Three provocative and interesting health care links

1.  Josh Barro on health insurance as fiscal policy. The private market may be more statist than you think.

2. Arnold Kling on when the ACA exchanges will be working. Maybe never, or possibly very soon.

3. Chris Conover on how many people will have to change their health insurance plans?  There is some exaggeration in the definitions there, but still the author makes some useful points.


This comment has little to do with the post it's in response to, but I figured it'd be a good place to pick the brains of some folks likely to be in the know. Or, at least, to be more knowledgeable than I am. In a discussion on the (alleged) perverse incentives created by the PPPACA the following hypothetical was described:

* Healthy family of three.
* No insurance from an employer.
* Income just high enough to not qualify for any subsidies.
* Bronze plan on the exchanges costs ~$900/month to cover all three.
* Penalty for not carrying coverage = ~$1000/year.

Since nobody can be denied coverage for preexisting conditions, this family how likely is this family to opt out of coverage? It's a gamble. A "win" would be $9,800 in yearly savings (minus the out-of-pocket health care costs that would otherwise have been covered) whereas a "loss" would be an unforeseen expense that could potentially be much larger than $9,800. Maybe a family member has to be hospitalized, gets cancer, etc.

How many families' situation roughly matches this hypothetical? Of those, how many do we expect to opt out (i.e. is this a legitimate concern)? If the number is significant, how large would the penalty need to be in order to alter the calculus such that most choose opt in?

9800 per year. 49,000 over 5 years. 98,000 over 10 years. I'd take the risk.

Also, bronze plan only covers 70 percent. If you get a 100k illness, you're out the premiums plus the deductible, plus 30k. If you had a 100k illness within 6 years you might break even. This all assumes the cash is in 0 percent Tbills.

as was pointed out in yesterday's thread on PPACA, there is an annual cap of $12600 on out of pocket expenses. there is no "plus $30k"

Cap adjusted by income, or flat-rate?

useful to note that the penalty can only be enforced by taking your tax refund. no refund, no penalty enforcement.

Also, if faced with a $100k medical treatment you should: immediately stop working, claim unemployment or welfare. Process a life-event change (loss of job). Then get subsidized insurance.

Odds of your child getting leukemia in the middle of the year, something now with a high cure rate times the cost of treating leukemia out of pocket for the rest of the calendar year, or the value of the risk to your child for not treating the illness until January of the next year.

Of course, the value of not treating an illness might be immortality: Henrietta Lacks could not get timely diagnosis and treatment and ended up immortal. and a bigger contributor to science than 99.9999% of the population.

A couple of points:

(1) In order to be ineligible for the subsidies, our family of three would need at least $80,000 in income. While I suppose it is not unheard of for a household of three with that level of income to not have employer-provided coverage, I would guess it is relatively uncommon.

(2) Our hypoethical family would not have affordable coverage if that coverage cost $9,800 a year until the their household income was about $145,000. Families of three below that income level would be exempt from the penalty.

We are **not** discussing "Insurance." This talk is all about HealthCare Contracts. Those contracts do contain some risk transfer conditions, but their major cost factors are healthcare services.

These contracts are principally for cost transfers & reallocations and cost spreading through insurers. They are ** not** for risk spreading.

The ACA makes it illegal to purchase insurance that isn't expensive enough, i.e. doesn't cover enough.

"Under-insured" is the new minimum wage law for the 21st century. Regular people are not being allowed to pay large insurance corporations to purchase less than a certain level of coverage, even if they'd otherwise be able to agree on a price and coverage set.

From that perspective, does any economist doubt that as a result prices will rise while the number of insured will drop?

Your solution for people who are uninsured is what?

Creative destruction: Death, dismemberment, and sales of used body parts to people with insurance and or money like Dick Cheney?

Or simply death.

Look at Obamacare as doctor and hospital payment assurance to protect them from deadbeats.

"uninsured" != "no health care"

"under-insured" != "Not what the customer wants"

Why does the government need to force people to be able to get the insurance they otherwise want?

By your logic, we should pass a law requiring everyone to buy a car each year with features costing at least $50K. Think of the boom to the economy and how much nicer rides everyone will have...

