Sounds like a good time to explain a few facts about the modern insurance market. Start with the reality that nine out of 10 people under 65 are covered by their employers, most of which cover all employees and charge everyone the same rate. President Obama's horror stories are about the individual insurance market, where some 15 million people buy coverage outside of the workplace.The WSJ conveniently ignores the 50 million Americans who aren't covered, but they don't count. And yes, the 150 million Americans under 65 who have health insurance, roughly 90%, 135 million or so, have employee-based insurance.Mr. Obama does have a point about insurance security. If you develop an expensive condition such as cancer or heart disease, and then get fired or divorced or your employer goes out of business—then individual insurance is going to be very expensive if it's available. But what the President and Democrats won't tell you is that these problems are the result mainly of government intervention.
But blaming the higher cost of self-insurance on government intervention is a bit like blaming the cost of a $200,000 Italian sportscar on import fees. I've been in the insurance business, folks. Insurance works off of the Law of Large Numbers, which basically says if you have a large enough group of people insured, you'll make more money off the premiums on the healthy people than you'll pay out on the sick ones. Self-insurance is expensive because it's just that...self-insurance. For the most part that means that large number is one...which is not a large number. Needless to say, you'll pay more. Government intervention has nothing to do with it, it's actuarial science and economics, and profit motive. Period.
Now, the op-ed piece goes on to suggest that forcing the insurance companies to cover sick people is going to basically double everyone's premiums. If that was done without a mandate to cover all Americans, without a public option, and without an insurance exchange for people to shop around in, the WSJ's board would be correct. Lack of competition is the exact reason why insurance premiums are higher. The point is, a major part of the Obamacare plan is to take measures to lower costs through both competition (public option, insurance exchange) and increasing the number of people covered (Law of Large Numbers, mandates) will lower the premiums for all Americans.
It's the entire package that is the reform. Just saying you're going to cover people regardless of illness, without the rest of the measures, will not work. But saying that's all the reform plan consists of and not mentioning the rest of the plan is rank dishonesty.
Then again, this is the Wall Street Journal's editorial board we're talking about here.
Since you didn't bother mentioning the reason government intervention causes the problem, I thought I'd quote that part here.
ReplyDelete"Because the tax code subsidizes private insurance only when it is sponsored by an employer, the individual market is relatively small and its turnover rate is very high. Most policyholders are enrolled for fewer than 24 months as they move between jobs, making it difficult for insurers to maintain large risk pools to spread costs."
But hey, you don't have to honestly represent the other side of the argument. You're a lefty!
I didn't include it because it's irrelevant. If the problem is people changing jobs, how is that "government intervention?"
ReplyDeleteHow does that paragraph even begin to explain that theory?
Because the tax code subsidizes private insurance only when it is sponsored by an employer
ReplyDeleteEmployers get a tax deduction for providing health insurance benefits. Individuals do not get a tax deduction for buying health insurance*. This tends to tie whether you have health insurance to your employer.
One significant reform we could make without driving private insurance out of business would be to give the same deduction to individuals.
*You have to be self employed, you can't deduct if you're a schedule C business and you lost money, you can't deduct if you were eligible for a group plan, ...
Then the issue is that Americans need an affordable place to get health insurance through someone other than their employers, or self-insurance needs to be made far more affordable through competition.
ReplyDeleteWhich the Democrats' plan would provide through both the public option and the health care exchange.
The public option is designed to squeeze out the private option. Various dems have said as much. Even Obama said this was how he would introduce single payer.
ReplyDeleteBut your response is typical for a statist. The previous intervention had undesirable effects so we need to intervene more to produce more undesirable effects so we can intervene more and take more control.
btw. Self Insurance isn't when you buy insurance yourself it's when you set aside your own money to pay for potential future loss.
Yes, and in your free market utopia, only those who can afford health care get it. Health care is already rationed by ability to pay.
ReplyDeleteWe can go around and around on this, Serv. At some point you either have to admit government should be providing services, or should be dismantled.
There is no free market utopia. There is just the real world governed by physical laws and people who deny them and think that government can actually help when really government just causes more problems.
ReplyDeleteGovernment is alot like luck. You can't do without it but only a fool relies on it.