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Tim Cavanaugh | January 31, 2006

With health care expected to be a big theme in tonight's State of the Onion address, Ron Bailey makes the case for putting insurance back in the hands of the individual.

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Mike|1.31.06 @ 4:48PM|#

Mandatory private health insurance in a way sounds authoritarian, but the more I think about it, the more I like it. I'm not sure exactly how it works in Switzerland, but I believe its more like a mandatory in practice type thing. When you apply for a job, loan, apartment lease, they require you to show some type of healthcare card. The Swiss I know say it's very affordable ($150 a month for a good policy), and dirt cheap for basic services only.

First step should be to axe medicare and medicaid. The government is crowding out this market, private enterprise would quickly take up the slack.

|1.31.06 @ 4:48PM|#

Is "State of the Onion" a joke that I'm too stupid to understand or is that a typo?

|1.31.06 @ 4:51PM|#

What's the latest on catastrophic health insurance? I didn't see that in the article.

As per the concluding paragraph's in Bailey's article, I'm also curious to know what lies in store for those with pre-existing conditions/high-risk candidates that struggle to earn a sufficient income, should health coverage become privatized. Who would willingly sell them insurance, and how extravagant would the cost be for them?

Would the distribution of risk be enough to allow these individuals to receive the care they need, or would insurance companies decide just to tell them, "Lotsa luck?" Would the government offer enough in vouchers to cover potentially high medical expenses?

I do think privatized health care is a good idea overall.

|1.31.06 @ 4:52PM|#

So if you favor making health insurance mandatory, what will the punishment be for those who do not buy it?

|1.31.06 @ 4:53PM|#

Jennifer,

Death.

|1.31.06 @ 4:54PM|#

State of the Onion. I like it.

Mike|1.31.06 @ 4:54PM|#

So if you favor making health insurance mandatory, what will the punishment be for those who do not buy it?

Well, if you follow the Swiss model, you need the insurance to get bank loans, car loans, a lease agreement to rent an apartment, or apply for a job. So someone could feasibly do without health insurance if they remain unemployed, living with family, without any credit to their name?

|1.31.06 @ 4:55PM|#

Well, if you follow the Swiss model, you need the insurance to get bank loans, car loans, a lease agreement to rent an apartment, or apply for a job.

Sounds like an odd proposal for a libertarian to make--another government regulation coming between you and the ability to make a living.

|1.31.06 @ 4:56PM|#

Does everyone accept the fact that for profit insurance is good for the consumer, and not just a way to bleed off premium dollars to health care executives?

|1.31.06 @ 4:57PM|#

More like Ron Bailey making the case for putting more guns in the hands of the gov't.

|1.31.06 @ 4:58PM|#

There has been a long thread on medicare struggling with this issue below. It seems more complicated than any of the proposals given here seem to appreciate.

The mandatory private insurance thing doesn't seem to work smoothly in the case of car insurance unless you include some sort of no-fault provision. Not sure how that applies here, but...

What would you do with those that underestimate their needs? I think voucher programs are just too likely to underfund the needs of the poor. But if not, flesh out the transition from the current program to the new one.

I have floated the idea of non-profit HMO type organizations that get tax breaks etc... as long as they have an open door policy and maybe a sliding scale for participation based on income (which might include scholarships or vouchers below a certain level of income). Private firms providing a service to meet a public need, healthcare for the poor.

Mike|1.31.06 @ 4:58PM|#

Not really a regulation. It can work from a private standpoint very easily. Why would a bank want to give someone a loan for a house if that person doesn't have health insurance? They get horribly sick, stuck with medical bills up the wazoo, and default on their loans.

You don't need to make it the law, but most reputable lending places would require the insurance. Maybe some won't but they charge you 30% interest or something.

The problem is now with the people who are just enough above poor to not qualify for medicaid, but not rich enough to buy private healthcare. If you eliminate the govt programs, private insurers will quickly go after that market segment.

Hell, you could even take 25% of what the govt spends on medicare/medicaid now and give vouchers to old and poor people to use to buy the private insurance. It would at least be a start...

|1.31.06 @ 5:01PM|#

Not really a regulation. It can work from a private standpoint very easily. Why would a bank want to give someone a loan for a house if that person doesn't have health insurance?