1. Barro is really starting to turn into an Angry Ex, with an obsession about the poor. I'm not saying he should be dismissed and he makes valid points, but it is getting hard to take him too seriously.

#1: I've remarked here before that it is amazing how few people understand what insurance is and how it works. It is not just the guy on the street. The chattering skulls seem to be the most ignorant. Give credit to Barlow for at least trying to understand the difference between private insurance and what we have today. The fact is we have had socialized medicine in America for close to 80 years. So called private insurance has always been heavily regulated by the states. In most cases, rates are set by the state. Since most of it is purchased by employers on behalf of their employees, it is also subject to the mountain of laws pertaining the labor and employment. Throw in Medicare and Medicaid, which account for the lion's share of health care and we have our form of socialized medicine.

This ignorance is why the Left offers up reforms that make little to no sense and the Right struggles to offer any alternative. What the Left should have done with ObamaCare is simply expand Medicaid, maybe turning it into a government alternative for the middle class. The rates would be pegged to earnings. They would have avoided this debacle and the inevitable political consequences. The Right should be offering to de-regulate insurance, allowing companies to offer what they like where they like to whomever they like. People like choices so it is an easy and rational policy to pitch to the public.

" People like choices so it is an easy and rational policy to pitch to the public. " Z


The people get choices each election day. Obama & Congress & the ACA somehow resulted from those "choices". How's that working out for your world view ?

If widespread ignorance is the core problem -- why is it then a good idea to let such ignorant American people make critical choices on anything ?

The Progressive Left (Obama, Democrats & many Republicans) believe the general public is ignorant/misinformed due to the inescapable oppression of class, culture, capitalism, inequality, etc.
Thus, only a non-ignorant, noble elite leadership can ever hope to improve things ... by making the right choices for the populace. And, since that populace is hopelessly ignorant -- the Progressive leaders must regretfully use deception & lies to coax the masses forward.

The details of ACA and "insurance" are ultimately, totally unimportant -- if you view the world from the port side.

You seem to have not understood my post. A simpler version for you is this. Both ideological camps that run this country start from a position of ignorance when trying to reform health services. That's why their respective proposals are so awful.

By the way, my worldview is working out really well for me. Thanks for asking.

"Both ideological camps that run this country start from a position of ignorance when trying to reform health services. That’s why their respective proposals are so awful."

In other words, if informed, both liberals and conservatives would back universal coverage for basic care that is funded significantly by taxes of one form or another because that is the most cost effective for a society, economy, and 90% of individuals, because that is clearly supported by all the evidence.

Yeah, I know you like to argue that the working poor in the US should not be counted in US health care statistics and stories because the working poor don't deserve their citizenship and thus deserve to be denied medical treatment that they would get without delay if Canadian or French or Japanese of Taiwanese or British....

Even denying care to tens of millions of US citizens, the per capita cost to taxpayers for health care for decades has been equal to the total cost per capita in Canada to cover everyone.

Further, even denying care to tens of millions of US citizens, the per capita cost to the US private sector for health care for decades has been equal to the total cost per capita in Canada to cover everyone.

Eg, we pay twice as much per capita as Canada and still don't deliver care as comprehensive as Canada does.

I remember studying Geico's business model in MBA school. They pretty much just wanted premiums to reinvest them in the stock market.

As far as I can tell, insurance at its core is about diversification of a-systemic risk. Just as one should buy the S&P 500 index, one should prefer buying insurance than paying directly because of the reduction in uncertainty. That is really it.

Once the government decided that insurance companies couldn't make their own judgments about who goes in what risk pool then the concept of insurance was destroyed.

The entire mess is made worse because the government won't allow barriers to new supply to come online. That is the main problem regardless as to how one fashions the payment mechanism.

At this point, as horrible as the option is, I think all you can eat, for free, healthcare is the best solution. Obviously, allowing illegal aliens access to it is the reason why we cannot do it. All of central america will sneak over to get free stuff. Insurance companies are just crony capitalists. They are guaranteed returns over 10%, basically.

