Medicine

Coverage Story

Does the cost of uncompensated care justify forcing people to buy health insurance?

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At a July press conference, President Obama claimed "the average American family is paying thousands of dollars in hidden costs" because uncompensated health care for the uninsured drives up the price of medical coverage. In an interview with ABC's George Stephanopoulos on Sunday, by contrast, he said uncompensated care costs the average family $900.

According to a 2008 report from the Henry J. Kaiser Family Foundation, both of those estimates are way off. The foundation's analysis indicates that the true annual cost per family is more like $200, with uncompensated care accounting for "less than one percent of private health insurance costs."

These numbers are important because the president's main justification for requiring every American to buy health insurance, a central element of his reform plan, is that uninsured people unfairly impose costs on their fellow citizens. That rationale not only has a weak empirical basis; it conceals the real motivation for the individual insurance mandate while dodging moral and constitutional questions about it.

During the presidential campaign, Obama castigated his Democratic rival, Hillary Clinton, for saying the federal government should force everyone to buy health insurance. Five months into his presidency, however, Obama said he supported "making every American responsible for having health insurance coverage." In a speech this month, he argued that "the young and the healthy" cannot be permitted to "take the risk and go without coverage" because "such irresponsible behavior costs all the rest of us money," since "we pay for these people's expensive emergency room visits." 

The problem with this argument is not just that the cost of such uncompensated care seems to be much lower than the president claims. It's also his assumption that everyone who goes without insurance is a freeloader.

What about the young and healthy (or middle-aged and wealthy) person who decides insurance is not worth his money but pays all his medical expenses out of his own pocket? His choice does not impose costs on anyone, but under Obama's plan he would still be punished for it.

The real reason Obama insists upon making the young and healthy buy insurance they don't want is not the relatively minor free rider problem but the potentially ruinous adverse selection problem: The most expensive patients are the ones who are most likely to sign up for coverage. To keep the official 10-year price tag of his plan below that magical $1 trillion threshold, he needs to balance sick people who rack up big bills with healthy people who pay for insurance but don't use it. Instead of acknowledging this reality, Obama portrays the healthy uninsured as irresponsible leeches.

Even if Obama could make a plausible moral argument for the unprecedented step of demanding that all Americans buy insurance—not in exchange for a particular privilege, such as driving on public roads, but simply by virtue of being alive—he would be hard pressed to cite the constitutional authority for such a mandate. The regulation of interstate commerce is the usual justification for federal intervention in the economy, but the decision to refrain from buying insurance is neither interstate nor commerce.

Obama might be on firmer ground if he portrayed the levy imposed on people who decline to buy insurance as an exercise of the congressional tax power. But he does not want to admit he is forsaking his campaign promise to refrain from raising taxes on households earning less than $250,000 a year. That's why, in his interview with Stephanopoulos, he insisted that the "excise tax" imposed on the uninsured by the Senate health care bill he supports is not really a tax.

How so? After Obama signed a bill raising the federal cigarette tax, his press secretary explained that the tax pledge was still intact because "people make a decision to smoke." Likewise, Obama might argue, people make a decision not to buy health insurance. The lesson is clear: If you don't want to pay higher taxes, don't make any decisions.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

© Copyright 2009 by Creators Syndicate Inc.

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  1. Sorry, Mr. President, I’m not going to pay this tax/fine/fee.

  2. The fee charged for not purchasing insurance is not an excise tax. “Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline.” (http://www.irs.gov/businesses/small/article/0,,id=99517,00.html)

    The reason it is being called an excise tax is because a fee or penalty would clearly violate due process by claiming you are guilty without a trial, and a direct tax or capitation must be apportioned. Apportionment means each state would have to pay a percentage of the total tax based upon population as recorded in the census.

  3. Does anyone have the updated version of the Constitution that explictly states: “Government shall have the power to force the People to buy ____________.”?

    I can’t seem to find the Article which grants them that power in my old, original Constitution…

    😛

  4. To keep the official 10-year price tag of his plan below that magical $1 trillion threshold, he needs to balance sick people who rack up big bills with healthy people who pay for insurance but don’t use it.

    He also needs to mandate minimum coverage levels and maximum premium differentials so insurance companies don’t actually get to charge the young and healthy the pittance they truly cost.

    Instead of acknowledging this reality, Obama portrays the healthy uninsured as irresponsible leeches.

    When, in fact, he is impressing the healthy and uninsured — and, it should be noted, comparatively poor — to be the hosts for the actual leeches.

  5. “…not in exchange for a particular privilege, such as driving on public roads, but simply by virtue of being alive…”

    Jacob, don’t you understand? To a progressive, being alive is a government granted privilege, one that can be revoked at any time.

  6. “Does anyone have the updated version of the Constitution that explictly states: “Government shall have the power to force the People to buy ____________.”?”

    I’m guessing you mean the Federal Government, because it’s pretty clear that state and local governments can force people to buy all kinds of things constitutionally, from car insurance to registration decals for your cars.

    But as far as the Feds it would be this:

    Article I, Section 8, Clause 3:

    ” [The Congress shall have power] To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

    Health care is often interstate commerce, and as intrastate health care commerce has, in the aggregate, a substantial effect on inter-state health care commerce and thus would potentially undercut direct federal interstate regulation in that area, it’s fair game

  7. state and local governments can force people to buy all kinds of things constitutionally

    But what about forcing you to either buy something or face a fine? I don’t have to own a car.

