Can one change one’s mind on the health care mandate?

by on May 13, 2011 at 7:53 am in Economics, Medicine | Permalink

I never have, but some people have, see this post too.  I don’t care to guess at their motives (which are totally cynical), but let’s consider this as a question in pure logic.  It is harder to make a mandate work when a) health care costs are high, and b) income inequality is high.

a) The higher are health care costs, the more the mandate is forcing lower income consumers to buy an inefficiently high quantity of medical care.  (Forcing everyone to buy the same quality toothpicks is not a big deal, but forcing everyone to buy the same quality car, or house, is tougher to pull off.)  Of course subsidies offset this problem to some extent, but the poor person still may be worse off or only marginally better off, the subsidy is itself costly, the subsidy raises fairness questions, in a pluralistic health care system the subsidy may cause inefficient burden-shifting into the subsidized sector, and the subsidy involves higher implicit marginal tax rates as it is phased out for higher income classes.

b) The higher is income inequality, the more serious are the problems discussed in a).

Circa 2080, imagine a world with two classes, the very rich and the fairly poor.  The very rich pay thirty percent of their $1 million a year incomes on health care.  The fairly poor earn $100,000 a year.  How are we supposed to roughly equalize health care consumption?  Does it make sense to give the fairly poor 3/4 of their real income ($300,000 out of a total of $100,000 cash plus $300,000 health care benefits) in the form of health care benefits?  And could we enforce that with a mandate + subsidy?  Probably not.

Of course both health care costs and income inequality have been rising in this country.  It is a critical question — and one which remains unanswered — at which margins these problems kick in decisively.

Under “Medicaid for everybody plus private cash top-offs,” this same problem does not arise, but there is also less egalitarian redistribution.  I would favor that blend over a mandate.

Here is related commentary from Ezra Klein.  Here is related commentary from Andrew Sullivan.

Laserlight May 13, 2011 at 8:23 am

You must be distracted by finals.
a) ” I don’t care to guess at their motives” immediately followed by “(which are totally cynical)”. If you’re not gong to guess, don’t guess.
b) I am amused by your description of $100K/year as “fairly poor”. I’d be happy to be that poor.
c) In two places you have $300K when I suspect you mean $30K.

DSDan May 13, 2011 at 8:36 am

@Laserlight
The amounts are in reference to the year 2080, not 2011.

Evan Grantham-Brown May 13, 2011 at 6:31 pm

Hardly matters. Either $100,000 a year is not “fairly poor” or $1,000,000 a year is not “very rich.” The income gap between rich and poor is much, much bigger than a mere factor of ten.

AxelDC May 15, 2011 at 9:46 pm

It’s the ratio that matters, not the numbers. He is assuming some level of inflation between now and 2080, so don’t think that $100k is in 2011 dollars.

Think of a society where one class makes $10/hour ($20k/year) and the other makes $100/hour ($200k) per year if it helps. In no way would you think that $20k is a lot of money to live on today.

Jeromy May 13, 2011 at 8:33 am

If the problem with the individual mandate is income inequality and high Healthcare costs, then we need to rein in healthcare costs and reduce income inequality. The ACA makes a good start at controlling the costs, (though more needs to be done). And the subsidies, by being redistributive, start to address the income inequality (though more needs to be done).

If you view those two issues as major problems, address them directly.

Cliff May 13, 2011 at 1:10 pm

They are only major problems for the health care mandate, not in the abstract.

Rahul May 13, 2011 at 2:27 pm

For controlling high healthcare costs one option that could be brought on the table is fast-tracking immigration for doctors and nurses. Let’s stimulate some supply by external means. Also needed is a strategy to break the unholy nexus of medical associations and doctor licensing which has perverse incentives to keep doctor production limited.

A key culprit (often under-appreciated) is the American medical system which trains doctors after a primary degree. The 4-5 years of liberal eduction pre-med school are pretty superfluous. Oftentimes the undergraduate major has little relevance to med school. This delays their entrance into the market, hikes doctor loans and eventually results in inflated medical costs.

Another option is easing drug import laws. It makes me cringe each time I pay 5 cents for an aspirin in India that would cost me a dollar in the US. Some patent reform and FDA emasculation should be on the menu too.

mulp May 13, 2011 at 3:37 pm

Compared to the nations with universal coverage by one of a dozen means, the US has neither a shortage nor excess of doctors, nurses, etc., only a huge excess of high paid executives focused on increasing profits by any means to drive up stock prices.