The people have had their "free lunch" fantasies so indulged for so long that they'll never acknowledge that a system that depends on rational choices based on a prices derived from a well-functioning market-system is vastly superior. Fat, smoker, drug user, stressball, NYC resident, marathon runner -- none of those things are allowed to count -- nor are conditions that are known, not unknown (i.e., I've got a chronic sports injury that will need treatment forever).

We don't have a health insurance system, really. We have crony capitalists that much be provided with guaranteed profit to exist. There is so much overhead in that system. And even with it, 10% of the country has no insurance/health care.

Single payor is inevitable. It will last a short while because you cannot have it, single payor retirement, single payor unemployment/disability, single payor education, single payor imperialism, single payor public safety, and coming soon, single payor IPADs and free for all Amnesty at the same time. Well, unless we start a war and blow up everyone else's factories and create super-high wages for US workers, aka post WWII era.

It's a turd sandwich and we all gotta take a bite.

"The Right should be offering to de-regulate insurance, allowing companies to offer what they like where they like to whomever they like."

You do understand that before the rise of the Blues with their special legislation supporting their operation as prepaid medical providers, insurers looked at health insurance as impossible because it was inherently a moral hazard. The Blues opened in all States and did not go bust, thus attracting the for-profit insurers to the sector, but they cherry picked their customers, ultimately destroying the viability of the Blues, proving the insurers were originally correct: health insurance is impossible because it is inherently a moral hazard.

And conservatives have spent a great deal of effort and money teaching the moral hazard nature of private health insurance.

Consider that:

1. There are major problems with the website - this should have been the easiest part of Obamacare.
2. Many people are losing their insurance, due to the deliberate action of the Obama administration
3. Obamacare has been devised by smart people in DC - the type of person that Adam Smith described as follows:
“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.”

How could anyone think this is going to turn out well? I am looking forward to the next negotiation over the budget in January. I am sure Ted Cruz will have a few more choice words.

+1 for an post that mentions Adam Smith; +1 for a post that mentions chess; and +1 that mentions Adam Smith mentioning chess. Bingo!

This guy has a pretty good analysis - at least as good as the three cited by Tyler -

Barro: "This system is a kind of shadow fiscal policy, redistributing income from the healthy to the sick."

But you could apply the same strained logic to his homeowner's insurance example -- "redistributing income from people who haven't had a fire to people who have." Now it's true that with health insurance, people really want protection against two kinds of risks:

1. That they'll have an unpredictable, expensive health problem (house fire).
2. That their risk profile will get worse (neighborhood deteriorates and becomes higher risk).

Barro argues that insurance companies will only cover type 2 risks when required to by regulation. But that's not true. For example, I have a 10-year term life insurance plan -- the cost doesn't increase even if my health deteriorates and makes me a worse risk (and, of course, mere aging is guaranteed to make me a worse risk over the 10 year period).

The forced lack of underwriting is what makes health insurance not insurance. In the example of redistributing money to people whose house burn down, that's post-hoc. Looking backwards you would like to have skipped homeowners insurance if you knew your house wouldn't burn down. Pre-hoc, if you are risk adverse, it makes perfect sense to buy that policy.

Without underwriting on the hand the redistribution is pre-hoc and known up front. If you know that an insurance company is charging the the actuarially average cost for flood insurance to everyone, whether you live in Key West or Phoenix, than it makes sense to buy as much as they'll let you if you live in Key West and skip it altogether in Phoenix. Forcing the guy in Phoenix to buy it anyway at that point is just straight up income redistribution. Pretty tractable to calculate even.

The article says that chronic health conditions are expensive and so we have no choice but to have this kind of redistribution from the healthy to the sick. I say that's nonsense. Some people can afford that care. If you can, you should. We shouldn't be legislating subsidies from the poorer to the richer just because the richer happens to have higher costs.

"The article says that chronic health conditions are expensive and so we have no choice but to have this kind of redistribution from the healthy to the sick. I say that’s nonsense. Some people can afford that care."