  8. Health care is often interstate commerce, and as intrastate health care commerce has, in the aggregate, a substantial effect on inter-state health care commerce and thus would potentially undercut direct federal interstate regulation in that area, it’s fair game.

    OK, so I’m not allowed to buy insurance from out of state, and forcing me to buy insurance from an in-state provider is interstate commerce?

    If the goal was to say “Congress can do any damn thing MNG, vanguard of the proletariat, thinks is moral, because he is the end result of thousands of years of human moral and intellectual progress”, then why the phrasing about ‘interstate’ commerce? Why write a constitution full of enumerated powers and add amendments reinforcing that the fedgov is limited to those powers?

  9. Heck, everyone agrees that intra-state transactions would have, in the aggregate, a substantial effect on any inter-state regulatory scheme.

  10. If you don’t feed MNG’s ego by telling him he is the end result of thousands of years of human moral and intellectual progress and you thank God every day he is there to protect you from your own stupidity, then you are a racist.

  11. Johnny
    Hey, don’t hate on me, I didn’t write such a crazy broad grant of power to the feds, the Founders did.

    But if it makes you feel better the courts have recognized limits under the power; for example the regulation must aim at economic matters that have a substantial effect on interstate commerce, non-economic matters like sexual assault or gun regulations have been struck down.

  12. Heck, everyone agrees that intra-state transactions would have, in the aggregate, a substantial effect on any inter-state regulatory scheme.

    Show me the words “in the aggregate” in the constitution.

  13. Hey! You buncha freeloaders over there! We’re not gonna take that anymore. We’ve got a bunch of deserving freeloaders over here that need your money.

    The hypocrisy is astounding.

  14. Johnny
    You’re confused*, as TAO said I’m one of the “decent” liberals on race. I think liberals throw that term out far, far too much.

    *About more than this I would bet

  15. MNG, I think the commerce clause debate is settled at this point also, so I’m curious what you think about forcing people to buy something or face a fine.

  16. “Health care is often interstate commerce, and as intrastate health care commerce has, in the aggregate, a substantial effect on inter-state health care commerce and thus would potentially undercut direct federal interstate regulation in that area, it’s fair game”

    This probably qualifies under SCOTUS’s effects test so that the federal government can regulate insurance companies (what policies they offer, what prices, their financial stability, etc.) as well as the acts of people buying that insurance. But the particular regulation we’re discussing here requires someone to buy the insurance. That person wishes to NOT engage in commerce, i.e. avoid the act (including a wholly intrastate act) that would subject his actions to the commerce power. How does that square? I think the tax power is the more likely way that this is constitutional.

  17. (‘Cause I noticed you didn’t necessarily support it, only its Constitutionality.)

  18. Johnny
    Show me the words “Sherman tank” in the Constitution.

    Yet surely the feds could tax people to raise money to then build those tanks back in the day under the various army-raising clauses.

    But it ain’t explicitly mentioned!

    Of better yet, show me the explicit mention that Congress can make laws regarding protection of the mails. Not there either, but implied under the clause to set up a mail system.

  19. Frbunny-Mixed frankly.
    On the one hand, I think it little different than making someone buy car insurance or pay a fine.

    On the other, as you say, you don’t have to own a car.

  20. “What about the young and healthy (or middle-aged and wealthy) person who decides insurance is not worth his money but pays all his medical expenses out of his own pocket? His choice does not impose costs on anyone, but under Obama’s plan he would still be punished for it.”

    This is a great point Jacob. When I was young & didn’t work at a job that provided health insurance. I paid for my own healthcare, even though I probably could have qualified for state assistance.

  21. “the young and the healthy” cannot be permitted to:

    Drive motorcycles
    Eat transfats
    Smoke cigarettes
    Have more than two children
    Criticize the state

  22. Adam
    Interesting.

    “I think the tax power is the more likely way that this is constitutional.”

    Elaborate?

  23. “What about the young and healthy (or middle-aged and wealthy) person who decides insurance is not worth his money but pays all his medical expenses out of his own pocket? His choice does not impose costs on anyone”

    Er, unless his dumb non-planning-for-the-future ass gets sick or hurt, something he has less than complete control over, and then we get stuck with the bill for taking care of his dumbass.

    This is like saying “what about the careful, diligent driver, how can we force him to buy car insurance, he’s not going to impose any costs on anyone”

  24. The army buying a tank is not “I can do any damn thing I want if I argue it might touch interstate commerce”, particularly if the issue is a desire NOT to do business with an IN STATE insurance company.

    MNG, show me the words “I can personally enslave any doctors necessary if my child is sick, and so can everyone else w/ a sick kid” in the constitution, since you’ve already made that claim explicitly. Do you think you get to whip them and sell their children to the family down the road too?

  25. Johnny
    Do doctors not engage in commerce? Commerce with inter-state effects? Seems to me there is a section in the constitution that grants Congress a broad power “to regulate” interstate commerce. Now what is that part of the text?

    See, I’ve already answered your question.

  26. Er, unless his dumb non-planning-for-the-future ass gets sick or hurt, something he has less than complete control over, and then we get stuck with the bill for taking care of his dumbass.

    Ah, other unconstitutional govt healthcare programs mean not buying insurance imposes costs on the rest of us, so those unconstitutional programs make this one constitutional. Gotcha.

  27. The foundation’s analysis indicates that the true annual cost per family is more like $200, with uncompensated care accounting for “less than one percent of private health insurance costs.”

    Does this figure take into account the money that is paid to hospitals by state governments?

