Tuesday assorted links

by on December 6, 2016 at 11:14 am in Uncategorized | Permalink

1 Cliff December 6, 2016 at 11:48 am

#3 no quote or summary? I looked through the graphs and didn’t see anything on point. The one graph of child care costs seems to show a rough doubling (inflation adjusted) over 25 years?

2 anon December 6, 2016 at 11:51 am

6. It seems that as Obamacare comes to a close, it is a pattern of punditry to introduce something even more socialist, even more off the table, and say “I understand that this is not what progressives wanted.”

The government picks up 100 percent of health-care costs above 15 to 20 percent of adjusted gross income.”

I think real progressives would jump on that in a New York minute, but then those are probably not who McArdle is speaking to. I wonder who she is even trying to convince? Is Paul Ryan ready for this “not progressive at all” plan? Or is it all pantomime, a way to skewer those nasty progressives with artifice …

3 Yancey Ward December 6, 2016 at 12:56 pm

As usual you don’t know shit about anything.

Progressives would not have jumped on either one of the McArdle proposals discussed, and mainly because of the requirement that you or your private policy pay 15-20 percent of adjusted gross income before the government picks up the costs unless you are already qualified for Medicare (A, B, and D) and/or Medicaid.

Under McArdle’s main proposal, the government policies would not be covering things like prescriptions, health care related to most births, mental health issues, or any other routine medical care unless you poor enough to qualify for Medicaid, or old enough to qualify for Medicare A, B, and D. If you didn’t qualify for the pre-existing government programs, you get nothing from the new government policies until you have spent 15-20 percent of your adjusted gross income in a given year.

4 anon December 6, 2016 at 1:32 pm

I read that as “you get easy insurance that covers the difference between your deductible and 15-20% of income.”

That is a huge give away.

Are you saying you are actually for it, and only progressives are stopping you?

Or are you reading it as a weird plan where you are not allowed to insure the gap? That would be crazy.

5 Yancey Ward December 6, 2016 at 2:09 pm

Progressives don’t want people to have to pay 15-20% of their adjusted gross income for medical care before getting any kind of insurance to pay things like routine check ups and vaccinations, or paying for most births, for example. A lot of the blow-back from due to the ACA is that the policies the insurers have offered have very high deductibles, and most of those complaints come from progressive pundits. As a much more conservative person, my main complaint is that with such high deductibles the policies are massively overpriced unless you qualify for the full subsidy, and even then you have the low premium combined with the high deductible. This is an artifact of the way the Democrats tried to finance the program- higher premiums for healthy people to pay for lower premiums for the chronically ill- the key defect in the ACA.

McArdle’s plan offers this deal- the government covers all costs beyond that 15-20% of adjusted gross income for everyone, and you pay everything below that limit every year, unless you are poor enough to qualify for Medicaid. Through Medicare, Medicaid, and some smaller programs, the federal/state governments were already covering the majority of people every year who breached such spending limits. All McArdle’s proposal does is provide coverage for those who had neither government provided catastrophic insurance or could afford it in the first place. The trade off for everyone else is the taxes to pay for the additional coverage, somewhat mitigated by the higher take home incomes they will have due to the fact they no longer have to pay for the private portion of such cost coverage.

Given that, the private insurance market should adjust to providing insurance for spending that is below that adjusted income limit, and any gaps that happen due to the rules the government applies to what it will and will not pay for (Medicare and Medicaid already have these rules and rates). Since it makes no sense to insure predictable expenses like routine care, most people will find it advantageous to carry only the government catastrophic health care policy, and those who don’t will end up paying for most of their care anyway through the premiums they would to pay for the gap insurance. Her policy basically makes most people with incomes beyond the Medicaid cutoff pay for routine care out of pocket, as it should be.

6 anon December 6, 2016 at 2:23 pm

Your “progressives” are straw men who hate $40 co-pay more than they hate $40,000 hospital bills.

7 JonFraz December 6, 2016 at 2:28 pm

Re: McArdle’s plan offers this deal- the government covers all costs beyond that 15-20% of adjusted gross income for everyone, and you pay everything below that limit every yea

Correction: you or your insurer. (I don’t read Megan as suggesting we get rid of health insurance otherwise so we would still have health insurance for lesser expenses). Thus, one positive feature of Megan’s plan would be that health insurance would become a lot cheaper, even for chronically ill people. The largest component of our healthcare premiums is the part needed to cover reinsurance, AKA, catastrophic loss, especially since that is open-ended. If instead the total exposure the insurer has is limited to, say, 15% of the insured’s income then the premium’s will be much lower. At the extreme they would be limited to an annual amount equal to 15% of the insured’s income ,and for most people a good deal less.

