint or play online poker, maybe people wouldn't be so suspicious when the government wanted to, say, impose a reasonable tax for public benefit.

    I'm opposed to online poker too :)

    All gambling - as a matter of fact.  I particularly despise lotteries, one of the most regressive revenue gimmicks ever devised.

    Without this provision I'm all for the health bill. Let's see what it does.

    IMO, it is just an expensive placeholder any way ... kicking the can to 2016 when it will be even worse and we'll have to deal with it. The question is how many trillions we're going to get bilked before we really fix the problems.

    The Harvard Pilgrim data isn’t revealing because they are counting on people not paying attention to the numbers...they're skewed on purpose so as to mislead.

    For an example of what I mean, suppose Shell Oil announces a new find in the Gulf of 1 billion barrels. Most people would think a billion barrels of oil would last a number of years and not give it a second thought because a billion of anything is hard to imagine. However, if you look up how much oil is used in a single day in the US, you'd realize a billion barrels isn't that much. You see, we use approximately 20.7 million barrels a day...based on data from 2007. In 5 days, we've used about 100 million barrels. In 50 days, that well in the Gulf is empty.

    Don't have any idea if it'll end up getting reversed or whatever. But I've always thought the mandate stinks as well. If the idea is so damn good - prove it works and then demonstrate with REAL observations how the "free rider" problem is negatively impacting the situation. Then you have a genuine reason to do it. This they way they did it was like a dreamcatcher - an intricately woven contraption to isolate something that only truly exists in their minds at this point.

    So, I can't say I'm disappointed at all. Why would anyone be bummed about this? The decent stuff is still in there. Maybe now the Insurance Companies will want to get a public option going so they can try and dump anyone with preexisting conditions into it (the PO will probably still be cheaper).

    I still really want a national exchange. Dammit. That discussion got squashed by the PO.

    I haven't followed the health care issue much, as we don't go to doctors almost ever, and won't buy the plan in any event.  But I do keep hearing that it's health care costs, not insurance overage, that needs to be addressed.  It might have been on Dylan Ratigan's show guests were talking, for instance, how many docs build brick-and-mortar buildings for their groups of surgeons, say, and the costs of employees, the cost of the building, insurances (including malpractice) seem to have the effect of causing many of them to perform unneccessary surgeries and expensive tests, even if the same tests have been performed previously by other docs.  Don't know what fixes there might be, but...it's apparently a problem.

    As luck would have it, someone at FDL is discussing this subject, and some possible remedies.


    Howard Dean was on Keith O last night saying the experience in Vermont and Massachusetts was that the mandate was mostly irrelevant. He said, however, that in the new bill the ones that like the mandate the most are the insurance companies, for obvious reasons. 

    Also, Hudson the right wing judge did establish the severability of the "mandate" from the entire bill itself.

    Another interesting point about fines, etc. Many of the people who don't enroll are the young, but many of those will continue to be covered until they are 26.

    I was listening to a local fellow on progressive radio this afternoon and he says that this same tactic might be one avenue used by the cons for killing Social Security, i.e., get it declared unconstitutional to make people contribute to the SS trust fund.  And that they would then make it a welfare program based on need. He said cons are considering it.

    That's a new one on me and wondered if anyone has heard talk of it?

    They tried that right after SS was passed.   The courts didn't go along with it.  There are conservatives that would love to see SS declared unconstitutional as it administrated now.  It does pop up from time to time on talk shows.   This deal that includes a FICA payment holliday is as close they have come to fufilling that dream. 

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