    I hear a lot of “budget neutral” stuff. What effect will it have on percentage of GDP? Currently 16-17% is so far out of line with other industrialized countries it’s laughable. I think anyone concerned with the overall economy should be focusing on that figure.

  28. btw everyone, I’m against this not allowing interstate competition among insurance, it’s crazy wack imo

  29. “Er, unless his dumb non-planning-for-the-future ass gets sick or hurt, something he has less than complete control over, and then we get stuck with the bill for taking care of his dumbass.”

    MNG,
    If you were poor like I was, you would not be able to afford it. Have you ever seen what kind of rates they charge people for health insurance when you have to buy it individually?

  30. This is the best health care scheme we are likely to get (aside from “no change”). I like it because it is exactly what communist wannabes don’t want. They want “free healthcare”. Free to them, but obviously paid for by somebody else. Ha ha ha, they’re getting penised by Obama.

    Damn I’m petty.

    Next up is mandatory food insurance, electricity insurance, natural gas/oil insurance, and rent/mortgage/property tax insurance.

    I make under $250,000 so all this won’t cost me one dime.

  31. The costs of health care for uninsured people is at least a significant amount Johnny, sure to have an effect on the state of interstate health care commerce. Therefore it’s a proper subject for regulation under a regulatory scheme which aims to regulate the interstate health care commerce scene.

  32. Commerce with inter-state effects?

    That’s not what it says, you power hungry government slut. It was there to prevent interstate treaty wars, not to empower MNG’s personal moral fetish for government.

  33. Cabeza
    I’ve been plenty poor, thanks. Even car insurance, the basic liability, was very difficult at one time for me.

    So I would oppose any plan that doesn’t in effect make this mandate affordable for such people.

  34. Can MNG only enslave doctors from out of state, or is he empowered to enslave in-state doctors because those in-state doctors would have an effect on interstate commerce?

  35. “Next up is mandatory food insurance, electricity insurance, natural gas/oil insurance, and rent/mortgage/property tax insurance.

    I make under $250,000 so all this won’t cost me one dime.”

    I wouldn’t bet money on that. Once it’s mandatory your insurance rates will skyrocket.

  36. “It was there to prevent interstate treaty wars, not to empower MNG’s personal moral fetish for government.”

    Says who?

    “That’s not what it says”

    What it SAYS is a broad grant to Congress of the power “to regulate” “commerce among the states.”

    Don’t hate on me, hate the Founders.

  37. MNG, would your reading of the commerce clause make full blown, USSR-style communism constitutional?

  38. “So I would oppose any plan that doesn’t in effect make this mandate affordable for such people.”

    How? The only way to that is to make other people pay more for their health insurance. Which completely cancels out Obama’s whole argument.

  39. Laws regulating interstate commerce cannot infringe on your constitutional rights. Even if Congress does have the right to force someone to purchase insurance (doubtful), due process would require that person is then charged with a crime and permitted to defend themselves in court.

    By charging a fine, they violate due process. If it is a tax, it need not use the commerce clause, and it is not an excise tax (there is no purchase to tax, only a lack of purchase). Such a tax needs to be apportioned, and the proposed fee is not.

    So how exactly is the mandate constitutional? Is it regulation with due process? No. Is it a tax properly apportioned, or based upon income or a purchase to avoid that requirement? No.

  40. The only way to *do* that is to make other people pay more for their health insurance. Which completely cancels out Obama’s whole argument.

  41. Force me to buy insurance? How about forcing the insurance companies to actually cover me when I do buy it.

    I was basically told by my insurance company, that I bought on the open market, that because I have acid reflux (a pre-existing condition) they wouldn’t cover me for anything, even a broken leg. That just doesn’t make sense to me. I can understand, somebody without insurance finds out they have cancer, and goes out and tries to buy insurance to get covered for the cancer. But Christ, denying coverage due to a pre-existing condition totally unrelated? Can someone explain that to me?

  42. BTW, my acid reflux is easily treatable/manageable with OTC Prilosec.

  43. Tricky, I’ve bought private, individual health insurance with acid reflux and high cholesterol.

  44. Tricky, I believe fixing that issue has broad bi-partisan support in the neighborhood of 80+ senators. Even if reform is scrapped and started over again, that activity should be illegal relatively soon (when reform legislation passes).

  45. My insurance company wouldn’t even pay for an annual physical, which would have only cost them about $20.

  46. MNG is racist.

  47. Even if reform is scrapped and started over again, that activity should be illegal relatively soon (when reform legislation passes).

    Why? Why should they have to fix that? Why does that even exist? It’s all just legal trickery (no pun intended). Like, my uncle owned a house in Florida. He found out that his hurricane insurance didn’t cover wind damage. WTF? Luckily, he didn’t need it.

  48. “MNG, would your reading of the commerce clause make full blown, USSR-style communism constitutional?”

    I dunno, I didn’t write it.

    Citizen “Hey Founders, what kind of powers does Congress have in regards to commerce?”

    Founders: “Er, the power to regulate.”

    Citizen: “‘To regulate?’ Don’t you want to put in something more specific or limited than that? ‘To regulate’ means the power to ‘make rules,’ that’s crazy broad.”

    Founders: “Oh fuck it, we’ve got slaves to fuck. You’ll work it out.”

  49. “MNG is racist”

    Fuck you fascist!

  50. Tricky, you probably aren’t going to like the answer. The reason people get screwed over is that their state laws are not preventing it. Once federal legislation kicks in, all states are covered.