Well, yes, but it's not just nonsense because some people with chronic health problems are wealthy enough to afford it. Chronic health conditions are typically acquired rather than inherited characteristics and often not predictable (think, for example, of a very expensive series of surgeries and rehab following a serious auto accident). Non government solution? Buy and maintain a policy that can't be canceled or repriced based on adverse health events. As I pointed out, regulation is not necessary for companies to offer this kind of insurance (against both bad events and against deterioration of your risk profile) -- it's already a standard procedure for term life insurance.

#3 reminds me of those old lightbulb jokes:

How many bureaucrats does it take to change a health insurance plan?

1) Two. One to assure the everything possible is being done while the other
files the application into the waste basket.

2) Five. One to change the change the plan and four to file an Environmental
Impact Statement.

3) One to spot the plan once it is filed online, his supervisor to authorize a
requisition, a requisition typist, twelve clerks to file the
requisition copies, a mail clerk to deliver the requisition to the
purchasing department, a purchasing agent to order the plan, a clerk
to forward the purchasing order, a clerk to mail-order a receiving
clerk to receive the plan ...

4) Two. One to fix the plan in place and one to screw it up.

5) None. We contract out for things like that to CGI.

#1: I too don't really see what Barro's point is here. What is the difference supposed to be between "real" insurance and a mere transfer program? Fire insurance is an ex post transfer of money from people whose houses didn't burn down to those whose houses did. In the same way health insurance is an ex post transfer of money from people who fortunately remained healthy to those who unfortunately got sick. The question of whether this counts as true insurance or fiscal policy is mostly semantic.

If his point is that "private" health insurance, even in the individual market, is anything but in this country, and is a tangled web of carrots and sticks that tries to corral people into workable risk pools, and that neither party is actually proposing allowing a real private insurance market to unfold, well then...yeah duh, where have you been dude?

Barro's point is that the people complaining about the ACA because they don't understand the nature of insurance should get a clue and shut up. A lot of people on the right make crazy arguments that basically protest the fundamental nature of insurance: that healthy people help to pay for sick people. He just enlightens them that the government at both state and federal levels put in policies to ensure that the sick are not totally without recourse, and in that way private insurance is a public program. But that makes heads explode.


If Republicans were interested in working with Democrats to improve Obamacare and reduce the economic distortions it creates, they could fix this group's problem. For example, they could restrict the value of the tax exclusion for employer-provided coverage (shrinking a needless tax benefit for rich people like Sen. Ted Cruz) and use the savings to extend the subsidy range above the 400% of FPL mark.

Reforms like this, needless to say, are not high on the Republican policy agenda.

I'm sure some conservatives will say that health insurance should be a normal insurance product and not a tool of fiscal redistribution. But we have this system for a reason: chronic health conditions are really expensive, and they can't be addressed through one-year contracts. Addressing the problem of uninsurability requires either heavy-handed regulation of the sort we have now and will have under Obamacare, or some other heavy-handed non-market alternative, like a single-payer plan for catastrophic health expenses.

"Barro’s point is that the people complaining about the ACA because they don’t understand the nature of insurance should get a clue and shut up. A lot of people on the right make crazy arguments that basically protest the fundamental nature of insurance: that healthy people help to pay for sick people. He just enlightens them that the government at both state and federal levels put in policies to ensure that the sick are not totally without recourse, and in that way private insurance is a public program. But that makes heads explode."

I think your understanding of the nature of health insurance is probably about as poor as the people you are mocking. The subsidized high-risk pools had very little to do with private insurance for the people not in those pools. Previous government restrictions on rate setting were more likely to be "don't discriminate against races of religious denominations" than "don't discriminate against health status." People who think there has been a dramatic paradigm shift in private health insurance are not crazy or even wrong.

If you read Barro's piece in its entirety, he lays out more of the ways that government intervenes.

I, however, was not discussing that broad swath of activity, I was discussing critiques seen in comments that protest the basic nature of insurance, some of which boil down to "I don't want to pay for other people's risky behaviors" which we all have to do in some way, or "I don't want to pay for all these things I don't need" (maternity, substance abuse counseling, etc.)