Maybe because if the person gets too sick to pay their bills, the bank gets to take the house back AND keep all the money the sick person previously paid the bank for it?

|1.31.06 @ 5:02PM|#

Rush & Jennifer: Just trying my best to stop the slide toward completely socialized medicine. The gov't already pays for 45% of all health care expenditures, so my proposal tries to reverse that trend and empower patients and markets. It's modelled on proposals such as mandatory private social security accounts and school vouchers. It's not perfect, but I obviously think it's way better than the universal single payer (i.e., government) proposals that the Left is slowly getting people to accept.

|1.31.06 @ 5:02PM|#

Not just the poor, there are plenty of 20 somethings that forego insurance and take the risk. these are exactly the people you want int he pool, to offset the costs for the chronically ill.

Mike|1.31.06 @ 5:03PM|#

Maybe because if the person gets too sick to pay their bills, the bank gets to take the house back AND keep all the money the sick person previously paid the bank for it?

Sure, but there are costs involved with that, and it can get really ugly and bad for PR to be throwing sick people out on the street while taking away all their assets. I'm surprised banks don't currently require you to have health insurance to get a loan, any laws against this?

|1.31.06 @ 5:07PM|#

Ron Bailey--

I'm still wondering what the penalty will be for those who don't buy this mandatory insurance. "Mandatory" means "do it or else"--what is your proposed "or else"?

Also, will these vouchers cover the full cost of insurance for the poor? If so, isn't there the danger of costs going up, the way costs go up every time the government sticks its nose in a given market? If not, then we're right back to the problem of poor people being required by law to buy something they cannot afford, in which case they face the penalty of. . . what, exactly?

|1.31.06 @ 5:08PM|#

Ron,

I'm sure that there are more than a few people in this country whose illnesses and/or disabilities make it difficult to earn a living. If those individuals had to buy their own insurance, what company in their right minds would sell them a policy? Who'd force them to?

Wouldn't that be equivalent to a motorist who gets into multiple accidents trying to buy car insurance? Not only are they paying large premiums to begin with because of their history, but the constant repairs bleed them dry financially, and nobody wants to insure them anyway because they're a bad risk.

In other words, the people who need it the most are probably the ones who can't get it.

|1.31.06 @ 5:10PM|#

Bad idea for everyone except big business..

|1.31.06 @ 5:10PM|#

With health care expected to be a big theme in tonight's State of the Onion address

What on earth does anyone care what Larry Wall has to say about health care? 10th one or not, I don't see the point of including that topic.

*shrugs innocently*

Mike|1.31.06 @ 5:12PM|#

Bad idea for everyone except big business

I have a feeling private charities would get involved, or even some type of a "credit union" for health insurance. Help people with bad health get it at decent rates. Right now they have no incentives to get involved because of the govt monopoly on health insurance for the poor and elderly.

|1.31.06 @ 5:19PM|#

It's not clear to me how this sort of voucher system would work with pre-existing conditions. If I am poor and given, say, a $2,000 voucher to buy health insurance, yet I have a history of, say, heart problems, isn't it likely that insurers are going to want more than $2,000 to insure me? In fact, might not some of them refuse to insure me at all?

Mike|1.31.06 @ 5:23PM|#

In fact, might not some of them refuse to insure me at all?

Maybe they won't insure you for that specific condition, but they probably would for others. Some insurance would be better than no insurance. Also, they could put limits on insuring heart conditions. Maybe they would just pay out 100k max for bills or something.

alkali|1.31.06 @ 5:25PM|#

(This addresses the same issue Umax is addressing, but from a different way.)

RB: How do you propose that the private health insurance be priced? If the answer is "whatever the market will bear," then the sick person who can reasonably expect to incur $50K in health costs over the next year will have to pay $50K plus policy administration costs for a policy. If the government is going to provide vouchers to poor people so that they can get private insurance, it is hard to see what the cost advantage is over just having the government pick up the tab for their health costs. (Cf. the way banks act as fee-taking intermediaries for government-backed student loans.)

fyodor|1.31.06 @ 5:29PM|#

It's not perfect, but I obviously think it's way better than the universal single payer

I thought libertarians were genetically incapable of compromise?

|1.31.06 @ 5:30PM|#

Mandatory private health insurance in a way sounds authoritarian, but the more I think about it, the more I like it.