    Your current recourse when that happens is to contact your state AG and explain what happened, or alternatively file a lawsuit.

  51. Fuck you fascist!

    I stand by my statement.

  52. The overriding issue here is that mandating insurance coverage to just fucking live in this country is an affront to liberty. When I as an 18 year old busboy didn’t wish to purchase health insurance* and instead opted to pay my own health care bills out of pocket, (rolling the dice as it were) that was pretty much my goddamed business.

    $900 annually is a lot of money if you’re starting out in the job market and don’t have an automobile, or an apartment, or furniture …

    * If you’re wondering why I made that sociopathic decision, it had something to do with wanting a car, saving money to get my own apartment, dating 18 year old women and other wasteful expenditures.

  53. Don’t hate on me, hate the Founders.

    Can it be both?

    But, seriously, MNG, are you merely playing Devil’s Advocate or is “as broad an application as possible” a reasonable interpretation to you?

    Nice article by Sullum.

  54. “MNG, would your reading of the commerce clause make full blown, USSR-style communism constitutional?”

    I dunno, I didn’t write it.

    If that means you can’t comment on the constitutionality of full blown communism, then this cop-out also means you cannot comment on the constitutionality of ObamaCare.

    Thank you for playing. Now go be a good liberal and enslave some doctors for us.

  55. Tricky, you probably aren’t going to like the answer. The reason people get screwed over is that their state laws are not preventing it. Once federal legislation kicks in, all states are covered.

    Please, I live in NJ. Need I say more?

  56. Seriously, can we stop hearing this “What about the uninsured guy who gets in an accident” argument? Yes, those people cost a lot of public money, but the cost of being hit by a car is not defrayed in the slightest by preventative care.

    The uninsured in a public option cost equals (random accident guys + everyone’s else flu shots, birth control pills, antibiotics, pelvics, prostate exams, prescriptions) which has to be a greater cost in public money than the cost of (random accident guys.)

    Any sort of public option or quasi-public option mandatory-but-subsidized insurance scheme will not (and no one suggests that they would, to be fair) charge the “uninsurable” what it actually costs to cover them, the difference will be public money.

    And the argument is even further lathered with stupidity based on the fact that most of RAG’s medical costs will be written off or swallowed as pro bono for the hospitals and doctors. With a PO or MI scheme they will demand to be paid. The guy has “insurance,” after all.

  57. Tricky, do you really need insurance to cover a $20 expense? do you carry haircut insurance?

  58. Richard,

    You are probably right. I could fight it. But why the hell should I have to? I own a business. And if I conducted my business in that manner, I wouldn’t be in business very long.

  59. Tricky, do you really need insurance to cover a $20 expense? do you carry haircut insurance?

    It’s the principle. It’s bad enough I had a $40 co-pay.

  60. The guy has “insurance,” after all.

    Sure. Paid for by the state in subsidies to the hospital. Please, I hear about it all the time. Temple U. hospital is going to close their ER unless the state of PA gives them money. Sme in NJ. It’s a rat trap.

  61. You’re telling me the Founders should have anticipated the bullshit postmodern interpretation “regulate interstate commerce” = “do whatever the fuck you like”?

    No wonder Thomas Jefferson thought that we should have armed rebellion every couple of decades.

  62. One potential way to make it constitutional:

    1. Impose a flat tax of $X on every U.S. resident.
    2. Provide a $X tax credit for showing proof of insurance.

  63. Why do the uninsured cause premiums go go up?

    Granted people without insurance will get sick and need treatment. However, why the cost of treating them gets passed onto insurance companies is beyond my understanding.

    Why don’t doctors/hospitals send the bill for untreated patients to the government. Then the government can bill the patients directly. Turn the IRS loose on them. Ask anyone who has had trouble paying a student loan off how effective the IRS is at garnishing wages and tax refunds.

    It will take years and years to pay off those hospital bills? Tough shit. You should have bought insurance.

  64. That’s why I made the suggestion that any healthcare reforms should consider what, if any, reductions to % of GDP, not Federal budget.

  65. @MNG by the way.

  66. As I allude to upthread, this will meke it more difficult for young poor people to climb out of poverty. The 2.9% medicare tax they pay on every dollar they earn appaerently isn’t enough of a wealth transfer from the young and poor to those whose wealth dwarfs their own (the geriatric set).

  67. [The Congress shall have power] To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

    Health care is often interstate commerce,

    Then Congress can “regulate” health care that crosses state lines.

    I don’t see how forcing people to buy a product is “regulating” “commerce”.

    I also don’t see how a Congressional mandate applicable to business conducted within a state is regulating “interstate” commerce. You know, commerce “among”, not within, “among” the several states. Yes, I know the SCOTUS disagrees, but I think they are clearly wrong on the plain English meaning of the word “among”.

    I think the tax power is the more likely way that this is constitutional.

    Forcing people to do something is not a tax.

  68. Turn the IRS loose on them.

    I wouldn’t wish that on my worst enemy, you sick bastard 🙂

  69. junior, that would be constitutional. It is the traditional way things have always been done, so I really don’t understand why Congress is playing these new games with how to accomplish their desired result.

    Jimbo, someone has to pay the costs. Since the government does not through medicare/medicaid, the costs get passed to the insurance companies. The cost is estimated somewhere between less than 1% to less than 3%, and over half of that is due to illegal immigrants that would still not be covered under the new legislation.

  70. Can I also point out that mandating coverage doesn’t exactly push rates down.

    For example when I lived in TN there was no mandate to buy car insurance. My policy there cost less than when I moved to MN that does mandate liability insurance.

