Tuesday, March 23, 2010

My Thoughts on The Recent Health-Care Legislation

I have decided to throw my hat into the ring and blog about the recent health-care legislation.  Here goes...

Though this may seem rather heretical to my conservative kindred, the bill was not all bad.  I personally had no problem with the ban on insurance companies dropping longtime participants when they get sick, which goes against the entire purpose of insurance companies--you pay in, just in case, and when problems arise, they pay you.

This episode here is particularly skanky:


That being said, now it's time for criticism:

I am very skeptical of the mandate to purchase individual health insurance, on constitutional grounds.  The 10th Amendment to the Constitution states that all powers not specifically granted to the federal government are assumed to belong to the states and people.  Forcing individuals to purchase health insurance--or anything else for that matter--is unconstitutional.

(I would imagine Romney's insurance mandate in Massachusetts isn't unconstitutional, since it's done at the state level.)

This is the reason why attorney generals from many states have joiend together in a lawsuit against the imposition of these mandates.


Also, I cannot find anything about increased reimbursements for Medicare or Medicaid patients, which is a major problem these days.  Many doctors will not see these patients because the reimbursement has not kept up with rising medical costs.


Also, I believe the reforms include a mandate for businesses to supply health insurance for their employees.  Many small businesses will not be able to afford this.  I heard on the radio this morning (it was a morning talk show on 92.9 Dave FM I believe, not some political thing, to head off the obvious retort) a comment from a small business owner whose is afraid many companies will not be able to afford this and go out of business, something that will ultimately cost jobs.

Finally, I don't think a blanket ban on not insuring people with pre-existing conditions is such a great idea.  The reason insurance companies bar people with pre-existing conditions is that it drives up the cost of the total pool.  This means the insurance costs for everyone will go up.

It would have been better to subsidize the states' existing high-risk pools--Georgia has one, although it has not funded it--than to do that.  The same effect will be accomplished, without inconveniencing every health-insurance policy-holder.

If the individual insurance mandates are declared unconstitutional by the Supreme Court, there is a way to get uninsured people covered that will not involve amending the Constitution or similarly radical measures that I imagine some people will propose.

(After all, there are members of one of my Internet forums who want to abolish the Senate, largely due to the ability of the minority party to prevent things from getting done.  Funny, they never suggested that under Bush when the Democrats were in the minority.)

Simply expand Medicaid.  This is particularly doable if the statistics I have heard are correct and that the number of people who want health insurance but cannot get it, as opposed to those who could get it but don't, are not especially numerous--15 million of the total 47 million uninsured.

There.  Those are my comments.  Let the games begin.


  1. In your rescission example, I can't fault the company for protecting its health care policyholders, the ones who honestly filled in their applications, from those who seek to attain insurance fraudulently. Not everyone trying to cheat the system is going to file a claim for the second treatment for a disease they claimed they didn't have when applying, a week after getting insured. For the case of HIV, one could learn a past partner was diagnosed as HIV+, and seek insurance, and there would be no paper trail to diagnose fraud.

    That said, rescission is a terrible thing, and made more complicated because it's very difficult for the layman to know exactly what conditions need to be disclosed on an application. What I'd like is for Warren Buffett to fund the Rescission Insurance Company, whose only purpose would be to assume the policies, under the original terms and premium, of everyone who loses their policy because of rescission.

    More realistically, establish several levels of underwriting (preferred, standard, a few substandard levels), and when a later investigation indicates the policyholder should have been insured at a different underwriting level, move them to the appropriate standard, no fault, no accusation of fraud. There would have to be a transfer to a high risk pool for those who aren't insurable.

  2. According to the article, though, he purchased health insurance, contracted HIV, and THEN got dropped.

    There's no indication of dishonesty on his part.