And I don’t understand why you allow yourself to buy into the high profit branding when shopping in the US for drugs – thanks to decades of efforts by liberals who have dictated policies that treat drugs like they are treated in India – chemical compounds sold without profit and only a fair market return on capital, labor, qualify, and distribution. Mosts of the drugs taken in the US are made by drug makers based in India, Israel, Switzerland who either import into or manufacture in the US the “generics medicines [that] account for 69% of all prescriptions dispensed in the United States, yet only 16% of all dollars spent on prescriptions.”

Rahul May 13, 2011 at 5:58 pm

mulp:

I didn’t understand the second point. Can you elaborate?

Generics are cheaper than brand-name, I get that. Also aware of the massive outsourcing and jobwork in India, Israel etc. But drug-for-drug are you saying prices are not much more expensive in the US? Besides, generics are not possible for something within its patent period and I suspect those are too long currently.

rpl May 13, 2011 at 8:35 am

I am amused by your description of $100K/year as “fairly poor”. I’d be happy to be that poor.

Contain your amusement and try not to jump at that deal just yet, since Tyler hasn’t told you how a 2080 dollar in this hypothetical compares to a 2011 dollar. In any event the “poor” in this scenario make 1/10 what the “rich” do, so I imagine they would feel pretty poor.

In two places you have $300K when I suspect you mean $30K.

You, too, must be “distracted by finals.” By assumption the “rich” in this scenario spend $300K per year on health care, and we are asking how to equalize health care distribution between the “rich” and the “poor”. Assuming we’re not willing to forcibly restrict how much the rich pay for health care, our only real option is to give the poor $300K to spend on health care. That gives them a new total income of $400K, of which 3/4 is restricted to spending on health care, which is probably not the choice they themselves would make if they were somehow able to earn $400K on their own.

chris May 13, 2011 at 10:05 am

By assumption the “rich” in this scenario spend $300K per year on health care, and we are asking how to equalize health care distribution between the “rich” and the “poor”.

Why are we asking that? The current act doesn’t attempt to equalize health care distribution, just make it *somewhat* less unequal. If the rich spend $300K on health care and the poor spend $100K, or even $50K, that’s still a lot more than they would have been able to afford on their own and will probably get their life expectancy within a few years of the rich (certainly closer than they are today). Complete equality may or may not be unattainable, it’s not clear why it would be desirable, and even systems much further left than PPACA (such as the British) don’t have it or try to have it.

I assume these amounts per capita are some kind of actuarial projection or average over a class rather than actual spending on each person, healthy or sick, being exactly the same, which would be idiotic. Delivering health care *to the sick* while not sticking the sick with more bills than they can afford is the whole point of the system, but as long as some people are sicker than others, actual spending will be different from one person to another. In some cases, like chronic or congenital conditions, that will even be predictable (this is where ordinary insurance breaks down; Stephen Hawking can’t buy insurance on the free market, which is why he’s lucky to be English).

Also, a difference of only a factor of 10 between the poor and the rich would be much *less* unequal than the present day. 10 times the *median* income (let alone the 20th percentile or something like that) is only about $500K/year in today’s dollars; there’s a quite important group of people much richer than that. Real societies don’t generally have two neatly defined classes with nobody in between, but even aside from that, the society Tyler is describing is *less* unequal than our own (the precise Gini would depend on the relative sizes of the classes).

P.S. The idea that the poor might benefit from getting most of their income in the form of health care isn’t as ludicrous as it sounds, either. In a future world where health care has Baumol’s cost disease and all other non-luxuries are relatively cheap (let’s say computer-mediated education proves cheap and effective but it’s difficult to remove the human element from health care in a similar way), the poor might indeed benefit from having most of their income go to health care, when the alternative is spending it on personal trainers or dog groomers or driving to McMansions in the suburbs instead of riding the bus from the projects. You can’t enjoy those things when you’re dead.