8 Yancey Ward December 6, 2016 at 2:36 pm

No, you twit- they are the people who think government insurance should pay most if not all first dollar medical costs. Given their preferences, it would be single payer funded 100% with taxes, with extremely low deductibles, if any, and extremely low co-pays. In other words, they hated the ACA at the point it was being passed, and they hate it even more as it has evolved. I actually like it more now than when it passed- it has become a quasi catastrophic health care policy, though that wasn’t the intent of the bill’s proponents. My complaint about it is that unless you get a full subsidy and/or are chronically ill, the plans are worthless as catastrophic insurance policies, but you don’t legally have the right to refuse to pay for them.

Even McArdle’s second proposal made far more sense than the ACA- expand Medicaid and create a subsidized high-risk pool for those who can’t afford an individual policy- though I like that proposal less than the first proposal which at least starts to undermine the irrationality inherent in how a lot of employer based coverage works.

9 anon December 6, 2016 at 2:46 pm

When you are this wrong, about the fundamental purpose and cost structure of insurance, you should probably tail off on the anger.

Below you even tell the healthcare actuary how to suck eggs.

Not a good look.

10 Thomas December 6, 2016 at 9:48 pm

In the real world the cost of insurance is the expected cost of healthcare plus overhead plus profit. The two liberal buffoons in this comment tree as is typical have no idea what they’re talking about. Progressives are opposed to catastrophic plans, period.

11 anon December 6, 2016 at 1:44 pm

Actually you say “you or your policy.”

Jesus, you are raining money while blaming me.

12 Thomas December 6, 2016 at 9:50 pm

“Health insurance magically costs less than healthcare”

13 anon December 7, 2016 at 7:49 am

Do you really not understand that McArdle’s first proposal is for government to simply pay major medical expenses?

Are you for that, you big hippie?

14 Ricardo December 7, 2016 at 2:40 am

Since you concede elsewhere that conservatives would be “unhappy” with McArdle’s proposal, it is not clear what the point of this exercise is. However, under the PPACA status quo, it is entirely possible to spend more than 20% of one’s income on health care. For instance, I priced out a Bronze plan for a single California resident earning $48,000 per year and the premium was about $3,400 per year with a $6,300 deductible. Note that even if you hit the deductible, you still have co-payments to make on additional health care costs until a larger “out out of pocket maximum” for the year is hit.

Ultimately, McArdle’s proposal is essentially to nationalize the Bronze plan market and make a few tweaks to what they cover. You are quite right that getting conservative support for such a measure would be very difficult if not impossible.

15 anon December 7, 2016 at 7:47 am

The proposal to nationalize major medical costs is both quite “left”, and as we agree unlikely.

And so I took McArdle as doing a weird sort of hippie-punching, while complaining that the hippies won’t accept rock and roll.

16 Alan Gunn December 6, 2016 at 3:58 pm

It would need to be a bit more complicated than that. E.g., exclude cosmetic surgery and dentistry, and perhaps have the government pay a smaller portion of costs over 20%, then a larger portion over 30%, etc. Outlays for keeping dying people alive a couple of months longer should also be limited, but that’s probably mostly a Medicare problem.The plan is essentially Obamacare but limited to catastrophic illnesses. Obama’s largest mistake was insisting that the new plan include coverage for all sorts of things, many of them minor, and some of them just plain fraud, like chiropractors treating cancer and heart disease.

17 AlanW December 6, 2016 at 9:28 pm

Do I hear a vote in favor of death panels? Awesome. I don’t like the basic health provisions – chiropractors, acupuncture, whatever – but those aren’t what are driving costs. One of the common conservative attack lines, “Why does my policy cover pregnancy when I’m a 62-year-old man?” gets closer to the truth, although it begs the question whether those folks understand how insurance works.

18 GoneWithTheWind December 6, 2016 at 5:25 pm

While there may be better alternatives to Obamacare it still doesn’t fix the problem that the unwilling are forced by law and point of a gun to pay for the care of the unmotivated who refuse to pay for their own care. Why? Most people aren’t lucky enough to get as much sex as a rock star does that mean my tax money should supplement their sex life. I can’t afford a BMW should taxpayers have to pony up their heard earned money to buy me a BMW? My house is smaller than I deserve with a mere extra $1000 a month I could live in a McMansion should the tax payer pay for this? Why then should the tax payer pay for other people’s health care/insurance??? Why???

The usual answer is some form of combination between charity and “your brother’s keeper”. But if that is the reason it should be voluntary. Why should the Democrats or Republicans vote to take my money for a charitable use? It is like two wolves and a sheep voting on what’s for dinner. Why not let me vote by allowing me to keep my money AND not be forced to buy the insurance?

19 Stuart December 6, 2016 at 7:24 pm

I’d support that but as I personally required during the first ACA debate, if elect to not get insurance…. I respect and support your freedom to choose. Day comes you need medical care, I will also respect your responsibility. Meaning if you can’t afford it (you must show evidence you have the money or equivalent), no care. No one should be required to help unless upfront you can show you can pay in full.