    I’d love to see the numbers on how much rates dropped (if any) when a state moves to mandated car insurance.

    When MN enacted their law, one of the big selling points was that it would reduce the cost of car insurance. I don’t think that happened.

  71. The 2.9% medicare tax they pay on every dollar

    You assume their employer would give them the employer contribution as opposed to passing that saving to their customers.

  72. Does anyone have the updated version of the Constitution that explictly states: “Government shall have the power to force the People to buy ____________.”?

    I can’t seem to find the Article which grants them that power in my old, original Constitution…

    @someguy: It’s all implied in there somewhere between the lines. Nevermind Thomas Jefferson and his smart-ass “blank space” quips.

  73. there is just no reason whatsoever that every American citizen should not have healthcare!

    JEss
    http://www.online-privacy.us.tc

  74. Every American citizen does have healthcare. Trouble with definitions?

  75. Obama, State of Union — “But let me perfectly clear …: if your family earns less than $250,000 a year, you will not see your taxes increased a single dime.”

    After Obama signed a bill raising the federal cigarette tax, his press secretary explained that the tax pledge was still intact because “people make a decision to smoke.”

    Oh, no!! I made a decision to earn less than $250K/year! 8-(

  76. Tricky,

    I call BS on your “wind damage” claim. After the last bad round of hurricanes, many found their policies didnt cover “flood damage”. So, it depended how the water entered your house. If your roof blew off and rain fell in, you were covered. If your roof stayed on but your house flooded anyway, you werent covered.

  77. Has Spambot been reading KOS?

  78. Besides the word among, the simple context of the commerce clause provides the evidence that MNG’s interpretation is false. States is between foreign nations, and Indian tribes. Do liberal types think that the constitution grants the power to regulate the commerce of Mexico, France and Israel?

  79. You assume their employer would give them the employer contribution as opposed to passing that saving to their customers.

    Yep. Do you have a problem understanding how wage scales are determined?

  80. “…the true annual cost per family is more like $200, with uncompensated care accounting for “less than one percent of private health insurance costs.”

    These numbers are important because the president’s main justification for requiring every American to buy health insurance, a central element of his reform plan, is that uninsured people unfairly impose costs on their fellow citizens.”

    Illegal immigrants are responsible for some percentage of the cost of uncompensated care. How will the president force them to get insurance?

  81. Jimbo, Massachusetts has mandated health insurance, so there is no need to speculate based on data from car insurance. Mass premiums increased 7.4% in 2007 (6.1% national), 8-12% in 2008 (4.7% national), and projected 9% in 2009 (6.4% national).

  82. robc,

    Are you claiming that you “understand” the insurance regs. in Fla? Does anybody? All I know is what he told me. He no longer lives in Fla. because of the insurance.

  83. “””What it SAYS is a broad grant to Congress of the power “to regulate” “commerce among the states.””””

    If I pay cash for my local doctor’s visit how is that interstate commerce? Nothing crossed state lines.

    But if you’re trying to make the point that the government will try to use that to justify it’s self, point taken.

  84. Richard | September 23, 2009, 9:43am | #

    The cost is estimated somewhere between less than 1% to less than 3%, and over half of that is due to illegal immigrants that would still not be covered under the new legislation.

    May the fleas of a thousand camels infest your armpits.

  85. Re: “I’d love to see the numbers on how much rates dropped (if any) when a state moves to mandated car insurance.”

    Jimbo: just an anecdote. When Alabama went to mandatory insurance, my motorcycle rate went overnight from $50 to $80 per year. How 60% increase grabs ya?

  86. Let me fix that obama quote to be relevant:

    In a speech this month, he argued that “the young and the healthy americans” cannot be permitted to “give their hard earned taxes to banks that made bad bets” because “such irresponsible behavior costs all the rest of us money,” since “taxpayers now own the economic problems that we let the banks create”


  87. Yep. Do you have a problem understanding how wage scales are determined

    Well,let’s see. I am an employer. I actually have to meet a payroll every week, although not of late. No, I don’t deal with wage scales. If someone is worth $10/hr to me he gets paid $10/hr.
    The 1.45% employer contribution is a business liability. If it were to mysteriously disappear, it would be a reduction in overhead to the business. As such I would see to the allocation of that reduction in operating costs. I could give to the employee in extra wages, I could pass it on to customers in my fees, or I could just keep it for myself. That’s Business 101. It would be the same if my liability insurance decreased. It’s just a reduction in overhead.

    Only 1.45% is withheld from the employees paycheck. I pay the other 1.45% when I do my taxes (well, the accountant).

  88. “””Jimbo: just an anecdote. When Alabama went to mandatory insurance, my motorcycle rate went overnight from $50 to $80 per year. How 60% increase grabs ya?”””

    Companies drop prices to attract customers. If customers are a result of legal compliance, what incentive do the companies have to lower prices.

    I think Jeff Foxworthy is have a special Obama edition of Are You Smarter Than A Fifth Grader.

    It’s called Are You Smarter Than A Kindergardner.

  89. Insurance coverage in many states for disasters is fragmented, so your hurricane insurance is likely just the state flood insurance while homeowners would cover wind.

    As for the guy in NJ with acid reflux, my guess would be that the law requires pretty comprehensive coverage such that it would be illegal for the insurers to write a policy ruling out things related to acid reflux and just cover everything else.