Yancey Ward May 13, 2011 at 10:21 am

Why are we asking that? The current act doesn’t attempt to equalize health care distribution, just make it *somewhat* less unequal. If the rich spend $300K on health care and the poor spend $100K, or even $50K, that’s still a lot more than they would have been able to afford on their own and will probably get their life expectancy within a few years of the rich (certainly closer than they are today)

Tyler is giving you an extreme case and asking when do these considerations become a factor? That is what he is asking. Indeed, you are not making any sense whatsoever when you nitpick the meaning of the word “equalize” in this example.

mulp May 13, 2011 at 3:49 pm

If the opportunity for the millionaire to routinely spend $300K each year on health care were limited by universal health care for $10K a year – who would spend $290K extra to get a 10% better product, other than a Howard Hughes – would that be bad for anyone other then health industry executives who focus on increasing overhead from 20-40% to 60-80%?

The US is the only nation that has a large number of people who think the way to lower national health care costs is by denying health care to more people. The rest of the world sees health care as a universal right – a right that like liberty is approximately equal for everyone, but limited by the common good – and as a consequence they as a nation agree to a national consensus on the balance between costs and benefits and end up with 50-100% greater efficiency than the US.

Laserlight May 13, 2011 at 11:56 am

No, I was distracted by lack of caffeine. I am, thank God, many years past having to worry about finals.

E. Barandiaran May 13, 2011 at 8:52 am

Mandatory health insurance is to equal health care consumption the same as compulsory primary education is to equal human capital formation. Please, stop the nonsense. Get good sources of ideas.

Rahul May 13, 2011 at 9:49 am

A naive question. Why is healthcare always combined with insurance. Education for example, is gratuitously state-provided. Not state insured. So are roads, police, fire fighting and lots of similar services. What makes healthcare different that the healthcare-model needs to always include insurance?

If the state has to provide healthcare does it have to be through subsidizing insurance? Why not just a direct provision.

Pete May 13, 2011 at 10:00 am

It doesn’t have to be provided by insurance, quite a lot of countries have a need-based system. The UK NHS works nothing like an insurance system. The main people who benefit from an insurance system are the insurers.

E. Barandiaran May 13, 2011 at 10:11 am

First, no even Stalin would attempt mandatory health care but even Mitt Romney has supported some form of mandatory health insurance –care is difficult to define and provide, insurance not. Almost all governments provide some health care services, mainly to deal with emergencies, and several governments provide many health care services to most of their citizens. Regardless of how much and how good these services are, they will never succeed in achieving equal health care consumption.
And regardless of how much and how good government provision of public primary education may be, governments will never succeed in achieving equal human capital formation.
In other words, governments can provide all sorts of goods and services and promise equal outcomes. We know that their promises are as empty as Sgt. Barack’s promises.
Note that my emphasis is in Tyler’s reference to equal health care consumption as a policy’s objective.

Rahul May 13, 2011 at 2:32 pm

I still don’t understand, why fundamentally, mandatory health care is worse than mandatory health insurance? If care is difficult to define the same difficulty should arise in the relevant policy language. Agreed that the state can never pay for every health procedure that everyone needs; but how would insurance make this any better?

Andrew' May 13, 2011 at 3:18 pm

The state would prefer not to take responsibility for actual health care. They specialize in cash transfers.

mulp May 13, 2011 at 4:07 pm

Define the difference between “state single payer” for defense, education, health vs universal insurance against invasion, stupidity, and illness which pays for private public militias, private public schools, private public HMOs?

The private public charter is long established – churches when separated from government were chartered to charge customers in order to serve the public – tithes often enforced by the state, penances instead of state punishment, etc. Jefferson went against the grain by refusing to pay protection money or advocate individual shipping companies do so, so he socialized protection with government run single payer Navy and Marine.

Ships could pay fee for service when they got boarded; they could buy insurance from the city-states, they could have arranged for group insurance for their fleet from the city-states, or had single payer national insurance as the British and French who paid the city states premiums. The British and French wanted the US ships boarded and captured to eliminate the American free riders.

E. Barandiaran May 13, 2011 at 5:29 pm

If something called health care were mandatory, government would take direct responsibility for everyone’s medical actions (can you imagine Sgt. Barack asking grannies whether they have just taken their medicine before turning the lights off? I’m sure Sgt. Barack will prefer a death panel). If something called health insurance is mandatory, government will take some responsibility for everyone’s ability to finance partly many of his/her health care services.