Health care reform does indeed force people to pay for both the risk and health status of other people in large new ways. Barro's article does not refute these concerns, no more than human respiration refutes the concern that there is too much C02 being pumped into the atmosphere.

Isn't the point of insurance that lucky people pay for unlucky ones? And that for luck that runs its course *after* buying into the policy? Of course there are other kinds of wealth transfers, and they might have their benefits. But that's not what insurance is about.

"What is the difference supposed to be between “real” insurance and a mere transfer program?"

Insurance is about risk management. Risk involves uncertainty. There is little uncertainty on costs for many people with pre-existing conditions. Death (and its costs) is certain. If you do not think Medicare is a necessary program then I can understand why you are having trouble understanding Barro's point.

The fact that Medicare is a government benefit does not prove that private insurance is a government benefit. It just proves that people don't have to purchase private insurance for the period where they receive an actual government benefit.

Many of these comments are conflating "government provides a backstop to the private components of insurance" with "the private components of insurance are themselves a government backstop."

My point on Medicare is that it is not insurance it is a transfer. The costs to seniors are too high and must be provided by those younger. The same is true for people with pre-existing conditions. If these people were grouped in a risk pool using normal insurance methods the insurance cost would be unaffordable for many. The government has regulations forcing the insurance companies to widen their risk pools causing the transfer from the known healthy to the known sick. Current health insurance is a transfer program. Meaning there is no uncertainty involved - we know there are people who are not holding up their end of the risk bargain.

I'm not sure what you mean by "current" insurance. If you mean insurance under the ACA, you are mostly right. If you mean insurance prior to the ACA I believe you are wrong:

Previously there was quite a bit of discretion to price risk or exclude certain risks. It varied state to state and it was not absolute, but neither was it illusory. What happened in employer pools was perhaps another issue, tax-subsidized as they were.

It is not true that the costs for seniors are too high for all of them. Many could pay, and almost all could pay something.

Why should someone's grandkid get a house when they die, while their cancer treatments were paid for by the taxpayers? At a minimum there should be a lien on the estate.

Wallace - it could be that Barro is lying but certainly the following is true of employer provided insurance (once you are placed in a group you get to stay there regardless of your health):

Individually-purchased health insurance is usually a one-year contract. But these insurance policies are subject to a federal policy called "guaranteed renewability." Once an insurer covers you, it has to offer you renewals as long as you want them, and it's not allowed to raise your premium based on new information about your health.

This rule, created by the bipartisan Health Insurance Portability and Accountability Act of 1996 (HIPAA), is basically rent control for health insurance. It benefits the sick by obligating health insurers to write policies at a loss; they make up the difference by charging more to the healthy.

In most states, there are additional regulations on the individual insurance market that promote cost-shifting. These state regulations fall into two main categories; a 2008 report produced by the Department of Health and Human Services provides a good overview.

Steve J - I wouldn't say Barro is lying, he's just exaggerating the exceptions, mischaracterizing the substance of the status quo ante, and conflating actual government safety nets with unrelated private insurance markets. I've elaborated these complaints elsewhere in the comments.

I disagree with your characterization of Guaranteed Renewal. It doesn't force a wholesale subsidy from the healthy to the sick. It just shifts the character of the insurance from a 1-year product to a longer term product. Premiums can still be set according to individualized risk, just over a longer time span. The concerns and justifications are different from forcing people with insurance to pay for those who got sick before buying insurance.

Here is what I'm getting at.

Barro: "Most insurance products are designed to turn an individual's risk of loss into a predictable cost. For example, your premium on homeowner's insurance should equal your expected average annual claims plus a profit margin for the insurer. If your home is in a high-crime neighborhood or especially susceptible to natural disasters, you'll pay more.

Because of this, we can more or less let people buy whatever kind of homeowner's insurance they like, or none at all.

But health insurance doesn't just allow individuals to turn risks into fixed expenses. It is also designed to shift costs across individuals, away from the sick and toward the healthy."