    As for employer contributions, in the long run they would be passed on to the workers so long as the labor market is competitive. Businesses hire workers like people buy products, and if additional workers can provide additional value they will be willing to shift that money they are already paying right now into wages to attract workers from other firms. In the short run though employer would likely pocket it.

    The whole contribution thing is just a gimmick to make medicare and SS look cheaper. Employer don’t give workers anything, workers earn it. Were employers giving workers unearned benefits they would be losing money and wouldn’t bother to hire the worker in the first place. One doesn’t hire a worker who contributes less to the company than the cost of employing him.

  90. Employer don’t give workers anything, workers earn it.

    That’s old school, baby. You get an honest day’s pay for an honest day’s work. You don’t work, you don’t get paid.

  91. In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business (also known as Operating Expenses – rent, gas/electricity, wages etc). The term overhead is usually used to group expenses that are necessary to the continued functioning of the business, but do not directly generate profits.

    Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs.[1]

  92. Tricky Prickears | September 23, 2009, 9:48am | #
    The 2.9% medicare tax they pay on every dollar

    You assume their employer would give them the employer contribution as opposed to passing that saving to their customers.

    Yes, employers are surprised every pay period by their contribution. If only they could factor total employment cost in when setting pay rates.

  93. Heck, everyone agrees that intra-state transactions would have, in the aggregate, a substantial effect on any inter-state regulatory scheme.

    Yes intrastate commerce can have an effect of interstate commerce under certain conditions… so what. The power to regulate interstate commerce is a power granted to Congress to use it only when it occurs. Congress may not force commerce across state lines through regulation when innovation or market conditions cause a thriving and Congressionally-regulated interstate market to dissappear. Congress may only regulate interstate commerce that actually occurs, not activites that might affect it.

  94. If only they could factor total employment cost in when setting pay rates.

    We can. At least, fairly close. If I pay someone 15-16/hr, it’s costing me 20-22. Don’t forget, it’s costing me to insure that employee with liability and worker’s comp, not just payroll taxes.

  95. Health care is often interstate commerce, and as intrastate health care commerce has, in the aggregate, a substantial effect on inter-state health care commerce and thus would potentially undercut direct federal interstate regulation in that area, it’s fair game

    Yeah, I get (without agreeing) that growing marijuana in your back yard for your own consumption is “interstate commerce” because there is an interstate market for illegal drugs and your backyard growing affects that market (by reducing demand and thereby lowering the price, which presumably the feds have some interest in preventing). What I don’t get is how *failing* to plant marijuana in my backyard is also interstate commerce, which MNG’s argument seems to imply.

  96. …it would be illegal for the insurers to write a policy ruling out things related to acid reflux and just cover everything else.

    So, it’s all or nothing?

  97. Hey, don’t hate on me, I didn’t write such a crazy broad grant of power to the feds, the Founders did.

    But you gotta admire their cleverness, making that “crazy borad grant of power” look like a limited one.

    I mean, they could have written article 1, section 8 to say “Congress shall have the power to legislate on everything they damn well please, unless it’s expressly forbidden by this Constitution,” which according to MNG is the actual meaning of what they did write, but I suspect that would have made ratification even more of a touch-and-go thing.

  98. Thanks PR

    I would not have been near as civil or succinct.

  99. MNG is incorrect about the way the inter-state commerce clause is written and probably about the intent of the writers of the Constitution. However, he is correct about the way it has been interpreted by the court. The problem is Wickard v. Filburn.

    http://en.wikipedia.org/wiki/Wickard_v._Filburn

  100. Tricky,

    So, it’s all or nothing?

    In many states, yes.

  101. I am always amazed by people who think employers pay the payroll and medicare and workmans comp taxes with no effect on the employee’s pay.

  102. PR,

    Had an employee that when he started with my company, we covered just him on his insurance. His wife had a good plan thru her job. Shortly thereafter, she got pregnant and her insurance covered the birth and etc. However, she then quit the job and we added his family to his policy (at about his 1 yr of employment mark). Added about $300/month onto our insurance costs. Guess how much of a raise he got that year? That’s right, about $3600. Or $0 if you looked at his paycheck.

  103. do you really need insurance to cover a $20 expense? do you carry haircut insurance?

    Most excellent!

  104. For those who say its no different than forcing people to buy auto insurance, you are RIGHT!

    Forcing people to buy car insurance is ALSO stupid (not to mention a huge scam for the auto insurance companies). There’s no reason to have any law requiring auto insurance. No-fault auto insurance *for yourself* is the way to go. If you have assets, buy some extra coverage because you may get sued if the accident is your fault. Simple. Auto insurance solved WITHOUT coercion from the state and its unintended consequences. (Ever been pitched by your insurer to buy their “uninsured motorist coverage”?? WTF)

    But of course, if we did it sanely, then the market for insurance becomes more competitive and insurers can’t charge the rents they’re charging now.

    Same will be the case for health insurance.

    nmg

  105. I am always amazed by people who think employers pay the payroll and medicare and workmans comp taxes with no effect on the employee’s pay.

    We don’t. If my taxes were increased I would not necessarily cut my worker’s salaries. I would charge more for my services. Or a combination. JsubD’s statement that the entire 2.9% is completely paid by the employee is not true. It is most likely a combination of the employee and consumer.

  106. why don’t you charge more for your services right now? you could get richer.

  107. You can buy a car and drive it without a driver’s license or insurance. You just can’t use public roads. If you stay on your on property it is legal. People drive farm equipment without a license even today. Being forced to buy insurance because you are alive is a totally different proposition.