Mandatory health care is a means to no end. The closest you may come to it is to condition acceptance to passing a medical. For example, you need to pass a medical to get a driving license but the fact that all drivers may have passed the same medical implies neither equal health care consumption nor equal access to health care in case of a car accident.

Mandatory health insurance, however, may be a means to alleviate the financial burden of accessing health care services.

Andrew May 13, 2011 at 9:07 am

Why is this so hard to get. Some people can’t bring themselves to charge people for medicine, so they charge people for medicine. To feel better they rationalize it as a compassionate form of charging.

Joshua May 13, 2011 at 10:01 am

Income inequality has been rising in nearly all OECD countries.

Thomas May 13, 2011 at 10:17 am

Am I the only one who hoped that at least one of the links would be to an Obama statement from 2008, when he opposed a mandate? (Was his opposition cynical, or his switch?)

BTW: We shouldn’t confuse views about whether a mandate is appropriate policy with views about whether a particular mandate structure is constitutional.

mulp May 13, 2011 at 4:42 pm

Well, Obama is an anti-corporation leftist, happy to see health insurers go bankrupt, leaving only the government single payer system. ;-)

Obama was pragmatic enough to change his position to gain the support of conservatives who wanted a for-profit corporate insurance based system, and the for-profit insurers dictated a government mandate to buy from them. The mandate to support for-profits is a conservative policy stance. Obama just moved to the right to occupy Mitt Romney’s position in support of the for-profit insurers.

JasonL May 13, 2011 at 10:23 am

I don’t understand Tyler’s income inequality argument as it pertains to the mandate. Why couldn’t the mandate simply be for a high deductible low premium plan? I don’t know that I see a direct attempt to equalize consumption so much as an attempt to force participation at some minimum level.

Andrew' May 13, 2011 at 12:49 pm

For the sake of this post he seems to be taking as givens almost as many things Ezra Klein does, which is to say “If we assume as given everything that leads directly to and necessitates the liberal proposal, then we end up with the liberal proposal.”

Liberal assumptions: health is a 100% crapshoot
There can be no pecuniary differences in healthcare
People have no choices available whatsoever when it comes to buying insurance
You CANNOT discuss options with a doctor…dumbass.
etc.

Ryan Vann May 13, 2011 at 1:17 pm

That about summarizes it.

mulp May 13, 2011 at 4:58 pm

Taking Sarah Palin talking points, her Down’s kid and Stephen Hawking health problems were purely lifestyle choices – they chose to be born to defective parents who gave them their health problems.

You can’t argue “prevention doesn’t cut costs” and argue “illness is a lifestyle choice”. Either the path to good health is clearly mapped out, or everyone is stumbling around in the jungle with only general ideas of where home is.

Ultimately the point of contention comes down to your view that ignorance will always win over education because those with education are too simple minded and easily confused by the poor ignorant liar who is always smarter and able to outwit and defraud the rich educated elite who inherited their position in society. This applies to health policy and lending and business dealings – it is always the poor high school drop out who gets the best of the educated home repair contractor, the mortgage banker, and health insurance corporation.

Slocum May 13, 2011 at 10:31 am

We just don’t need a mandate. We already have a case of guaranteed issue without a mandate that works. Private insurance that covers nursing home care for the elderly is optional, and the government will pay for nursing home care. Why is this not a disaster? Because the government covers nursing home care only after the patient’s assets have been depleted to the point of qualifying for Medicaid. That’s the general mandate-free solution — go without insurance and the government will pay for your medical care only after you’ve spent your money to the point that you’re poor enough to qualify for Medicaid. People of means won’t run the risk of going uninsured. Many people with low incomes and minimal assets will continue to go uninsured, but their coverage was going to have to be heavily subsidized — coercing them into the system was never going to bring in much money anyway.

Yancey Ward May 13, 2011 at 10:46 am

Exactly.

Ben May 13, 2011 at 11:57 am

The reason this is not ideal is that it costs much more to provide care once somebody is sick than it does when they are healthy or in the early stages of their sickness. In other words, early phase treatments cost much less than late phase treatments. Taking this premise, which is well supported in the literature, let us look at a poor person who gets very sick. They are poor, so by definition they do not spend much money before they qualify for Medicaid. At that point, the government will pick up the bills for their care, but those bills are much larger than if the person had gotten preventive care. As a result, the taxpayers end up paying more to keep that person healthy than they would spend if they had covered that person early on.