I don't like the idea, but I'd take it over single-payer or the current system. It's almost a free market.

|1.31.06 @ 5:33PM|#

Like SPD, I think that private health insurance is a good idea. I also am concerned about people with pre-existing conditions and their ability to get new health insurance. I'm retired, with a history of two bouts with cancer (relatively minor, but ...) and my wife is diabetic. I have health insurance from my last employer, but the premiums are well over $1,000/mo. for my two-person "family". That uses up almost all of my pension. I'd like to try an HSA, but I worry about how our history will be considered. I wish I had enough resources to just switch. Consumer-driven care would lower prices. I think my costs are high because the govt. is a too-eager-to-pay player in the system, and people head for the doctor for things they might treat at home if somebody wasn't there with an open wallet on their behalf.

|1.31.06 @ 5:35PM|#

I thought libertarians were genetically incapable of compromise?

Well, it doesn't matter; convervatives and liberals will show no interest in this idea. :)

|1.31.06 @ 5:39PM|#

I thought libertarians were genetically incapable of compromise?

They don't make things mandatory for people's own good, either.

Wow! This is the first time I've ever been more bonafide than an actual Reason staffer! I'm going to sit here and bask for awhile.

Ahhhhhh . . .

MP|1.31.06 @ 5:47PM|#

They don't make things mandatory for people's own good, either.

Education vouchers are not for an individual's own good, but for the collective good of society. Yet this is a solution widely adopted by libertarians for education. Mandatory health insurance is comparable funded by vouchers based on income is comparable.

MP|1.31.06 @ 5:50PM|#

Mandatory health insurance is comparable funded by vouchers based on income is comparable.

Ug...Mandatory health insurance partially funded by vouchers is comparable.

|1.31.06 @ 5:54PM|#

Education vouchers are not for an individual's own good, but for the collective good of society. Yet this is a solution widely adopted by libertarians for education. Mandatory health insurance is comparable funded by vouchers based on income is comparable.

But availing one's self of education vouchers is not mandatory. And there's a difference between paying for vouchers out of tax money that's already been collected, versus telling people "Buy yourself this insurance or else."

I have no problem with my tax money going for food stamps that can only be redeemed for certain healthy foods, but damned if the government can tell me that it is mandatory for me to buy certain healthy foods for my own self.

And again, what penalty does Ron Bailey propose to inflict on people who don't buy this mandatory insurance--fines? Confiscation of property? Jailtime? Inability to get a job?

fyodor|1.31.06 @ 5:54PM|#

They don't make things mandatory for people's own good, either.

Not as their ideal position. But perhaps as a compromise position to avoid a plan that's even more harmful to individual rights. That's what compromise is all about and what you, Jennifer, have complained repeatedly that libertarians don't know how or refuse to do.

|1.31.06 @ 5:56PM|#

That's what compromise is all about and what you, Jennifer, have complained repeatedly that libertarians don't know how or refuse to do.

I am not opposed to compromise, but there are aspects of this plan that still need to be explained. I asked those questions at 5:07.

|1.31.06 @ 6:06PM|#

Re: "If the government is going to provide vouchers to poor people so that they can get private insurance, it is hard to see what the cost advantage is over just having the government pick up the tab for their health costs. (Cf. the way banks act as fee-taking intermediaries for government-backed student loans.)"

I agree here. And what role is there for the government beyond paying for healthcare? Does providing for healthcare play a role. Is it more efficient to both pay and provide, or to just pay using middle men via private industry?

Ron's idea may (maybe) have some legs, but I think it needs to be fleshed out. Particularly in how you get from the current system to the new one. What does the transition look like?

|1.31.06 @ 6:12PM|#

"--what is your proposed "or else"?"

Soylent Green.

Duh.

|1.31.06 @ 6:16PM|#

And from the peanut gallery...