  3. How does the health insurance mandate differ dramatically from mandatory car insurance? No reasonable person claims that car insurance is tyranny. And after all, you can’t opt out of paying social security (retirement insurance) or medicare (retirement health insurance). There’s no option to buy from a private provider, like with auto insurance. It’s simply taken automatically from my paycheck and given to the government.

    Health insurance makes up an enormous part of our economy, it's necessary and proper to regulate it to that end, 16th amendment clarifies it.

    Also, since the only penalty for not buying is a moderately teensy penalty, one could frame it as a tax hike with a subsidy for purchasing insurance.

  4. When one has Medicare and a second stop-gap policy, Medicare states what will be covered and what will not be covered. the second policy pays the difference BUT if Medicare denies the treatment unless one is rich you will not be covered by the 2nd policy. For those 65 and over the Government is already determining our fates! I shudder to see how they cut Medicare - I have had cancer - if it reoccurs because of my age will I not be covered?

  5. 1) To Anonymous: If you are referring to a law that specifically prohibits seniors from purchasing coverage that would cover treatment denied by Medicare, that would be a terrible government policy, but I've never heard of that being a law. That's a lot different from if that is just the way most private insurance policies for seniors are written. Just seeking clarification. Anyways, regardless, you seem upset that the "Government" determines what is covered by Medicare, but you don't really address how this is worse than the combination of employer and private insurance companies determining what is covered in your policy. Finally, I couldn't help but notice an unexplained inconsistency in the logic of your post. You imply that it is somehow bad that the Government provides Medicare and determines what is covered by Medicare. But then you later seem afraid of Medicare cuts. It's not clear to me how you oppose government control of health insurance and then also oppose cutting government funding of Medicare.

    Now on to the general post. As for the point about its constitutionality, who knows how the Supreme Court will rule on the issue. I would not be surprised to see the Court duck the question and avoid ruling on the substantive merits, but we'll see.

    As for your suggestion about pre-existing conditions, it's unclear how different that would be from what is going on. Either way the point is to get people with pre-existing conditions covered and this is going to require some distribution from healthier people to less healthy people. State subsidies of high-risk pools would be accomplishing the same transfer of wealth through different means. Actually, limited-government, fiscal responsibility types might have reason to support the alternative the Democrats went with on this one over government subsidies. Not putting the government in the middle of determining exactly how much to subsidize those with pre-existing conditions means less taxation, and maybe more importantly, less government borrowing.

    Of course, we need an individual mandate in order to make that sort of program effective. The fundamental question here is how we as a society want to distribute health care resources. How much do we want it to be dependent on sheer luck? The idea behind the individual mandate is that we should spread these costs evenly across society, and essentially force those who were lucky enough to be healthy to help pay for the healthcare of the unlucky sick. Some Rand devotees might think that's immoral, but to a lot of people this is the most rational and fair way to allocate health care.

    Anyways, kind of a ramble, but there you go.

  6. Lucky?

    Though many health problems are a matter of luck (such as hereditary propensities to certain cancers), a lot of Americans' health issues can be traced to diet and lack of exercise.

    (I remember from health classes a lot of commentary on the "typical North American diet," all of it unflattering.)

    About the constitutionality of the mandate, I posted the blog link on an Internet forum I post on and someone cited the Christian Science Monitor to say that the mandate is essentially a federal tax--those who purchase health insurance get a 100% rebate on said tax.

    Clever move, politically. If it's set up as a tax/rebate situation, it's rather different than "buy it or else!" and more likely to pass constitutional muster.

    About the risk pools, I brought those up because they involve pre-existing governmental infrastructure and it might be easier to go with those.

    Of course, you do raise a good point with the free market vs. statist approach. After all, the first time I heard about the mandate approach was from Mitt Romney in Massachusetts.

  7. Oh, also to address the point about the Senate.

    There are two separate issues with the Senate: 1) How it prevents the majority from governing; and 2) how it favors smaller states.

    The second aspect structurally favors Republicans/rural interests. The systematic disfavoring of urban, usually Democratic interests obviously pisses off Democrats, including me. I still have yet to see a good reason that Montana and Nebraska should have such disproportionate power.