Why else should the government (in one way or another) provide easier access to preventive care? Beyond keeping the overall population healthier, which has numerous benefits, it means that the government would have to spend less overall, which would mean a smaller deficit and/or lower taxes. In the event of lower taxes, then that money could be put to more productive uses. In the event of a smaller deficit, there would be less concern about whether the government is overextended.

Cliff May 13, 2011 at 1:15 pm

All the studies I have seen suggest that preventative care does not reduce health care costs.

Andrew' May 13, 2011 at 1:40 pm

What about benefits? Preventive care doesn’t mean you don’t ever die…yet.

Ben May 13, 2011 at 2:14 pm

This can depend on what metric you use. If you measure total health care expenditures per person over their lifetime, then people who tend to use more preventive care can have higher total costs, but that is primarily as a result of increased health and longer lifespans. If you measure per year, instead of per person, then it can lower.

Rahul May 13, 2011 at 2:37 pm

@Cliff:

Cost needs to be normalized by outcome. If you had high infant mortalities your healthcare cost would be very low indeed. That’s not exactly what we’d want.

Slocum May 13, 2011 at 1:21 pm

If that’s true, provide subsidies at a level that it will be worthwhile for lower-income people to participate voluntarily. Isn’t that a better approach than making it a crappy deal for low-income people and then legally coercing them? And remember that the actual poor already qualify for Medicaid. Do you really think that the holdouts — those who refuse to sign up for even heavily subsidized insurance — would be consistent, responsible users of even free medical services? Is that the record of existing Medicare patients? Keep in mind, too, that many of the uninsured are healthy young people who have relatively low incomes and few accumulated assets…and consume very few health services. When they’re older, have ‘real’ jobs that provide insurance and families most of them will be insured. Bottom line: what does a legal mandate really get you — other than the intense opposition of roughly half the voters in country who see this as a offensive expansion of government control over personal lives?

Jay Jeffers May 13, 2011 at 2:54 pm

To echo the other posters, I don’t think preventative care is going to help that much. Don’t get me wrong, I think it could be a very good thing, socially. But if that’s pretty much what it has going for it, then that should be the argument for it – nothing more, nothing less.

Your argument has a certain logic to it, Ben. But taking it from a sensible person (I think it was Joseph Heath) I think we should keep in mind that everyone has to die of something (he actually used this phrase to explain the truth that the more diseases we cure, the longer people will live, and so other ways of dieing will become more prevalent, but I think it applies here).

The thing is, right now we’re covering the most expensive phase of the individual’s sickness, and per person, that adds up. But doesn’t everyone eventually get something that requires a lot of expensive care? You’re not proposing that we withhold treatment from people (i.e. everyone) when they inevitably are in need of very expensive medical care, you’re asking that we *add* preventative care to the tab.

While it’s true that an individual’s care for, say, diabetes can be controlled for longer with preventative care, the disease will eventually catch up to them, or they’ll acquire something else (that will cost to treat). We’ll be paying for the expensive phase either way.

Now, if it can be shown that the treatment of certain diseases can be made much cheaper by trading for other diseases or ailments (that we all will eventually fall victim to) then fine. Also, per Atul Gawande, perhaps getting a hold of doctor owned hospitals can be a huge saver (though the problem there seems to be *too much* prevention). Anyway, I’m not closed down to learning more from the discussion, but at the most general level, the data that show that preventative care won’t save on costs doesn’t surprise me, for the reasons I’ve mentioned.

I can see why that might seem counter-intuitive, because if you take 10000 people, all of which will die at age 75, and imagine that we’re covering them for the entirety of their lives, and that their end of life care will cost about the same, then it would make sense to have provide medical care at the preventative level, because they won’t be coming into the doctor all the time (which adds up).

But that doesn’t seem to be the scenario we’re in. What we face is the reality that

1) We’re bringing in many people to the system that weren’t in it at all until it was too late for them (sure, the costs for one of those visits are much more eye opening than the cost of a preventative visit, but we can’t stop the analysis there).

2) If the preventative care does it’s job, then people will live longer, which will increase costs.

Andrew' May 13, 2011 at 3:22 pm

“he actually used this phrase to explain the truth that the more diseases we cure, the longer people will live, and so other ways of dieing will become more prevalent,”

This isn’t precisely true. By curing (or simply stabilizing) myriad diseases, the cause of death collapses onto aging, for which there are only 7 underlying phenomena, allowing a huge economy of scale in research.

