How Does Free Insurance for Healthy People Pay for Sick People's Medical Care?

According to a recent analysis by the consulting firm McKinsey and Company, about 7 million Americans will qualify for free health insurance policies under the Affordable Care Act once federal subsidies are taken into account. That includes about 6 million people who are currently uninsured and about 1 million who have policies purchased on the individual market. All of them have incomes that are too high for Medicaid but low enough to receive subsidies that will fully cover the cost of a "bronze" or "silver" plan on a government-run exchange. The New York Times says this free medical coverage is not only a boon to the recipients but also a shot in the arm for Obamacare, since "the availability of zero-premium plans may make the deal especially enticing to the healthy young people the marketplace needs to succeed."

Wait a minute. It's true that younger, healthier policyholders are supposed to subsidize medical care for older, sicker policyholders, especially now that it's illegal to charge people based on how much covering them is expected to cost. But that works only if the younger, healthier policyholders are paying for medical coverage they rarely or never use; if they are not putting any money into the system, how can they possibly improve its financial condition?

Instead of paying for the premiums of the young and healthy, the government could directly subsidize coverage for people who really need it. Wouldn't that be cheaper? More generally, Obamacare seems like an unnecessarily complicated way of forcing some Americans (the ones who do not qualify for subsidized premiums) to pay for other Americans' medical treatment. The mandates, the exchanges, and the individual insurance requirement combine to transfer resources from richer, healthier people to poorer, sicklier people. This hardly seems like the most straightforward or efficient way of helping people who cannot afford health care, but it does serve to conceal what is actually going on, to the point that a leading news outlet claims each healthy person covered at taxpayers' expense is somehow saving taxpayers money. 

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  • Sevo||

    Ooops, sorry! The pea isn't under that shell! You lose!

  • Ken Shultz||

    "That works only if the younger, healthier policyholders are paying for health coverage they rarely or never use; if they are not putting any money into the system, how can they possibly improve its fiscal condition?"

    Sullum doesn't understand the genius of Obamanomics.

  • CatoTheElder||

    The audacity of hope!

  • Swiss Servator, Sail Genfersee||

    Because fairness!

  • R C Dean||

    if they are not putting any money into the system, how can they possibly improve its fiscal condition

    They are getting other people's money into the system to pay their (tax-subisidized) premiums on their behalf.

    So, like all things in Obamanomics, its dependent on other people's money.

    Ponder for a moment a system so hideously designed that it can't even tempt enough people to join on someone else's nickel.

  • Robert||

    I think the way it's supposed to work is that they'll be drawn in by the carrot of 0-charge insurance, but then when they find out they don't qualify, they'll already be sold on buying insurance, so they'll buy. Like when you go to the store and they're out of the free ones, so you buy the one they're selling for money.

  • Rich||

    to the point that a leading news outlet claims each healthy person covered at taxpayers' expense is actually saving taxpayers money

    "Leading", as in "leading question".

  • mr simple||

    Well, clearly the law isn't about getting people health insurance in an economically efficient manner. It's about government control of basic services and an expansion of purview and power.

  • Fist of Etiquette||

    One doesn't win the match by moving only some of his chess pieces.

  • ||

    Look, they had to pass it to see what was in it. Now they're finding out. This stuff takes time! And just because they're finding that it does the opposite of what was advertised doesn't mean they still don't need to see what was in it. Or something. I get confused by how stupid it all is sometimes. Maybe I should just get stoned. Then I'd understand!

  • sarcasmic||

    You know what else you have to pass to see what is in it?

  • tarran||

    a kidney stone?

  • ||

    My...my stool?

  • Certified Public Asskicker||

    Eww, corn.

  • Swiss Servator, Sail Genfersee||

    The point of no return?

  • Brett L||

    Fraternity initiation?

  • Fist of Etiquette||

    A bus full of cheerleaders?

  • The Rt. Hon. Serious Man, Visc||

    A hymen?

  • Hillary's Clitdong||

    The Enabling Act?

  • The Other Kevin||

    Remember when the president said you could keep your insurance and your doctor? And back then, if you didn't believe him, you were a racist party hack? Well now, if you DID believe him, that makes you a dumb redneck who doesn't know how to take care of yourself.

    I, too, am confused.

  • Homple||

    You are missing the nuances and unaware of the underwear gnomes.

  • Gary T||

    Hey are you one of those pot smoking economists with guns?

  • ||

    Tell us something we don't know already.