20 AlanW December 6, 2016 at 9:30 pm

That ship sailed when Reagan signed EMTALA. The people of the United States are manifestly unwilling to allow people to die in the streets. Cry “freedom” all you want, the genie is not going back in that bottle.

21 GoneWithTheWind December 6, 2016 at 9:40 pm

I don’t want anyone to die in the streets for lack of medical care either. But there is a solution to that. We have doctors, clinics and hospitals that today treat people who cannot pay. Immediately we should make two changes: 1. If the patient is not a citizen then the hospital with the help of the federal government can demand payment from the alien’s mother country and use the courts to seize money or assets which that country has under U.S. control. 2. Allow the hospital to go after the citizen patients assets to pay the bill.

A longer term solution is to replace all forms of welfare with a workfare program run by each state. To get any aid the individual has to work 40 hours a week for their community. In return they get a paycheck (instead of any welfare) with payroll taxes deducted. This money could be attached by a hospital if the recipient hadn’t paid their bill.

22 anon December 7, 2016 at 8:29 am

I don’t agree with you Gone’, but I give you credit for seeing the plan for what it is.

It is indeed a direct transfer to sick people.

23 GoneWithTheWind December 7, 2016 at 10:39 am

I would add that I don’t believe that the federal government can constitutionally create a national health care system or health insurance. However states can and if we are to do it then it should be by the individual states. Which brings me to the one part of this that the federal government can do and should do and that is regulate or design an acceptable and adequate basic health insurance model for the states to follow in order to provide some consistency. The reason we have standard threads for pipes and screws and standard rail sizes and standards for safety devices and so much more is because the federal government stepped in and created those standards for all the states and municipalities to follow.

24 rayward December 6, 2016 at 12:04 pm

4. Trumpism could demolish the fallacy that Republicans are libertarians. On the other hand, the union of libertarians and the authoritarian Trump could demolish the fallacy that libertarians are, you know, libertarian. On a positive note for libertarians, the Niskanen Center.

25 JWatts December 6, 2016 at 2:19 pm

“4. Trumpism could demolish the fallacy that Republicans are libertarians.”

That’s one hell of a straw man post.

26 Ross December 6, 2016 at 2:24 pm

Huh? The Republicans and Trump have never been regarded as libertarians.

The Niskanen Center is not libertarian either, though it might be considered to have some libertarian leanings. It’s stated mission is to work closely with big government to shape government policies. Genuine libertarians abhor government “policies”. Niskanen is basically a Potomac lobbying group working within a corrupt political system.

27 AlanW December 6, 2016 at 9:32 pm

No true Scotsman. “Libertarian” does not equal anarchist. Libertarian ideas are only useful within the context of a functioning political system.

28 JWatts December 7, 2016 at 8:47 am

It’s not a “No True Scotsman” fallacy. Trump is not a Libertarian. He’s never said he was and no one seriously claims he is. Nor are Republicans Libertarians. There a distinct differences and you certainly might have some positions in common or people in the middle of the two positions who could go either way. But the core philosophies have distinct differences.

“Trumpism could demolish the fallacy that Republicans are libertarians. ”

This is just a really lazy argument, that’s effectively a straw man post. Republicans aren’t libertarians, so there is no fallacy to demolish.

29 Jshots December 6, 2016 at 12:04 pm

I’m confused by #6. ACA plans already have OOP maximums, which yes, I understand could potentially vary considerably if you look at it as a % of a person’s AGI, but what is this plan going to do to help cover the cost of premiums? Also, just expanding Medicaid to 150% is not as easy as it seems. Will it cover everyone? Not just those categorically eligible before? Are the states going to pay for this expansion? Then you start getting into how the insurance companies will have to coordinate with the govn’t regarding people’s incomes/when to stop paying, etc. (or will there be rebates from the govt to ins companies?) and this plan is already sounding like a bigger nightmare to administer than the ACA while the author plays this off as “so simple”.

30 Yancey Ward December 6, 2016 at 1:20 pm

It is simpler in design than the ACA- by a magnitude or two- at least her proposal is.

Basically, she is proposing that beyond whatever the Medicaid income limit is set- poverty level, 125% of poverty level, 150% of poverty level- you have to spend, in one manner or another, 15-20% of your adjusted gross income in a given year on health care before the government picks up any of your costs. As she points out in that old essay, the government already bears a large majority of such costs simply because such consumers tend to be the elderly or the very poor and incapacitated, while the rest are those who are working, but have some chronic or near chronic condition that had made what we consider typical health insurance policies prohibitively expensive to purchase individually.

If the government provided everyone with such a catastrophic policy, then the private health insurance market would almost certainly adjust to providing only those polices that covered none, part, or everything not paid for by the cat policy. There would be no mandates from the federal government about what a health insurance policy has to cover otherwise.