But how is that different from homeowner's insurance? It too shifts costs across individuals, from the not-burned-down to the burned-down. When the insurance company pays out money on a policy, that money comes from the premiums of all the not-burned-downs, and if the insurance company did a good job pricing risk, there's some left over for profit. Wonderful. Now, the government COULD enroll everyone in a mandatory homeowner's insurance program, where everybody who owns a house has to pay premiums and then if the house burns down they get a payout. Is that a "transfer policy" from the not-burned-down to the burned-down? Or is it "insurance?" What I'm saying is, what difference does it really make other than semantics? As it pertains to healthcare, the web of regulations regarding even nominally private insurance in this country has made private insurance more or less part of a big quasi-mandatory health insurance policy with holes, and the hope of Obamacare is that those remaining holes can be closed. So again, what difference does it make if we call this a de facto transfer program or a mandatory insurance plan?

As far as I can tell Barro's article boils down to saying that health insurance can't work the way homeowner's insurance can, because of guaranteed renewability issues, and that it doesn't work because of adverse selection. But if Barro wants to write an article about that, then he should just write about that. The article as written seems not to have a clear point and just kind of twists and turns from one issue to the other. And that is what I was trying to say.

See my reply above to Wallace Forman. If we somehow knew a home is going to be damaged by fire we would not group that home in the same pool as ones where fire damage was an uncertainty. Yet current health insurance regulations force that grouping. There is already a mandated transfer occurring.

I get what you're saying, but that doesn't really apply. People pay into Medicare while young with the understanding that they'll be on the receiving end once old. Seniors are of course a very high risk risk pool, so ideally seniors (as a group) would save while young for the higher premiums they would inevitably have to pay once old. Medicare is an attempt to approximate this.

Just to be clear, I completely agree with what you're saying. Current regulations do force that grouping, and (I think) we're in agreement that what's called private insurance is not really private insurance.

The difference is whether the cost shifting is ex ante ex post.

If individual insureds are priced at their expected risk, then the transfers are merely ex post. No one is being forced to pay for the risks of other insureds, they are just paying for the actual losses.

If insurers are prohibited from pricing certain types of risks, or if caps on the variation in premiums are set, then the transfers are ex ante. People are being forced to take on some of the risk of people with a different expected cost of insurance.

People might rationally want ex post transfers in a free market, but they probably would not sign up to subsidize others with higher risks ex ante if it could be avoided.

MR's page layout has been broken for me now, for about 24 hours. Is this a subtle joke on website problems?

1. Here is a paper on restrictions on rate discrimination:

I read it a while back and don't remember it perfectly but my impression was that health insurance usually offered a lot more of ex ante individualized risk setting, and generally more than other types of insurance.

Is private insurance "statist"? Relative to what??? Certainly the status quo allowed more individualized rate setting than the ACA does. If Barro is trying to pass off the exceptions as the preexisting rule, then he is distorting the picture badly.


"That's a summary of the "private" health insurance system we have today: Subsidize and regulate to push as many people as possible into insurance pools, and shift costs among them so the healthy subsidize the sick.

Under Obamacare, we will do the same thing, but more of it. Insurers will face more rules about what kind of coverage they must offer and to whom. Tax subsidies for insurance will be augmented with direct premium subsidies through the exchanges."

A glass of water with a drop of oil is more than just quantitatively different than a glass of oil with a drop of water.

Barro: "health insurance is not really a private product but a government program creating winners and losers"

This is a specific instance of the common general argument: there is no free market X, only a mixture of free market X and government X, therefore X is really just a government X. One unit of coercion somehow short-circuits any argument against lots more coercion. The logic is self-defeating and no improvement over marginal analysis.

If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what. - President Obama

This phrase was more than likely focus tested for emotional impact. It was specifically designed to overcome the public reluctance that Clinton's attempt to reform health care encountered. It reassured the vast majority of voters that Obamacare would be well designed and would be well implemented.The veracity of the quote never mattered, because Obama never particularly cared about that aspect. He wanted to win and he did win. And if your asking why? Well, FYTW, probably sums it up rather well.

On #1
I can understand the desire to transfer from the rich to the poor and from the healthy to the unhealthy but why the transfer from the young to the old. The old vote in higher numbers?