Jay Jeffers May 13, 2011 at 4:04 pm

Respectfully, I’m not how you’re contradicting what I said. It seems tautologous (but perhaps easy to overlook) that if we eliminate one (common) way of dying, other ways will become more prevalent. This is not to say that there will be *more* diseases, (though it could) but what it has to mean is that the rates of other kinds of death must go up. Everyone has to die of something.

Rahul May 13, 2011 at 6:11 pm

What are the 7 phenomena underlying ageing? Curious. Couldn’t google anything good.

JasonL May 13, 2011 at 12:07 pm

I’m sympathetic, but I’m not sure this solves the Parfitian incentive problems with young self needing to save for old self in an optimal way. It seems like there is a large incentive to free ride when you are young, and if enough people do so the costs to insure will be higher on everyone else.

JasonL May 13, 2011 at 12:11 pm

Does the literature actually support the preventive care hypothesis? I thought we were in a spot where lifestyle was 70% or something of eventual outcome, such that the early treatment of cancer provides no real savings if someone was smoking. Early medical treatment doesn’t solve for smoking, eating, working out, etc.

The Anti-Gnostic May 13, 2011 at 1:02 pm

I think this is correct. It doesn’t matter if you spot cancerous cells in the lungs at the first opportunity after a pack/day for 20 years, or early-stage diabetes after french fries and cokes your whole life. It would actually seem that subsidized health care encourages poor lifestyle choices.

If we’re going to socialize medical risks, probably the best thing to do is move everybody into camps where we can guarantee healthy choices.

Rahul May 13, 2011 at 2:14 pm

Studies of twins have shown that genetics play a very strong role in the development of type 2 diabetes. If you have a family history of type 2 diabetes, it may be difficult to figure out whether your diabetes is due to lifestyle factors or genetic susceptibility.

If only every poor sod were to blame for all his illness…….

Rahul May 13, 2011 at 3:03 pm

I think it is big misconception that lifestyle accounts for 70% of disease outcomes. You underestimate genetics. Of course, not much we can do for that via preventive care. At least yet. By 2080 things might be very different.

As an aside, even for the lifestyle risk factors, preventive care can have a subtle effect. Some poor schmuck who never went to a doctor is more likely to continue down the downhill path. Not everyone pays heed to early warnings but many do.

The Anti-Gnostic May 13, 2011 at 9:30 pm

It’s worse than that, Rahul. We’re all going to get old and sick, so illness is an uninsurable casualty. And if it’s OPM, the incentive is to maximize consumption.

You really think obesity and substance abuse don’t play a role in COPD, joint problems, diabetes, heart disease, etc.?

Rahul May 14, 2011 at 12:17 am

@The Anti-Gnostic:

Of course obesity etc. plays a role. I’m just saying people often forget the effect of genetics. e.g. If both your parents had type-ii diabetics, in spite of a very health lifestyle you are still significantly at risk of still getting it. Trust me, I see some very health-lifestyle people with type-2 diabetes.

Slocum May 13, 2011 at 1:29 pm

…there is a large incentive to free ride when you are young

But those uninsured, free-riding young people as a group A) don’t have much money and B) don’t have many health problems. We’re talking about 20-somethings with level jobs that they don’t provide health insurance — just how much revenue did you expect to collect from forcing them to buy insurance?

JasonL May 13, 2011 at 4:04 pm

I think what I’m worrying about is that it isn’t clear to me when the incentive to buy insurance appears. We know that young people don’t save for retirement. Absent either forced savings or something similar, people will just wait until it’s too late. When enough people do that, the politics of it become unsustainable and the handout increases. When dealing with healthcare, I suspect the actual outcome would be young people saving nothing, not paying for insurance, waking up later in life wanting insurance but with only high risk heads in the pool it’s too expensive, and eventually spending down to the medicaid threshhold when they have to. You have to incent transferring wealth from young you to old you somehow.

Slocum May 14, 2011 at 7:38 am

When does the incentive to save money for a down payment on a house occur? When do people decide to start contributing to a 401K? When do they marry, have kids, and buy life insurance? By some ill-understood process, irresponsible 20-somethings become 30-something soccer moms & dads. Maybe people are slower in accepting adult outlooks and responsibilities than they should, but it definitely happens — why would we expect health insurance to be the single, lone exception?