Income taxes would have to be raised to pay for the additional costs incurred, but most workers would have higher incomes because they aren’t paying for as extensive private health insurance policies any longer. As opposed to the ACA which tries to fund the subsidies by forcing a large number of people to buy policies that are inappropriate for their actual needs. I can easily imagine, that with such high, intermittent or recurring costs taken care of, most people might find it convenient to forgo insurance for routine care, and a real market for pricing and competition at the provider level would develop more completely.

The political problems with her proposal are that there would be no mandates for routine care being covered. This is why progressives would have been very unhappy. Conservatives, of course, would have been unhappy with it, too. This is how you got the ACA in the first place.

31 Jonathan December 6, 2016 at 1:22 pm

Under this plan you wouldn’t need insurance. The gov’t guarantee is the insurance. A family which would need a $12,000 per year insurance plan that only had $30,000 in income would simply go uninsured. If they spent more than $6,000 in actual bills, government picks up the rest. If they spend less, they pocket the savings.

32 anon December 6, 2016 at 1:34 pm

But as I say above, are you allowed to insure the gap? It would be prudent, and cheap.

Huge market intervention to say “you are not allowed an insurance contract!”

33 Jonathan December 6, 2016 at 1:46 pm

You’d be allowed one, but for lower income people the cost of the insurance would be fairly close to the cap, so there’d be no point. That $12K plan must have an expected cost of at least $10K!

34 anon December 6, 2016 at 2:02 pm

Would it? A healthy young person might only have 1 in 100 chance of spending “the gap” so at 3 percent of the gap insurance companies clean up. And of course the healthy young person is fully covered, with deductible as the max out of pocket.

35 Jonathan December 6, 2016 at 2:25 pm

Do away with community rating and the cost of the insurance for these healthy people drops so much that we’re back in a world that they don’t want to insure. After all, they didn’t insure before…

36 anon December 6, 2016 at 2:38 pm

I don’t know what that means. As a young person I was healthy except for bones broken in recreation. Those were less than 15% of income, and I was glad to have the insurance. Like $6k for some pins put in, removed, was nice not to pay.

37 anon December 6, 2016 at 2:41 pm

Oh, I forgot the occupational therapy to get range of motion back. Since that was fully covered I never totalled it. It might have been more than 20%, with emergency, operation, etc.

38 Yancey Ward December 6, 2016 at 1:47 pm

Are you really this fucking stupid? Yes, there would be a market for gap insurance, but it would most likely make no sense to purchase such a policy unless you just like prepaying for routine medical care.

39 anon December 6, 2016 at 1:56 pm

Come on Yancey, put yourself in the position of the seller.

Most people do not exceed their deductible most years. When they exceed it, they tend to by a lot. That “a lot” is essentially the entire insurance risk.

If the government takes up that risk you can sell really cheap plans that only need to pay a little, infrequently.

The government takes care of paying a lot, even more infrequently, but where all the costs are.


40 Govco December 6, 2016 at 5:52 pm

I imagine payment plans, not gap insurance, covers individuals lump payments. My transport and education costs are lumpy too, so I finance them.

41 Jshots December 6, 2016 at 2:05 pm

I think the point of my original post was that the article is short and has a lot of unanswered questions. Not having insurance would be a terrible idea. Without insurance, there would be a lot of uncertainty for providers about whether they are going to get paid from an individual (Unless Medicare still exists in this plan? or employer plans? The article doesn’t specify exactly, so I’m assuming they won’t exist). There would be massive cash-flow problems for persons without insurance, but who haven’t hit the catastrophic threshold yet (i.e., there are going to be a lot of people who hit the catastrophic limit in January, with $6K in expenses, that might otherwise have been limited by evened out by copays, etc.). Yancey’s first response, particularly the second/third paragraphs, ignore the very concept of how/why insurance markets even exist in the first place, which is that there always HAS to be a lower probability for some that they will gain value from their insurance contract, otherwise it’s just prepayment (as some have already mentioned). As a healthcare actuary, I see some huge potential problems with adverse selection in such a market such as the one the author describess where insurance is not mandated.

42 Yancey Ward December 6, 2016 at 2:23 pm

You already have these problems with the ACA for all but the platinum level plans which few people can afford anyway, so McArdle’s proposal doesn’t make them worse. Outside of that, if the proposal causes most people to drop insurance that covers the rest of the costs, so what? Most such people are well off enough to work out a finance plan that pays for that infrequent hit of 15-20% of income- for those who can’t, they already can’t so nothing is worse in this regard. If it is a chronic hitting of the level- again, so what? Tough fucking luck. I feel a little sympathy that you have to shell out 15-20 percent of your income every year, but lots of people shell out income like that on things don’t want to have to pay for.