This year, both "Groundhog Day" and the "State of the Union Address" fall on the same day.
It is an ironic juxtaposition: one involves a meaningless ritual in which we look to a creature
of little intelligence for prognostication, and the other involves a groundhog.

|1.31.06 @ 7:00PM|#

I'm seeing a fundamental problem here: For any "free market" system to work requires the withholding of care from the poor.

If you can't afford health care, you don't get it. END OF STORY.

That's the fundamental nature of the market, is it not? Buying and selling? Sure, you can float pie-in-the-sky fantasies of churchs and charities ponying up for Little Timmy's cancer treatment, or to handle Bob's heart blockage -- but in the end, it isn't going to work.

The American public is also completely unwilling to toss a dying kid or Grandma out onto the street because they can't pony up for the pills or treatment.

That's the main reason health care is so freakin' expensive. Those without insurance don't go to the doctor when they get first get sick -- when 20 or 100 bucks of antibiotics can fix it. They show up at the ER three weeks later with a systemic infection and end up in ICU, costing 10 times what a simple preventative visit would have cost. And the American public will not tolerate tossing their dying asses out because they're too poor to pay.

But since they couldn't afford the Doctor's visit in the first place, they're certainly not going to pay 20k in hospital costs -- we pay it in the form of increased health care costs or higher taxes.

Since no matter how you slice it, we will end up paying for their health care, I'd rather we just flat out GIVE them comprehensive care so that it costs as little as possible. I'd rather pay for their doctor's visit and their 20 dollars worth of pills than their trip to the ICU.

Then there's the fact that the insurance industry's incentives with health care are, in fact, ass backwards. To make money, you do two things: Only ensure the healthiest individuals, and deny care whenever possible -- and offer the cheapest treatment. Not the best. The cheapest.

Take my father. Good health insurance all his life. Starts having really bad pains in his arm. Visits a doctor, gets referred to a neurologist who is quite certain it's a bone spur one of his neck veterbrae, pinching one of the nerves running down his spine. Tries to schedule an MRI -- the insurance company refuses. Why? No MRI until they've tried six months to a year of physical therapy. Because it's cheaper to offer physical therapy than to give an MRI and perform required surgery, and by the time it's obvious that the MRI is absolutely necessary, it's likely my father's company will have switched insurance and some OTHER company foots the bill.

18 months, it took, for him to get an MRI and surgery. His doctor suspects he'll have pain in that arm the rest of his life -- the nerve is permanently damaged. This from a national insurance company -- not some fly by night organization.

Makes me laugh, really, when people say "Canadians have to wait 12 months for an MRI". So do Americans. And we pay twice as much for the privalege.

You guys are just pissing in the wind here. Single payer or socialized is coming. There's no stopping it. It gives what Americans want -- no tossing the poor out to croak -- for about the same price. And it's simpler -- no more worrying about "What happens if Cindy gets really sick while you're between jobs?".

Removes one more variable from people's lives.

Demand for health care simply isn't that elastic, and there's only one solution that fits reality -- which includes the tolerance of the American public for watching people die for being too poor to live.

|1.31.06 @ 7:36PM|#

Demand for health care simply isn't that elastic, and there's only one solution that fits reality -- which includes the tolerance of the American public for watching people die for being too poor to live.

I like it when rich people spare no expense in funding the research needed to keep themselves alive, even though I could not afford the same.

|1.31.06 @ 8:01PM|#

It really doesn't matter what Bush or the USA does with health insurance for people under 65. Nobody is going to touch the basic structure of Medicare, and Medicare is what is going to break the bank. If you ever have the opportunity to see figures on how much is spent per person vs age or how much is spent in aggregate vs age, you will see why this is the case.

A patient with Medicare does not have to wait for any surgery or any test. If they cannot afford the 20% co-pay, the co-pay is waived. The percentage and raw numbers of people covered by Medicare will be increasing now that the Baby Boomers are retiring.

|1.31.06 @ 8:01PM|#

Since no matter how you slice it, we will end up paying for their health care, I'd rather we just flat out GIVE them comprehensive care so that it costs as little as possible. I'd rather pay for their doctor's visit and their 20 dollars worth of pills than their trip to the ICU....