Hyena May 13, 2011 at 4:06 pm

The actual reason this doesn’t work and is not ideal is that Medicaid runs from income and assets. Losing all your wealth doesn’t matter if you still have your income. That means someone would generally need to lose their and their spouse’s job. It would also mean the impoverishment of any children they have.

So “choose poverty” is probably the worst solution. It’s like solving high student debt by shipping engineers off to monasteries….

Slocum May 14, 2011 at 7:49 am

Losing all my wealth would matter a hell of a lot to me even if I still had my income. And, of course, there’s nothing that prevents some level of attaching future income for uninsured, higher-earning spendthrifts who require charity medical coverage (we might even be as draconian as the government is now with student loans and make such debts non-dischargeable in bankruptcy).

As for the impoverishing kids — that’s why parents, in general, would be *really* unlikely to go uninsured. And note that government does not now prevent parents from impoverishing their families by making stupid or even just unlucky decisions — dying without life insurance, buying an expensive house at the top of a bubble or taking out hundreds of thousands of dollars in non-dischargeable government student loans for a degree that result in no enhanced earnings capacity.

mulp May 13, 2011 at 5:09 pm

Medicaid and Medicare are bankrupt and bankrupting the States and Federal government, or so we are told by conservatives, so the States need flexibility so they can pay less for care, which will eliminate the problem today of Medicaid and Medicare paying too little. Paying less is somehow paying more…

Mitch Daniels claims this is possible, because he showed it is possible, by paying for prevention in Indiana, which I think is the position Obama has taken for the past four years and is incorporated in ACA.

RZ0 May 13, 2011 at 10:33 am

It is reasonable to change one’s mind on the mandate if you think it is unfair to the poor, as Tyler seems to be thinking. It is also reasonable to change one’s mind if you believe the mandate is the only practical way to get health care all around, which is what Obama did.
It is a bit dodgier for a lawmaker to change one’s mind on the mandate because he has changed his mind on the constitutionality of the mandate, which a large number of Republican legislators have done. This would require one to state what one overlooked when first examining the issue.

Floccina May 13, 2011 at 12:05 pm

This is in keeping with my opinion that at 5% of GDP going to healthcare it is far less important who spends the money than at 17% of GDP. At 5% of GDP employer provided health insurance is OK and maybe Government provided health insurance is fine, but at 17% of GDP the consumer needs to more involved in the spending decisions, he needs to benefit directly by any savings he can find.

mulp May 13, 2011 at 5:24 pm

But the US has the highest number of people making their out of pocket health care spending decisions of any nation with universal health care. 50 million don’t have insurance, something like 50 million have high deductible policies that require people to pay out of pocket the first $1000 to $10,000, and then there are those with the Wal-Mart, McD’s, et al employee plans that pay some share of costs up to $5000-10,000 for rather high payroll premiums.

The nation with the high out-of-pocket payments closest to the US is Switzerland, one of the highest per capita nations; Switzerland is slowing cost growth by moving to more managed care and less out-of-pocket decision making.

Andrew' May 13, 2011 at 12:15 pm

You could change your mind on a mandate for the same reason you could change your mind about an elective procedure. If the price goes up and the value goes down, or your knowledge of it changes, or a better alternative presents itself, or you determine it’s a potential disaster you change your mind. There is no “the mandate,” there is a medical provision system with mandated care and then there is how to get the users to pay for it with untold permutations.

One side is focused on getting the rest of us to provide medical services (using ‘the mandate’ as a greaser) and the other side was focused more on getting the recipients to pay something.

ohwilleke May 13, 2011 at 12:19 pm

Circa 2080, drugs and medical technologies invented in 2059 will be generic and out of patent. The prospects for really material medical advances between 2011 and 2059 are great, and honestly, I think that we are approaching the stage were more advanced technologies will mean lower costs rather than higher ones in medicine. For example, there are several drugs in R&D phases right now that would permanently end the capacity of an individual to become addicted to a particular drug (e.g. alcohol, cocaine), ending an addiction as easily as one wipes out a bacterial infection. The prospects of an AIDs vaccine is out there. Real progress is being made in that time frame on cures for diseases like M.S., Lupus and chronic fatigue syndrome. The possibility of highly targeted drugs for certain kinds of cancers is realistic. Permanent cures for some types of diabetes may be possible. Microrobots and nanotech will make lots of types of surgery that are already far less invasive than they were a generation ago even less invasive (meaning less hospital utilization and more procedures per physician and fewer complications). Gene therapies may be widely available for a variety of conditions. Cheap diagnostic kits may make early detection of long latency diseases like Alzheimer’s easier.