  • Gilbert Martin||

    "but it does serve to conceal what is actually going on, to the point that a leading news outlet claims each healthy person covered at taxpayers' expense is somehow saving taxpayers money."

    A leading news outlet?

    What leading news outlet?

    I thought you were talking about the New York Times.

  • CatoTheElder||

    Citing the CBO, the Washington Post says that it's a myth that "the health-care law will increase the deficit."

    Unfortunately, the CBO calculations are based upon the audacity of hope in their assumptions.

  • Longtorso, Johnny||

    It's basically a hidden tax, and hidden so nobody knows "we won't raise taxes on people making over $250K a year" is also a lie.

  • rts||

    Looking for some emetic reading? I have you covered:

    The nanny-state lie behind Obamacare

    A peculiarly American debate over the right to buy lousy stuff

    Simply put, the question is whether the American government has the right to stop people from making stupid, self-destructive choices.

    You'll never guess that the answer is.

  • R C Dean||

    "You can't make stupid self-destuctive choices! That's the government's job."

  • Rich||

    Ima guess the answer is: The government has the *obligation*.

    Do I win a free lun, uh, a cigar?

  • Brett L||

    Every time those motherfuckers tell me the plan I researched and purchased was sub-standard, I resolve yet again to never, ever, ever cross the street to piss on them, unless they are on fire and I'm pissing 151 proof.

  • Sevo||

    "Every time those motherfuckers tell me the plan I researched and purchased was sub-standard,"

    That lie started when the other lie was found out. When this is exposed as a lie, don't worry, the lefties will have a brand new replacement.

  • Brett L||

    That's okay. I still want to watch them die in a fire. Or maybe a botched hanging. I never thought I was bloodthirsty, but I'm coming around to it.

  • Juice||

    If the plan I have now is substandard, what does that make the new plans that are worse?

  • Bill Dalasio||

    And I'm sure the folks over at CBC have a crystal ball that they know everyone's optimal level of coverage, right? Otherwise they're relying on little more than vague platitudes and cliches to make their assessment.

  • ||

    if they are not putting any money into the system, how can they possibly improve its financial condition

    They're not importing the system's financial position, they're improving the marketplace's financial position. He's essentially saying that Suder-man's dreaded death spiral is avoided via Government largesse pumping into private insurance's coffers.

  • CatoTheElder||

    It's not like the Chinese and Saudis would ever want to stop lending money to the US Treasury. (I can't wait until the MSM starts calling foreign central banks and sovereign wealth funds predatory lenders.)

  • Dr. Frankenstien||

    We couldn't refuse the low rates. How were we to know that they were ARM's

  • R C Dean||

    We're already monetizing most of the deficit, and have been for years. The Fed is willing and able to monetize the whole damn thing if they need to.

    It's not the withdrawal of willing purchasers from the Treasury market that will be the immediate cause of the collapse. That happened years ago.

    It will be the withdrawal of willing purchasers of dollars from the forex markets.

  • AuH20||

    But if it were a straight up, uncomplicated direct subsidy, that wouldn't give them more control. Only through arbitrarily written rules and regulations that only certain people can understand can you control people. Also, it is much harder to dish out political favors with a straight up subsidy. With a complex bureaucratic scheme, you can exempt some people for being willing to play ball or harm your opponents.

    See, your problem is that you're looking at this through the lens of liberal governance, which may desire bigger government but also well working government. This is Chicago governance, which is based on increasing your own power and this increasing people's dependence on you to win power in perpetuity.

  • CatoTheElder||

    I'm not sure it is fair to call this Chicago governance, but only because it is so inept that it is in a class of its own.

  • Paul.||

    How Does Free Insurance for Healthy People Pay for Sick People's Medical Care?

    I'm assuming that the government will be paying the premiums which won't be used on the patient, because they're healthy?

    Does it really matter, at this point, who the customer is?

    I agree with the direct subsidy argument.

  • Loki||

    a leading news outlet claims each healthy person covered at taxpayers' expense is somehow saving taxpayers money.

    Up is down, left is right, short is long, not taking is giving, etc.

  • phandaal||

    Thanks for bringing this up. I read the same article and that was a head-scratcher for me. Of course it's as nonsensical as you've said, and a good editor would have caught that.

  • John||

    Instead of paying for the premiums of the young and healthy, the government could directly subsidize coverage for people who really need it. Wouldn't that be cheaper?

    Yes it would. It wouldn't be the ideal of the "pure free market", but so what? It would make a hell of a lot more sense than what we are doing.