Problem is, even the insured won't go to the doctor in time to avoid this scenario...you'll have to mandate twice yearly doctor visits...

|1.31.06 @ 8:04PM|#

Here's a novel proposal, mandatory private health care, if you want, but also mandate that if you want to provide health insurance in the US, then you must insure at the average risk profile in the US and could not exclude any particular person nor exclude "pre-existing conditions" (which is kind of an oxymoron anyway, but I digress). This would 1) eliminate the need for "group" plans, thus allowing people to get it personally instead of through a job, 2) shift competition to management rather than beating down doctors, 3) allow people to switch plans without fear, allowing for better competition on the cost management as opposed to selective exclusion of people, and 4) since more people could get insurance, would reduce dependency on governmental money.

Presumably, this would end up with a reduction in overall costs, as people could obtain insurance. Since we're all paying for noninsured through higher costs anyway, this should have an overall decrease effect on costs.

Seems incredibly simple, doesn't really result in any more regulation than currently, and if done on an nationwide basis would put out of business a lot of medical review issues, which do nothing but burden things anyway.

So simple that I'm sure it wouldn't be instituted.

|1.31.06 @ 8:07PM|#

I want employers out of the health insurance game. They already have far too much intrusion into their employees' lives.

I believe that health care is a basic human right. Not unfettered access to all the health care anyone might want, but access to primary and preventive care, basic eye care and dental care, mental health services, emergency care. A fully individual private market won't deliver health care services to everyone who needs them because it's not profitable to do so, and because people have wildly differing needs. The sickest 20 percent that account for 80 percent of health care costs, and those people aren't hugely difficult for insurers (or employers) to target.

And health care is further tricky also because there are many factors about our health we can control, but a whole host of them that we can't.

|1.31.06 @ 8:31PM|#

Since the insurance companies are the evil villains ruining this system, forcing people to buy insurance is an unintuitive solution. Instead we should put disincentives in place for insurance. For example, allow people to deduct what they pay to their doctors, but tax them on their insurance premiums. This is essentially the opposite of what we do now.

In Libertopia, the IRS would be completely out of the health spending verification business and there would be no deductions for medical expenses.

|1.31.06 @ 8:37PM|#

I believe that health care is a basic human right.

OK, and I believe your underware is on backwards.

What you are saying is that anyone who chooses to develop skills in the health care field is a slave to anyone who asserts a need to his/her skills.

|1.31.06 @ 8:38PM|#

I thought libertarians were genetically incapable of compromise?

Not genetically incapable. It just makes me violently ill.

Wouldn't want to drive up costs :)

|1.31.06 @ 8:44PM|#

Presumably, this would end up with a reduction in overall costs, as people could obtain insurance.

Matt, are you kidding? Do you understand how insurance is constructed? If the current average premium per month for individual insurance is x, when companies can rate and refuse people who present intolerable risks, how is the cost for coverage going to go down under a system where you cannot do that? By adding more impoverished people to the pool? Yes, they would be impoverished because regardless of whether they can afford the chemo for their cancer, they still cannot work and pay the bills. So, the poorest still will get their insurance cancelled when they need it most, and the only people covered will be those with the least need.

It would be wonderful if anything in this article were true, or possible. I pay for insurance for my company. Recently I had a new employee buy coverage; he was formerly self employed, paying $720/month for himself. Under my group plan, he's paying $271. But the difference in his case is not the pool--it's the fact that in the state he resides in the insurer is allowed to rate the applicant due to health conditions, whereas where I operate, they are not.

Basically, Bush's proposal is just another flawed way to shift the burden on the poor.

|1.31.06 @ 8:55PM|#

I want employers out of the health insurance game. They already have far too much intrusion into their employees' lives.

You'll get no argument from this employer; the less I have to pay to support your ass the happier I am.

Of course, if you tell me you need a week off from work to recuperate from a bacterial infection that could have been cured in 24 hours with some Amoxycillin just because you couldn't afford the pills, don't bother showing up next week. Your choice to not pay full price for antibiotics is your choice, and a bad one.

|1.31.06 @ 9:25PM|#

>What you are saying is that anyone who chooses to develop skills in the health care field is a slave to anyone who asserts a need to his/her skills.