I worked for 25 years, and never once spent more than 3% of my income on medical care in a year, even when I was earning below poverty level income, which I did for 4 years at the start. I am not so atypical in this either, for my age group. I could have easily born a cost of 15-20% every year if I had had to do so- I wouldn’t be happy about it, but I could have done it and I would not have expected anyone pay it for me.

43 JWatts December 6, 2016 at 2:30 pm

“Without insurance, there would be a lot of uncertainty for providers about whether they are going to get paid from an individual ”

First, the providers are guaranteed to get paid any amount above the threshold. So, the risk is only for money above what patients can pay immediately and below the threshold. Furthermore, providers already must treat uninsured people regardless of their ability to pay. So, how has the risk gone up?

“There would be massive cash-flow problems for persons without insurance…”

Of course. That’s why you buy insurance in the first place.

44 AlanW December 6, 2016 at 9:42 pm

JWatts – that’s only true of hospitals and high-end specialty care. Primary care would be reduced to minute clinics and pharmacies – everyone would pay cash. The gap would also play havoc with the notion of preventative care – diabetics and people with heart disease would have negative incentives to proactively manage their health.

Actually, the more I think about it, the more terrible the whole idea sounds. The accountable care incentives in the PPACA were a mess, but still a step in the right direction.

45 psmith December 6, 2016 at 12:08 pm

#5 cutest anti-terror program

46 Anon7 December 6, 2016 at 8:45 pm

Yes. I’m surprised that the folks at SFO of all places are not more culturally sensitive to Muslim terrorists and PETA (animals doing tricks for humans is oppressive). Do they also have a separate safe space for people to deal with such outrageous microaggressions?

47 rayward December 6, 2016 at 12:14 pm

6. McArdle is the Donald Trump of the commentariat. Don’t underestimate her like so many underestimated Trump. Her progression from her embarrassing appearances on Bloggingheadstv (whcih I would watch to see Jonathan Chait’s eye brows merge with the hair on top of his head when she said something particularly insipid) to the most popular contributor at Bloomberg View (based on the number of comments) can only be compared to the progression (if you can call it that) of Donald Trump as the insipid reality television star to president-elect of the United States. I think I get the symmetry.

48 Wonks Anonymous December 6, 2016 at 1:19 pm

I thought her BHTV appearances were rather good. The most mortifying diavlog I can recall is when Ann Althouse vented her frustrations with other people onto Garance Franck-Ruta.

49 Student December 6, 2016 at 12:16 pm

Four honest questions on #6:

1.) what is meant by this, “creating a national high-risk pool to insure anyone who’d been turned down for coverage more than twice in the past 12 months, at prices comparable to what a healthy person of their age would pay in the insurance market”? How would a national high-risk pool for people denied insurance be able to purchase insurance at comparable prices? Does she mean… putting them in medicaid?

2.) How is this proposal preferable preferable to Obamacare for Libertarians?

3.) How would a plan where fewer young and healthy people (presumably since there is no mandate) are in the pool be cheaper?

4.) Given that catastrophic expenses represent the lions share of healthcare expenditures, and that the government will just pick up the cost (with no mention of caps…. which is the primary sticking point with doctors and insurers [the other sticking point was that the wealthy bear the costs of the poorer folks through taxes]), how does this keep costs down better than ACA?

I give her credit, this is an alternative to ACA, vouchers, tax credits, and single payer… but this is far far from as simple as she seems to be making it look to be. Further, I dont see how this makes the politics any simpler at all.

Can someone please enlighten me to what I must be missing….

50 rayward December 6, 2016 at 12:18 pm

See my two prior comments.

51 Wonks Anonymous December 6, 2016 at 1:27 pm

I didn’t think catastrophic expenses actually did represent the lion’s share of expenditures. Does anyone have data on this?

52 JonFraz December 6, 2016 at 2:36 pm

Why do you think this? I read the plan as saying that the government component would be automatic and universal. There would be no question of a mandate, since coverage would be automatic with maybe some manner of exception for unusual religious objections. (like Social Security).
Since I don’t think she’s proposing a ban on workplace insurance (that would politically lethal) young people would continue to sign up for their employer’s health plan to cover gap expenses just as they have generally signed up when insurance is offered at work in the past (otherwise you’re leaving money on the table- almost no employer pays you the difference if you forgo insurance) and more employers would be able to offer insurance.

53 JWatts December 6, 2016 at 2:43 pm

“Does she mean… putting them in medicaid?”

No, she likely means creating a high risk medical insurance pool subsidized by the Federal government.

“2.) How is this proposal preferable preferable to Obamacare for Libertarians?”

Primarily because:

A) Customers must pay directly for their first usage of medical care, similar to a High deductible plan, so they will shop around and avoid high fees. Whereas, the traditional model of a 20% or smaller payment, results in customers who are price conscious.