  108. “Why don’t doctors/hospitals send the bill for untreated [uninsured?] patients to the government.”

    Hospital costs for uninsured Americans are ruinous, like nowhere else in the world. The Wall Street Journal recently pointed to a major reason: Hospitals gain a “charity” tax deduction for the difference between what they collect and their “list” prices. If they can actually collect the money, which they often do by threatening collection lawsuits, they make a tremendous profit. If not, then they deduct from taxable income their phantom “losses” from patients who don’t pay.
    […]

    How Hospital Costs Ran Amok

  109. why don’t you charge more for your services right now? you could get richer.

    Because I try to charge a fair price. I am constantly being outbid by other contractors. And sometimes I outbid other contractors. If a tax is across the board ( all contractors), the prices are fairly consistent, and each contractor tries to balance out the added expense his own way. It is based on competition. I am not greedy. I’ve been in this line of work for 30 years. I know what a fair wage is, and I know what a fair price is. And I’ll tell you what, and I’m not Lonewacko in disguise, the biggest cause of the stagnation in construction wages is illegal immigration. I’ve had people say to my face, “why should I pay you $15/hr when I can pay a Mexican 8?” That’s why I started my own business.

    Tell me, would you say a business that spends $5,000/month on a facility pays its employees less than a facility that spends $4,000? Overhead is overhead. Payroll taxes is an overhead. Those costs must be factored into a business plan. All expected costs and incomes must be accounted for and dealt with in one way or another. It’s all a balance. Yes, sometimes the employee gets the short end, but not always, and not entirely.

  110. If you want to learn about writing a business plan go here:

    http://www.sba.gov/smallbusinessplanner/index.html

  111. Can anyone explain why President Obama has not proposed drafting all physicians into the Army and then ordering the Secretary of the Army to meet America’s health care needs?

    That would not require the creation of new bureaucracies.

  112. Tricky,

    Why should I pay you $15 when I can pay a Mexican $8?

    Unless you provide 15/8ths the productivity of the Mexican, I would go with him every time (and twice on Sundays, because he doesnt want OT pay).

  113. Wasn’t that tried with coal miners ages ago? And didn’t SCOTUS declare it unconstitutional?

  114. Tomcat- “Ages ago” it actually *was* unconstitutional.

  115. Unless you provide 15/8ths the productivity of the Mexican, I would go with him every time (and twice on Sundays, because he doesnt want OT pay).

    And he shows up for work everyday (sober), and he doesn’t piss and moan when you tell him to do something, and if he pisses you off, you can always threaten to call INS on his ass.

  116. Illegal Mexicans are so much easier to control.

  117. Illegal Mexicans are so much easier to control.

    Spoken like someone who has never hired or supervised a workforce that included illegals.

  118. What President Obama also fails to notice is that his claim that the uninsured impose a cost on the rest of us shows that we already have universal health care since even the uninsured can receive some health care when they need it.

  119. President Truman once ordered the National Guard to seize steel mills during a steel mill strike, on the basis that steel production needed to continue because of the ongoing conflict in Korea.

    Could not President Obama order the National Guard to seize hospitals and medical clinics?

  120. “But, seriously, MNG, are you merely playing Devil’s Advocate or is “as broad an application as possible” a reasonable interpretation to you?”

    It’s not as broad as possible, I noted the limitations above according to SCOTUS imo reasonable interpretation.

    It’s reasonable because the granting language is very broad. The Constitution could be very limiting and qualifying when granting powers to the government; the commerce clause is not one of those. It grants Congress the power “to regulate.” Essentially it reads “if something concerns commerce among the states, you have the power to make rules (period!) in that area.” In this sense it is like the very broad executive war making powers granted textually.

    Again, don’t hate on me guys, hate on the Founders. They obviously didn’t give a shit about libertarianism!

  121. Could he? Possibly.

    Should he? Absolutely not.

    That’s private property and property right should still mean something. After Kelo, they apparently don’t in many cases, but they should.

  122. And its also very reasonable to come to the conclusion that if they have the power to regulate interstate commerce they have the power to regulate intra-state commerce that has significant effects on inter-state commerce.

    I mean, think of it this way: if Congress has, say, the power to regulate the “navigable waters of the united states” wouldn’t that also imply the power to regulate non-navigable waters that flow into them? Same logic dudes.

  123. Tomcatt
    Relax, SCOTUS slapped down Truman when he did that. Youngstown.

  124. I should say executive commander in chief powers lest we get a nitpicky war powers debate going here

  125. “Tomcatt
    Relax, SCOTUS slapped down Truman when he did that. Youngstown.”

    I know. I was answering Michael Ejercito’s questions regarding this.

    Of course, there’s a new SCOTUS now and Obama could, theoretically, decide to take his chances. I doubt he will, but hypothetically he could I guess.

  126. “””For those who say its no different than forcing people to buy auto insurance, you are RIGHT!”””

    Not every has to have auto insurance. I don’t. I don’t have a car.

    But if they can do it with health insurance why can’t they mandate that you buy some sort of personal tracking device, for your safety of course.

    “””President Truman once ordered the National Guard to seize steel mills during a steel mill strike, on the basis that steel production needed to continue because of the ongoing conflict in Korea.

    Could not President Obama order the National Guard to seize hospitals and medical clinics? “””

    I would expect the feds to move like that during war time to secure that which is necessary for the war effort.

    I don’t think your analogy applies.