Not in the least. Farmers aren't slaves. Teachers aren't slaves. Sweatshop workers might be, though. Maybe you do have a point...

Zardoz, you're such a cuddly teddy bear. I'm sure my employess wish they had you for an employer instead of me. I refuse to pay for health care and give a higher salary a commesurate amount. It's none of my concern. Happily for me, I only have two employees.

Finding a way to give consumers more of a voice in health care is an admirable goal. It's easy to be price-insensitive when you have no idea what anything costs and when doctors, likewise, can't give you a straight answer because every consumer gets charged a different price, depending on what her insurer has negotiated with the doctor's employer.

|1.31.06 @ 9:42PM|#

Two years ago, I went without health insurance for awhile after being laid off and got ill during that time. I made three visits to a big hospital and had three procedures (X-rays, spiral CT and blood tests) done which I had to pay for out of my own pocket. When I got the bills later on, they were so screwed up they had overcharged me over 200%. They had procedures on there I had never had done and double-charged me on the CT. I cleared everything up but if I had had insurance, I never would have known (nor checked) and I doubt the insurance company would have either. They would have just paid. I don't know for sure, but I have read articles that state this overcharging is quite common. Would private healthcare encourage individuals to check their healthcare bills for accuracy? If so how? Would it be kinda like auto insurance--the more you use it the more your rates go up? Or would there be pay-out benchmarks--say if you exceeded $50,000 in medical costs in one 12 month span then your rates go up by x%?

|1.31.06 @ 10:00PM|#

What you are saying is that anyone who chooses to develop skills in the health care field is a slave to anyone who asserts a need to his/her skills.

Americans accused of a crime have the right to an attorney; that doesn't mean that lawyers are slaves. A right to basic healthcare won't turn doctors into slaves either.

|1.31.06 @ 10:48PM|#

Jennifer,

The "right to council" when you are charged in a crime is not the same as a right to a have a doctor fix your broken arm, or the right to have an auto mechanic fix your muffler. In the case of being charged with a crime, the state is paying both sides to make arguments that will lead to a just verdict. I do not how your comparison here works.

|1.31.06 @ 10:56PM|#

Jennifer, a defendant doesn't have a *right* to a lawyer, he has an entitlement to same. We confuse rights and entitlements all the time.

An entitlement to health care wouldn't make slaves out of doctors, at least at first glance. It's the taxpayers who are enslaved, to some degree. Of course, there are lots of entitlements in our society, so there are lots of little degrees, which add up to a lot of slavery.

But what if there weren't enough doctors to supply all of the health care demanded by those entitled? How would the entitlement be provided? By raising pay-outs, so doctors' salaries are higher, thereby attracting more people to the profession? Aside from enslaving taxpayers even more, that's got a free-market aspect to it, and might work. But if it doesn't, say, because people just wouldn't want to be doctors in a system like that, or because being a doctor is just too hard for most people (four years of hard, expensive, post-grad study, plus an internship/residency, at least seven years total, before setting up a practice), would we create a national medical corps, with a draft? Now, *those* doctors would be slaves.

|1.31.06 @ 11:35PM|#

I'm sorry to say it, but this whole health insurance issue stopped being about pooling risks a long time ago. It's unfortunately become another tool of wealth redistribution.

I cannot see any justifiable reason that the amount you pay for health insurance should be based on your income instead of the state of your health.

If someone is uninsured, sick and can't afford health care, then it's simple... they can't afford health care. They must borrow, beg or do without.

If people can't afford something that they know they will need, there is no magic of insurance that can suddenly make it available to them at no cost. Insurance pools risks to mitigate uncertainties, it can do nothing for certain outcomes.

If the probability of people's claims approaches 1, the insurance premiums will inevitably rise to the point where it's not even worth insuring. So they should pay their costs out of pocket... or they should do without.

Ultimately, it doesn't matter because they're still going to die. Despite the ever prevalant false dichotomy of "health care or death", to the best of my knowledge modern health care has yet to deliver immortality.

For an interesting thought experiment, just imagine that it could.