10.06.09

Insurance doom and gloom

Posted in Society at 13:40 by RjZ

I’m not really a fan of the “public option” for health care being debated in the United States Congress. Generally, I’m in the camp that the government isn’t all that efficient at running things and I predict that, in the long run, the public option will become the go-to option for the nearly impossible to insure and will become a huge drain on our economy.

So why am I for it? Because most of the arguments opposed to it are wimpy strawmen that won’t scare away the tiniest autumn crow.

Public insurance will force us to ration care (or have death panels)

I certainly hope so. We can afford to give people a modicum of health care in this rich nation and it makes great economic sense to do it. It doesn’t make as much sense to do absolutely everything possible to heal someone with a 0.0oo ooo oo1 chance of survival. Sure, if I am that guy and the procedure the doctor is proposing as a one in a million chance of working, I’ll take the risk, but why should everyone else have to pay for my bet? I should probably go get some special (non-government) insurance for that. I bet there will be a few companies filling that niche.

Sadly, though, we already ration health care. Not by anything so sensible as need or success rate, but rather by employment and money. If you have enough money or the right employment, you get health care whether it’s likely to succeed or not. If you don’t, you’re out of luck.

Health insurance mandates force the healthy to pay for something they don’t need

It sure does. The libertarian me is pretty unhappy about it too. Fortunately, I’ve come to accept it in other parts of life because it makes economic sense. We can argue in the comments about the specifics but we generally are mandated to pay for things we may or may not use because society around us does use them and we benefit. Think roads, or another mandated insurance: auto insurance.

While college students will no longer get to imagine they’re so healthy they’ll never need insurance, in nearly every plan before congress insurance companies will give up something too. They will lose there right to refuse service to some individuals.

It makes economic sense. If I am a entrepreneur hiring employees for my rapidly growing business, then once I invest and train these folks, I’d sure like it better if they stayed healthy and returned that investment back to me. Just because they’re young and creative doesn’t mean they won’t get cirrhosis from all the drinking. Healthcare will get them back to work sooner. Above all, if we really would allow people to take responsibility for their choices, that is, to simply die in pain when they can’t pay for the health care they refuse to get, I might be OK without a mandate. As long as the uninsured (particularly those who choose to be) still get health care without paying, it makes sense to make not pulling your health care weight against the law.

The government will need to know how healthy I eat, whether I rock climb, or even if I engage in what they consider risky sex acts!

I made this very argument. When the government is paying for my health care, they’re going to want to make sure I am a good bet and not costing my fellow taxpayers an undue share. Private insurance companies already do this, but I don’t have to choose one that asks questions I don’t feel like answering. One mitigating factor is that when insurance is mandated people’s bad behavior is spread out against more payers and therefore less of a pain, so they’re less motivated to ask about everything.

As much as my brain keeps imagining a world where I sneer at overweight people and they sneer at my rock climbing, it’s a slippery slope argument. If we make even a step in this direction, we have to be prepared for every possible consequence regardless of how likely it is. Meanwhile, back in reality, in dozens of countries with a public option, this simply hasn’t happened. Shouldn’t we argue about likely possibilities, instead of unlikely ones?

Shouldn’t I be able to buy insurance anywhere I want, not just in my state?

Sure you should. Except for the unintended consequences of that plan. If we regulate insurance companies so that they all provide the same minimum of care, this might work, but that would mean more crushing federal regulation. Is that really what libertarians or conservatives want? If instead we let Arkansas decides to make its state attractive for health insurance companies and removes regulations such whether or not the companies may cancel insurance for no reason, but Colorado does not allow such practices, it seems pretty likely that insurance from Arkansas will be cheaper than Colorado. Indeed, insurance companies may find it profitable to open up offices in Arkansas just so they can offer the cheaper, competitive, and less effective coverage. So begins the race to the bottom.

Actually, I rather prefer that the ability to decide just how little or much coverage we get be as close to where I vote as possible. When Arkansas bans abortion coverage and doctors who believe in evolution (alright, now I am just being unfair…) I’d like to still have a choice of local coverage.

The public option puts my choice in danger enough. Buying across state lines, without federal regulation (which I don’t want either) just makes the problem worse. Let’s attack one problem at time, shall we?

The public option will bankrupt insurance companies

The conservatives have been making two conflicting arguments. The government is no good at running things and providing value and contradictorily, that this horribly run government option will be so much better than private insurance that they’ll all go bankrupt trying to compete with a non-profit.

I am not so sure why were desperately trying to protect insurance companies—aren’t they only a step above the IRS and some unscrupulous lawyers? Still, why would they be unable to offer value that the public option cannot offer? The U.S. postal service is the public option for mail. It still exists, even if they’re not able to compete on a level playing field. UPS and FedEx are not required to deliver to every address in the nation. They can refuse your business if it’s too inconvenient for them, where the postal service may not. Yet somehow, in spite of the public option for mail, the private companies have thrived.

When I lived in Germany and the Netherlands, by the way, I was mandated to have insurance but was not allowed to just have the public insurance (I made slightly too much.) I bought insurance from a private company (admittedly one getting significant revenue from the government….) All the while I did not have to report on my diet, or risky hobbies. I am not an unqualified supporter of European health care, but it’s obvious that it’s not all doom and gloom.

So, given that we have a public option for postal service and insurance mandates for auto insurance and armageddon hasn’t actually started, perhaps we can try out this whole public option thing. President Obama offered the best option in his address to congress. Let’s put what we need in place (mandates, for example) and determine what good enough looks like and what we expect (something better than we have now with increasing costs and sick people being dropped by insurance companies for acne) and then let market see what it can do. The threat hanging over their head is that if we do not achieve the goals we’ve set, the dreaded public option will be initiated.

If the market does fail to deliver and the public option doesn’t fare better, then we’re back to the drawing board to figure out if this is problem we can really fix. Many will claim that there will be no way to turn back the clock on public option. I think they’re right—once an entitlement is started, there’s no good way to get rid of it. And yet I don’t know anybody my age or younger who believes that Social Security will be around for them. If the public option fails, it will cost a fortune and for a long time. Conservatives can enjoy the power they’ll receive to come up with a better idea, because the status quo just isn’t working at all.

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