B) The plan is very straightforward and less subject to gaming and political perks for given voter constituencies. For example, Obamacare providing additional benefits that weren’t traditionally covered to the same degree in health insurance, such as, mental health coverage.

C) Customers would not be forced to subsidize other customers to the same extent.

“3.) How would a plan where fewer young and healthy people (presumably since there is no mandate) are in the pool be cheaper?”

It’s not cheaper. It would be cheaper for health people, and more expensive for sicker people.

“4.) Given that catastrophic expenses represent the lions share of healthcare expenditures,”

That’s not a given, nor is it true.

54 JWatts December 6, 2016 at 3:07 pm

Should be: ‘Whereas, the traditional model of a 20% or smaller payment, results in customers who are less price conscious.’

55 LK Beland December 6, 2016 at 12:26 pm

“I give her credit, this is an alternative to […] single payer”

No it is not. It’s actually single payer. Quasi-single payer for old people (medicare), single payer for poor people (medicaid) and single-payer high-deductible insurance for everybody else.

Her argument is basically that (high-deductible) single payer is better than mandates+subsidies+tighter regulations.

56 Student December 6, 2016 at 12:45 pm

That was my impression as well.

57 anon December 6, 2016 at 3:07 pm

Right. My impression was that her first suggestion was single payer with high deductible, and that it was just play acting that “progressives” didn’t want that.

Piffle. It is a great deal, with government taking on a much higher share of total expenditure.

Thus, in my first comment I doubted Ryan was going to go for it.

58 Yancey Ward December 6, 2016 at 1:44 pm

Sigh, wasting my time, no doubt, but here goes. We already had/have “quasi-single payer for old people (medicare), single payer for poor people (medicaid)”, with a few other, smaller miscellaneous ones thrown in- VA, for example. These programs already paid for the health care of the majority of people who spend 15-20 percent of adjusted gross income in a given year, mainly because such consumers tend to be over 65 and/or disabled by a chronic condition.

McArdle’s proposal tries to focus on those who aren’t covered by the preexisting government programs and who can’t afford a health care policy that covers expenses beyond that 15-20 percent of adjusted gross income. She actually offered two proposals in that essay, but the main one is simple- everyone gets a government policy that pays for all costs beyond 15-20% of adjusted gross income in a given year. This can be combined with an expansion of Medicaid much like that done in the ACA, but doesn’t have to be- she assumes it is done, however.

Given this, most private policies are likely to be cut back to cover routine medical care up to 15-20% of adjusted gross income, or to pay for the catastrophic care the government won’t pay for (think about Medicare’s rules about what it will cover and won’t). Indeed, it is likely that most healthy people will find it nonsensical to have such policies and will cover routine costs out of pocket.

The additional costs of covering the uninsured group will be paid for by raising income taxes, but a lot of workers will also get higher incomes because they won’t have to pay for private insurance policies that cover the high costs. It won’t be a complete wash- there is the cost of covering the previously and completely uninsured, but they were only a fraction of the population in the first place.

As for controlling costs, the working assumption is that the catastrophic policy would be run under Medicare’s and Medicaid’s already existing rules about what is paid for and at what rates. I think it completely reasonable to expect that, with the catastrophic costs out of the picture for most consumers, they will start to abandon all first dollar coverage policies and act as actual consumers for routine care, including how to pay for most births and prescriptions.

59 JWatts December 6, 2016 at 3:10 pm

“… but the main one is simple- everyone gets a government policy that pays for all costs beyond 15-20% of adjusted gross income in a given year. ”

I think that could logically be considered single-payer. Though clearly most of the Left would reject it. Rationally, I would call it single-payer catastrophic health insurance.

60 anon December 6, 2016 at 3:39 pm

Remember 2008?


“Barack Obama said he would consider embracing a single-payer health-care system, beloved by liberals, as his plan for broader coverage evolves over time.”

I don’t suppose you said then “sure, but make it high deductible.”

Can you show anyone right of center supporting single-payer in that timeframe? Because this is striking me as a weird revisionist game.

61 Taxes Can Be a Worthwhile Investment in Our Future December 6, 2016 at 9:28 pm

Silence except for the crickets here. Of course there was no one Right of Center supporting single-payer in that time frame.

The Right loves to make up history that never happened. Remember that the 2008 financial crisis was caused by too much government regulation? Me neither.

62 Student December 6, 2016 at 4:01 pm

Good stuff everyone. Thanks.. didnt have time to think this through today.

“…they will start to abandon all first dollar coverage policies”. I dont think this is going to be the case. Most people live paycheck to paycheck. If most people are getting their iphones on a lease or a payment plan, i dont think people are going to be paying out of pocket for births and prescriptions.

As well, get ready for war with doctors, they are going to fight this idea with everything they have.