Just about anything that can be cured by a generic drug is going to be much cheaper to treat than it is now, and the proportion of conditions that can be treated with that is going to be greater. Just about anything that can be treated with outpatient surgery is cheaper than something that must be treated with inpatient surgery, and the proportion of surgical treatment that must be inpatient will shrink. Earlier detection usually means cheaper treatment.

In short, there is no reason to think that health care costs will increase indefinitely. The number of things that require medical treatment is finite. Effective treatments that are cheaper than they are now for most of them are going to be available in the long term. We may find ways to spend more money to more effectively treat some things, but this is not the predominant long term trend.

In 2080, health care, like most goods and some services, is going to have much higher quality for real costs similar to or lower than the ones we have today. It will be possible to provide very high tech and sufficient health care for a family at less than $30,000 a year then, and so long as we continue to remain an affluent society, that will not be a big problem.

Agorabum May 13, 2011 at 8:08 pm

If you have a society with one class making all the money and getting the health coverage, and the lower tier cannot even make 1/3 of the amount needed for proper health care, then obviously the upper tier, which is the elite, will ensure the lower tier gets nothing.
And there will likely be a revolution of some sort, or at least frequent mob violence.

We could consider the matter an exercise in pure logic. But it seems a rather silly exercise. And rather illogical.

figleaf May 13, 2011 at 8:29 pm

“the subsidy raises fairness questions”

Ah, the scales fall from my eyes here. Of course! Because not providing subsidies for medical care is fair in a way that providing them isn’t.

Funny how till now it always seemed more fair to ask some people to give up some of their money so that others can stay alive than it is to ask some people to give up their lives so that others can keep their money.

But I can see the logic now: if I let you die of a preventable illness or intervene-able injury instead of helping you live then, well, you’re dead and therefore no longer have standing (as they say at the Supreme Court) to complain about fairness. Meanwhile I’ve still got my money. If we did it the other way around it would be totally the opposite: you’d be alive but I wouldn’t have some of my money and so I would have standing to carp about it.

Hmm. Applying the principle of standing to the situation it seems like letting you die a preventable death while keeping my money isn’t just more fair, it’s also Pareto optimal!

figleaf

Other May 13, 2011 at 8:52 pm

You remain welcome to use as much of your wealth as you choose to save others from dying of preventable illnesses.

anon May 14, 2011 at 3:13 pm

How come you don’t say the same thing when protecting you from rape, murder, terrorism, and even illegal immigrants etc? Then it is cool to beg the government to intervene?

AxelDC May 15, 2011 at 9:42 pm

A country with such disparity of income would no longer be a democracy. If you have 2 classes: millionaires and paupers, either the rich would control everything and the poor would get no say, or the poor would revolt and demand lopping the heads of the rich, or some series of events that incorporates both scenarios. The rich would probably account for 10-20% of the population with the rest making up 80-90% of the population. The rich would also be a lot poorer by world standards than current wealthy Americans are to the rest of the world. Think the wealthy of Haiti or Peru, not the US or Japan.

A number of events could precipitate such a scenario, none of them allowing democracy to flourish: end of public education, effective restriction of higher education to the rich, decimation of unions, subversion of the press by corporations, economic catastrophe, climate cataclysm as seen in “Solyent Green”, military defeat, etc. A country with such discrepancies in income with no middle class would have to be sustained by a large police state with the rich living in gated communities. In this case, the rich would probably provide some menial level of public clinics while reserving the best hospitals for themselves. The idea that the poor, meaning the vast majority of the population, would have access to $300,000 health care on $100,000 budgets in such a society is unimaginable. The rich would not allow them to slide into such poverty unless they had callously guarded all the resources for themselves, so it would be unlikely they would express much concern about the plight of the masses.

A thriving democracy cannot survive without a strong middle class. The rich will either suppress or buy off the poor in such a bifurcated society.

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