  • Paul.||

    At this point, direct payments to people who need it seems to be a good starting point.

    Subsidizing everyone a little bit is going to kill us.

  • R C Dean||

    the government could directly subsidize coverage for people who really need it.

    See, also, Medicaid.

  • Paul.||

    I'm no expert on medicaid, but I'm seeing a lot of "benefits for people at 700% of the FPL..."

    So either the FPL is way, way too low (an argument the progressives undoubtedly make) or we're getting to the 'subsidize everyone' point.

  • John||

    Last I looked t hat was paying doctors directly rather than just cutting them a check.

  • Michael Hihn||

    There are no doctors for CURRENT Medicaid eligibles -- 12 million of them (1/4 our uninsured)are eligible for Medicaid and SCHIP (children) but have never enrolled.

    In many parts of many inner cities, there are no doctors at all. If they cannot overcharge working- and middle-class families, they can't afford to treat Medicaid for as little as $17 per visit.

    Likewise, look to remote retirement communities (Medicare). I have retired friends on the Washington coast who must travel 30 miles or more for the closest doctor. One of them tells of his doctor retiring last year, could not sell his practice as he'd hoped ... then couldn't give it away on behalf of his patients.

  • ||

    Interesting. Hearing it now. As it turns out, president dumbfuck's advice to use teh telephone or paper in lieu of a nonfunctioning website was completely worthless. If you do so, you get put in the same line as people using the website to be put into the system via the website. The propaganda minister is taking heat over it now.

    Barry Obama; One man clusterfuck.

  • RightNut||

    Shut up it's free. Why would you ever question something that is free? Free things are great!

  • wareagle||

    How Does Free Insurance for Healthy People Pay for Sick People's Medical Care?

    fuck you, that's how.

  • Auric Demonocles||

    How Does Missing Alt-text Pay for Sick People's Medical Care?

  • Zenjuris||

    The federal subsidies cover only part of the true cost of Obamacare. The remainder is borne by everyone else in the form of higher premiums. Obamacare is essentially off-balance-sheet financing paired with a backdoor tax hike.

    Moreover, the federal subsidies only cover the costs of purchasing insurance but not the cost of using it. It is hard to see how a person who needs a subsidy just to buy a bronze plan will be able to afford the deductibles to use the bronze plan. It is only a matter of time before this problem becomes propagandized as market failure requiring single-payer as the only solution.

  • XM||

    These people will probably avoid anything that requires too much out of pocket expense, if they can. In CA a bronze plan lets you see a doctor for 60 dollars and your cost for medication is reasonable (I could be wrong on that).

    If you're healthy, you could do worse than buy a bronze plan and have the government pick up the tab. But if you only need to see a doctor once or twice a year for routine check up, then you might as well try to qualify for medicaid.

  • ||

    I'd also like to point out that the cost-shifting involved disproportionately falls not just on ALL richer people, but specifically on self-employed richer healthier people. Poorer and sicklier people are disporportionately concentrated in the individual market, since they may be only employed part time (which is why they are poor), so they don't have their own coverage, AND sicker people are less likely to be employed full time (or at all). So as a result the individual market is going to have a heavier concentration of seriously ill, expensive to treat, members, so average insurance costs will be higher and as a result, if you are self-employed oyu will be paying even more than the typical middle-income professional to cover them. Never mind that, on top of all this, you don't get a tax deduction for purchasing insurance.

  • The Late P Brooks||

    it does serve to conceal what is actually going on, to the point that a leading news outlet claims each healthy person covered at taxpayers' expense is somehow saving taxpayers money.

    Compared to the cost of insuring sick people at taxpayer expense, it's a steal.

  • Michael Hihn||

    "if they are not putting any money into the system, how can they possibly improve its financial condition?"

    Several folks here have caught the obvious error. Here's why.

    Older people vote. Younger people far less likely. The premium paid by the younger person, subsidizes an older wealthier person. Robin Hood in reverse. So the subsidy is paid to the younger person, but really provides the bribe, errr discount, for the older person.

    Follow the dollars. 45-year-old gets a $150/month lower premium than today. 28-year-old pays that $150 in a higher premium. But 28-year-old gets a $150 subsidy to make the inflated premium "affordable." So who gets the actual benefit of the $150?

    It's not just Reason, most of the media has yet to figure out this mess.

  • Mark22||

    Don't worry, these "young healthy" people won't stay healthy much longer once they get "free health care". They will soon be put on drugs they don't need, get treatments they don't need, and become sick people dependent on insurance.

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