63 Student December 6, 2016 at 4:23 pm

So the lower and middle class people that are unhealthy, have a sick kid, or a sick spouse are going to be the losers here. Is anyone concerned this kind of structure incentivizes the middle class to have few (or fewer) children and to abort any fetus with birth defects or otherwise costly heath implications?

64 anon December 7, 2016 at 8:47 am

You misunderstand. The sick are the main cost in the medical system. It is chemotherapy, not casts for broken arms.

In McArdle’s first proposal the government simply pays those major costs.

And you insure for small things like broken bones.

It is a great and very socialist plan, but McArdle manages to invert the logic with emotion, and bring out the people who can’t quite handle the math to hate on progressives.

65 Thor December 6, 2016 at 9:02 pm

Thanks for explaining this patiently and clearly. I learned from your explanation, and (bonus learning!) learned that anon is sometimes not worth reading.

66 anon December 7, 2016 at 7:37 am

Huh? Anon, Ricardo, and JShots (the actual insurance actuary) are on the same page.

Read again, for content.

67 eccdogg December 6, 2016 at 4:08 pm

It’s kind of single payer, but not single payer the way I think most liberals envision it.

First it is very high deductible, and second it is fairly heavily means tested because the deductible is tied to income.

And actually it would not even really need to be implemented as a single payer. You could make it a refundable tax credit for all medical expenses above 15-20% of income.

68 AlanW December 6, 2016 at 10:03 pm

I’m having a hard time picturing who the constituency for this proposal would be. Certainly not Republicans, who oppose single payer in all its forms. Democrats would want more coverage and would hate the cliff for the working poor. Libertarians are dead out. It’s probably worse for poor people than the PPACA. Rich people wouldn’t like the means testing. Employers would be caught in the middle. Primary care docs would get screwed. Specialty care docs would have weird incentives to go big or go home. I guess big hospital systems would like it, since it would likely increase their profits in the ER and reduce uncompensated care.

Having said that, if McCardle could dig up some votes, I’d certainly support it over Price’s plan.

69 Donald Pretari December 6, 2016 at 2:10 pm

#6…Although I’m personally for a plan much like McArdle’s, I was for the ACA because it managed to balance five or six very powerful special interests. Since we spend so much money on health care in this country, all of these special interests have plenty of money, hence, plenty of influence ( so forget single payer ). At the same time, at least on this blog, many people knew the ACA would have to be altered going forward. But if what’s proposed is going to alter the ACA to the point where the special interests decide to ramp up their lobbying, then people should at least understand that they have no idea, personally, if what happens will be better or worse for them. Even Raymond Smullyan can’t untangle our health care system, and he’s a very smart guy.

But if people want to go down that path, then I have a two word solution for them…Christian Science.

70 Todd Kreider December 6, 2016 at 9:02 pm

And I have two letters: NR

That is of course just a symbol of how medicine is about to be flipped upside down over the next 5 years and that includes continuing improvements of Watson type systems and less need for doctors and nurses by 2022.

This is not a test. This has not been brought to you by the Emergency Broadcasting System.

71 carlospln December 6, 2016 at 11:30 pm

“and less need for doctors and nurses by 2022”

Yes, tell us all how it goes when you operate on yourself to set a compound fracture.

btw, Watson is a complete Potemkin’s Village. IBM paints it as a line-of-business.

It doesn’t even generate any revenue [if it did, they’d report it. they don’t]

72 Donald Pretari December 7, 2016 at 11:55 am

carlospin….good points…

73 JWatts December 6, 2016 at 2:18 pm

“3. Child care is not actually becoming so much more expensive in the U.S.”

Huh? This paper seems really bad. It’s a simple question. How much did prices rise in real terms?

” shows that average weekly expenditures among working families grew from $87 in 1985 to $148 in 2011, an increase of 71 percent (in constant 2013 dollars)”

Instead of stopping there, the author seems to bring in a really complicated analysis that serves to obscure the basic reality. There are plenty of reasons why daycare has gotten more expensive. But those reasons don’t change the fact that it has gotten more expensive.

74 Floccina December 6, 2016 at 4:07 pm

Here we go: The government picks up 100 percent of health-care costs above 15 to 20 percent of adjusted gross income.

Capping at 20% of income seem much to low and that percent should rise with income. Someone earning more 2X the median income could surely afford to pay 50% of their income per year for medical bills. The goal is to get people to change norms and push for cheaper care.

Also people in the UK and Canada fall into bankrupts due to illness so it is still a problem, if your balance sheet is not great being out of work can push you into bankruptcy.

My favored plan:

The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.
It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.
Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.

75 dearieme December 6, 2016 at 4:29 pm

The jazz link didn’t work for me. Maybe there was no best jazz of 2016. No wonder: Louis and Bix and Jelly and Fats are all dead.