    The effective supermajority requirements in the Senate exacerbate the problem. The truth is when Democrats filibuster, they are far more likely to be representing a majority of the American population because they are more likely to come from populous states like California. So you're really drawing a false equivalence.

  8. Oh also, you are right that many health conditions are linked to diet and exercise. If you are taking the moral position that people then deserve the sickness or are not morally entitled to health care because they only have themselves to blame, I guess that's not an unreasonable position. However, the truth is in our system getting the wrong sickness can bankrupt you, whether your choices had a lot to do with it or not.

    I think the more reasonable argument has to do with moral hazard, but people are always going to have an incentive to protect their own health, and I think the incentive effects here are marginal.

  9. However, the Senate exists to keep smaller, less-populated states from being run over by the big ones.

    For example, what if California and Nevada were one country and more-populuous California decided to outlaw gambling, which would ruin Nevada's economy?

    A purely majoritarian scheme would let them get away with that, leaving Nevada with the choice of economic collapse or defiance, which could get ugly.

    And about the minority preventing the minority, that's part of the checks and balances system.

    It would be more prudent and less radical to simply make it so anyone who wants to filibuster is going to have to get up there and talk for hours on end rather than saying "we filibuster" and nothing gets done until a supermajority is found.

    If something is worth filibustering, it's worth putting one's bladder on the line. As such, it would also happen less often.

    And I never went so far as to say people who get sick deserve it. My point is that health is not simply a matter of who is lucky enough to get sick or not.

  10. Matt,

    I think there is a very solid case for abolishing the filibuster. Though our founders were exceedingly brilliant for their day, I think we can beg the question 'is there a reason to value states over people?' This parallels the backlash against the recent Supreme Court decision furthering corporate personhood. Most Americans don't think a corporation deserves the same rights as individuals. And while minorities should be protected against the tyranny of the majority, at some point we can safely ask why should the disagreements of the minority infringe on the majority enacting legislation they were elected to enact. The filibuster has become a tool to disenfranchise the majority in this country.

    Your example obfuscates the bigger issue which your post addresses, which is health care reform. On every element of the health care bill there exists a majority of Americans who support said element. And the question becomes, do we let a small band of well organized and motivated conservatives in say Montana prevent legislation from being adopted which is supported by a massive majority of Californians. Should the rights of 10,000 trump the rights of 50,000,000?

  11. 1) The Senate today does more than "protect" smaller states from being "run over" by the big ones. It allows smaller, less populous states to essentially extract disproportionate political rents in the form of government funding. Example: Agricultural subsidies. You portray these states as needing to protect themselves, but what about the ability of the bigger, more populous, more urban states that actually contain the majority of Americans? Why shouldn't they be able to protect themselves against the smaller states hustling to take disproportionate shares of government funding? Why shouldn't they have an equal right to say what goes on in our national government? The Senate is an anachronistic institution created for a time in which states, not the United States, were primary political identities. Today, it primarily exists to serve our agricultural sector's interests at the expense of the metropolitan American for no good reason. We should all be asking ourselves why, when most Americans live in metropolitan areas, for some reason rural, live-in-the-middle-of-nowhere Americans like Sarah Palin get to claim they are "real" Americans. The structural flaws of our government that favor rural interests so much play a big role in this, in my view.

    2) I apologize if I misinterpreted your statement on luck and health. Unfortunately, if you weren't saying it affects their moral entitlement to health care, it's unclear what relevance your point had to the question of whether and how we should cover those with pre-existing conditions.

  12. Excellent blog post.

  13. Matt, it's a little late to comment, but the bill doesn't apply a penalty for not buying insurance, which I agree would be unconstitutional. It grants tax relief for having insurance, which you lose if you don't have it. It would feel like a penalty, but it really isn't, it's a loss of tax relief. There is really no question of its constitutionality.