  127. Again, don’t hate on me guys, hate on the Founders. They obviously didn’t give a shit about libertarianism!

    The founders had to deal with Articles of Confederation that permitted states to levy duties on trade between two different states. It’s that sort of objectionable, illibertarian behavior that led to the Constitution in the first place.

    Yes, they clearly overreacted with this clause, but as noted in Federalist 45, they never anticipated an MNG, or, for that matter, an FDR Supreme Court.

    If the new Constitution be examined with accuracy and candor, it will be found that the change which it proposes consists much less in the addition of NEW POWERS to the Union, than in the invigoration of its ORIGINAL POWERS. The regulation of commerce, it is true, is a new power; but that seems to be an addition which few oppose, and from which no apprehensions are entertained.

    Oh, you should have entertained apprehensions, James. You should have entertained them.

  128. Your Carolina bucks are worth crap here. We only take New England bucks at full value.

  129. I mean, think of it this way: if Congress has, say, the power to regulate the “navigable waters of the united states” wouldn’t that also imply the power to regulate non-navigable waters that flow into them? Same logic dudes.

    That’s a slippery slope argument with no end. The dissent in United States v. Lopez would allow ALL activity everywhere to be regulated if Congress had a reasonable basis (and we all know how well they can reason) to believe the activity would affect interstate commerce.

    Congress can only regulate actual interstate commerce, and if changes occur intrastate where interstate activity is diminished, then they must be content with their diminished power.

  130. “”…not in exchange for a particular privilege, such as driving on public roads, but simply by virtue of being alive…”

    Jacob, don’t you understand? To a progressive, being alive is a government granted privilege, one that can be revoked at any time.”

    When the government legalized abortion it made life a privilege. And when the government starts limiting the number of children per household as they do in China then Life will be a granted privilage

  131. Can anyone explain why President Obama has not proposed drafting all physicians into the Army and then ordering the Secretary of the Army to meet America’s health care needs?

    Because it’s a ridiculous idea. *Drafting* physicians would be like, like — *forcing* people to have health insurance.

  132. When the government legalized abortion it made life a privilege.

    On that note, an argument can be made, using the ridiculous interpretation of the commerce clause, whereby the government can prohibit abortions due to their reasonable effects on interstate economic activity, despite them being intrastate activities.

  133. MNG, in the modern keyboard-filled world it is common for people like you and I to write a lot for the sheer pleasure of hearing ourselves talk. But when you have to argue with hundreds of other people over the precise wording of a world-changing document before dipping a quill in ink to carefully put the first of many copies to paper, you don’t throw in redundant words! If “interstate commerce” meant “any commerce”, the document would just say “commerce”!

  134. On that note, an argument can be made, using the ridiculous interpretation of the commerce clause, whereby the government can prohibit abortions due to their reasonable effects on interstate economic activity, despite them being intrastate activities.

    Indeed. It’s a source of unending amusement to me how the believers in the “government can do any damn thing it wants” theory hastily backtrack when something they think of as a right could be affected.

  135. “The dissent in United States v. Lopez would allow ALL activity everywhere to be regulated if Congress had a reasonable basis (and we all know how well they can reason) to believe the activity would affect interstate commerce.”

    Good thing I’m not arguing that view. I agree with the majority in Lopez.

    roy
    But commerce doesn’t necessarily mean the same thing as ic commerce, just that which in the aggregate has a substantial effect on interstate commerce. In out interconnected time I admit most commerce fits this bill, but not necessarily all.

  136. Commerce clause does not even matter to this debate. Fully refundable tax credits/deductions for premiums levied on every American would pretty much do the trick without even invoking the commerce clause.

    As for free riders: it’s the principle, not the cost, that drives the political debate. Evolution hard-wired us to react disproportionately to perceived free-riding. Consider: how much actual cash has “welfare reform” really saved the working taxpayer? Taxpayers earing under $50K/yr through employment probably have lost money on welfare reform, if you factor in the additional wage competition it created. No matter. Welfare reform is treated as above reproach, despite all its lousy unintended consequences.

  137. Because it’s a ridiculous idea. *Drafting* physicians would be like, like — *forcing* people to have health insurance.

    The U.S. has had peacetime drafts before.

  138. The U.S. has had peacetime drafts before.

    Ah, yes … Well, can we at least draft CPAs, too, to meet America’s tax-form-filling needs?

  139. But commerce doesn’t necessarily mean the same thing as ic commerce, just that which in the aggregate has a substantial effect on interstate commerce. In out interconnected time I admit most commerce fits this bill, but not necessarily all.

    Fine, Congress has more commerce to regulate because more commerce crosses state lines. It doesn’t follow that Congress can now regulate intrastate activities with effects on interstate commerce. The clause forces Congress to accept its dminishing power if local activities should reduce interstate commerce.

  140. The clause forces Congress to accept its dminishing power if local activities should reduce interstate commerce.

    And it certainly should not cover noncommercial activities like rape.

  141. I mean, think of it this way: if Congress has, say, the power to regulate the “navigable waters of the united states” wouldn’t that also imply the power to regulate non-navigable waters that flow into them? Same logic dudes.

    Ergo, the US has the power to regulat the entire ocean. Since the ocean flows right into our navigable waters.

    Wonder what the Canadians would think of that.

  142. The Constitution is apparently silent on the question of electing fools to Congress. There is no clause or article to spare the citizenry from their foolish voting decisions.

  143. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets…in order to really get the Books of the Bible, you have to cultivate such a mindset, it’s literally a labyrinth, that’s no joke

  144. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp.

  145. And it certainly should not cover noncommercial activities like rape.

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