Why subsidize birth control users?

And why encourage employers to buy insurance for there employees? I think that is a bad idea.

And why not encourage very high deductibles instead of discourage.

What I like about PPACA:

It subsidizes the poor and that the subsidy rams up slowly unlike medicaid.

It reduces the preexisting condition problem.

"Why subsidize birth control users?"
-Because subsidizing the pill is cheaper than subsidizing children. Duh.

"And why encourage employers to buy insurance for there employees? I think that is a bad idea."
-Agreed, so long as employers properly compensate their people so that they can afford it after taxes. They currently get the better part, taxwise, of compensating people this way instead of through direct compensation.

#2: I disagree with the March 2014 date. My opinion of the distribution of likely outcomes is that it is bimodal. There is a high probability that the exchanges will be working at the end of November. I think that there is an even higher probability that they will be working never.

I think this is a pretty good statement by Arnold Kling. I might say its probability is bi-modal between the middle of December and Never. But that's just quibbling.

However, it's possible that they'll attempt a Hail Mary play and strip out all the enrollment functionality, and rebrand the website as a Policy browsing site, with the user then able to email a request for a quote to a given Health Insurance company. Then the company could email back a response with an attached Enrollment. Then the user could email back the enrollment form. And then the company could send a confirmation email.

It's not the best solution, but it's far better than the current solution.

I agree with some of what Barro said, but I also think he is being extremely disingenuous. He admits that government is so intertwined with insurance markets that the distinction between the two has nearly disappeared, yet instead of arguing for deregulation of this industry, he argues for more intervention. But it's not terribly insightful to note that Obamacare is not radically different from some of the other Republican health care proposals, since libertarians and even some conservatives have always recognized this. The more interesting question is why are any of these proposals better than a free market, and Barro hasn't adequately answered that question.

It is very easy to prove Obamacare is not about "insurance". Actuarial tables prove pretty clearly for similarly underwritten policies E[Benefits|woman] > E[Benefits|men]. Yet what does the law say about premiums for men and women???

Obamacare is as anti math as those nuts in Indiana (or where ever it was) that wanted to define pi as 3.

1.: "I'm sure some conservatives will say that health insurance should be a normal insurance product and not a tool of fiscal redistribution."

What is a "normal insurance" product?

Like the undercapitalized insurers who offered property insurance in the good old days who simply left town when losses exceeded the cash they had on hand? The only insurance that could be considered "normal insurance" before the days of regulation was mutual aid societies tied to the community which could figuratively, and sometimes literally, run the cheaters out of town on a rail.

The property insurers long ago insinuated their way into the laws of each State and the Federal government to define the limits of their liability and enforce risk mitigation. Property insurers mandate building codes everywhere they offer coverage, mandate fire departments to qualify for rates, mandate fire hydrants to qualify for rates, and have ensured the government define the properties that are prone to certain risks that are thus automatically excluded from coverage.

Flood damage is excluded from coverage only if in a flood zone, so a water tower failing and flooding your house on a hill is a covered risk. Unless government had listed the property in a flood zone. A claim might be valid against the city water company, but maybe not if deemed an act of god.

Property insurers depend on government to protect them from losses caused by the uninsured. Thus they depend on fire departments to put out fires that threaten the property they insure. Only in certain areas do insurers take matters into their hands and deploy private fire fighters, the areas with multi-million dollar homes.

The insurers got legal authority to conspire and collude in setting standards, like UL - the Underwriters Lab is owned by insurers. The effect of laws sought by insurers exclude from the market almost everything used to build property, or be used in property, without a UL rating. Try to produce and sell an electrical appliance that plugs into AC power without getting a UL approval.

And insurers have ensured that the laws require all competitors join a risk pool and contribute capital in proportion to their share of the market to cover the failure of any insurer. Neither the crook nor super capitalized insurer is free of a "tax" on their success to cover the cost of failure or crookedness by a competitor.

As a consequence, insurers have made free riders pretty smart. Why buy property insurance when insurers have reduced the risk so much that virtually no one gets back in insurance claims anything close to what they pay over the course of decades in premiums.

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