76 Albert December 6, 2016 at 6:59 pm

It is because of the firehose of requests generated by the Marginal Revolution readers. Blame it on Tyler 🙂

77 carolospln December 6, 2016 at 7:09 pm


What are you, like, 137 or something?

78 anonymous December 6, 2016 at 9:18 pm

Bix is great !!!!! “Lonely Melody” “Riverboat Shuffle” “Tiger Rag” !!!!!! Don’t diss the Bix!

79 Taxes Can Be a Worthwhile Investment in Our Future December 6, 2016 at 9:31 pm

Google for


I would link the url, but I can not link to web sites here any more. I used to be able to, but it doesn’t work for me any more. Perhaps I linked to something Tyler didn’t like so he disabled my ability to link?

80 Taxes Can Be a Worthwhile Investment in Our Future December 6, 2016 at 9:44 pm

Well, maybe the link was correct as Tyler printed it. I tried again to get to the site, but could not. Maybe the site is indeed overwhelmed by MR folks trying to get to it.

81 Enzo December 6, 2016 at 10:02 pm
82 carlospln December 6, 2016 at 11:26 pm

“You wear modern clothes. You drive a modern car. Why do you want to listen to that old time shit?”

Miles Davis

83 anonymous December 7, 2016 at 9:29 pm

Miles could be a fun guy from time to time but if you are at a jazz bar or some kind of music club or a party and there’s a bunch of guys and gals playing their hearts out and everyone is having a great time and a guy like Bix or Louis or Jelly or Fats walks in and asks if he can join in everybody is ecstatic if a guy like Miles walks in well that’s interesting maybe we will learn something whether we want to or not…

84 Ja-Rule's Eternal Banger December 6, 2016 at 5:21 pm

#5 -The only people who need therapy are the ones who introduced this disgusting program.

85 Taxes Can Be a Worthwhile Investment in Our Future December 6, 2016 at 9:34 pm

Well, it sounds like you are one of those people who is not a good candidate for therapy.

I like pigs myself. The piglets at country fairs are cuter than puppies.

86 carolospln December 6, 2016 at 7:06 pm

Pigs are clean, J-R.

Its humans that are disgusting.

87 Noumenon72 December 6, 2016 at 7:17 pm

I always wondered what happened to Karl Smith, he was so brilliant. I had figured depression.

88 Joël December 6, 2016 at 9:32 pm

6. I like the plan, I mean the simple one: the government pays every health care expense after 15-20% of the gross income of the patient’s family. I would even prefer 15%. But I am worried: Megan McArdle says it would be cheap, much cheaper than ACA, but she doesn’t give any estimate or back-of-the-envelope computation to justify this claim. Has someone any idea how much it will cost the federal government?

89 zztop December 6, 2016 at 11:37 pm

#6) We (the U.S.A.) are lost in the wilderness of our healthcare nonsystem. The rest of the world looks on shaking their head. The mere fact that we continue to discuss things in this regard is truly pathetic.

90 zztop December 6, 2016 at 11:46 pm

The ideal U.S.A. healthcare system is a Kaiser style provider involving (1) insurer/provider in alignment since they are one of the same; (2) managed care–no fee-for-service monkeybusiness, which cannot be controlled no matter how high the market discipline might be; (3) not-for-profit, or mission oriented.

It should totally be non-employer based,

It should be funded by fixed, but fully refundable, tax credit supported premium payments. Folks can pay beyond their credit, but if they pay less for a qualifying plan, they can pocket the difference. This would serve as an incentive to go with the most economized and efficient selection of providers.

Problems solved. This would lead to affordable care, ideally which should be %12 of GNP, not %20.

91 JWatts December 7, 2016 at 8:54 am

“Problems solved. This would lead to affordable care, ideally which should be %12 of GNP, not %20.”

None of your suggested changes would lower the cost of healthcare to any significant degree. To lower health care costs the US would need to drastically cut health care provider wages (probably by a third or more), drastically cut pharmaceutical spending (probably by a third or more) and drastically cut medical technology spending.

A free market approach where the consumer pays the first dollar for medical care puts downward price pressure on the system without resorting to command and control price fixing and/or rationing. That’s what McArdle is pushing for.

92 zztop December 8, 2016 at 3:04 am

“US would drastically cut health care provider wages”: Precisely! And in addition to this (the price of a service), they approaches I suggest would reduce demand.

Re: “A free market approach where the consumer pays the first dollar for medical care puts downward price pressure on the system without resorting to command and control price fixing and/or rationing. That’s what McArdle is pushing for.”

Impossible in all possible universes. Utterly stupid that you are even contemplating such utter nonsense. Wheat, commodities, iphones, cars, and band aids, sure, but “free market” applied to medical services: this is the stupidest thing in ALL history.

93 Donald Pretari December 7, 2016 at 1:55 am

#6…Maybe we freeze some sick people until it’s cheaper to treat them.

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