Regulation

Holder and Sebelius: The Government Must Eliminate the Cost Shifting It Compels

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Writing in yesterday's Washington Post, Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius say U.S. District Judge Henry Hudson was "wrong on the law" when he concluded that requiring Americans to buy government-approved health insurance exceeds Congress's powers under the Commerce Clause. They argue that "unfair cost-shifting" by uninsured patients "harms the marketplace," which justifies federal intervention. "For decades," they write, "Supreme Court decisions have made clear that the Constitution allows Congress to adopt rules to deal with such harmful economic effects."

As I note in my column today, this argument, endorsed by two federal judges so far, is an extension of the pernicious "substantial effects" doctrine, which holds that Congress may regulate certain activities that do not in themselves constitute interstate commerce because of their impact on interstate commerce. While the limits of this doctrine are unclear, the Supreme Court has repeatedly said it does not cover every activity that can be said to affect the national economy. In 1995 it struck down a federal ban on gun possession in or near schools, refusing to "pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States." Five years later, it overturned a federal civil remedy for "victims of gender-motivated violence," rejecting "the argument that Congress may regulate noneconomic, violent criminal conduct based solely on that conduct's aggregate effect on interstate commerce." It emphasized that "the Constitution requires a distinction between what is truly national and what is truly local."

The Court's concern that an unrestricted substantial effects doctrine would erase that distinction does not necessarily mean it will overturn the health insurance mandate. But this policy goes beyond anything it has upheld on Commerce Clause grounds before. "Every application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction, or deed placed in motion by an individual or legal entity," Judge Hudson noted. "Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market."

Putting the constitutional question aside, the policy argument offered by Holder and Sebelius is misleading, if not disingenuous:

The majority of Americans who have health insurance pay a higher price because of our broken system. Every insured family pays an average of $1,000 more a year in premiums to cover the care of those who have no insurance….

We have to stop imposing extra costs on people who carry insurance, and that means everyone who can afford coverage needs to carry minimum health coverage starting in 2014.

If we want to prevent insurers from denying coverage to people with preexisting conditions, it's essential that everyone have coverage. Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market.

The same is true for health insurance. Without an individual responsibility provision, controlling costs and ending discrimination against people with preexisting conditions doesn't work….

The individual responsibility provision says that as participants in the health-care market, Americans should pay for insurance if they can afford it. That's important because when people who don't have insurance show up at emergency rooms, we don't deny them care. The costs of this uncompensated care—$43 billion in 2008—are then passed on to doctors, hospitals, small businesses and Americans who have insurance.

The first thing that should be noted is that the Emergency Medical Treatment and Labor Act requires hospitals to treat "people who don't have insurance." So when Holder and Sebelius say "we don't deny them care," they are talking about a federal policy that compels the "unfair cost-shifting" they decry. It seems likely that it also makes young, healthy people even less inclined to buy health insurance, since they know that if they have a sudden, urgent need for medical treatment, they won't be turned away.

Like President Obama, Holder and Sebelius exaggerate the significance of uncompensated care. According to a 2008 report from the Henry J. Kaiser Family Foundation, the annual cost per family is something like $200, with uncompensated care accounting for "less than one percent of private health insurance costs." As I argued in a 2009 column, the main reason ObamaCare compels people to buy insurance is not so they can pay their own bills but so they can pay other people's bills. To prevent a disastrous "adverse selection" spiral, the government needs the money of people who hardly use health care to subsidize the expenses of people who use it a lot. That's the reality to which Holder and Sebelius are alluding when they say, "Without an individual responsibility provision, controlling costs and ending discrimination against people with preexisting conditions doesn't work."

ObamaCare not only requires insurers to cover people regardless of their health; it forbids them to set rates based on expected claims. As commenter Tman notes, that's another reason the analogy to car insurance is inapposite. "If everyone waited to buy car insurance until after they got in an accident," Holder and Sebelius write, "premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market." In this case, they seem to be endorsing risk-based pricing, under which "responsible drivers" with good records pay less than reckless or incompetent drivers who rack up traffic violations and cause accidents. But in the case of health insurance, they want to prohibit risk-based pricing.

Once the government does that, there are consequences to deal with: Healthy people must pay more so that sick people can pay less. Instead of acknowledging this reality, Holder and Sebelius pretend that ObamaCare is all about controlling costs and saving current policyholders money by making sure that Americans who are currently uninsured pay their fair share. It is actually about forcibly redistributing the costs of people who are unlucky enough to require a lot of medical care. Whether you consider that fair will depend on your views about the proper role of government in such matters.

[Thanks to Steve Chaos for the tip.]

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  1. the policy argument offered by Holder and Sebelius is misleading, if not disingenuous

    I’d say you’re being generous.

    And this:

    the government needs the money of people who hardly use health care to subsidize the expenses of people who use it a lot.

    is why the forced purchase of “insurance” should be considered a tax.

  2. The first thing that should be noted is that the Emergency Medical Treatment and Labor Act requires hospitals to treat “people who don’t have insurance.” So when Holder and Sebelius say “we don’t deny them care,” they are talking about a federal policy that compels the “unfair cost-shifting” they decry.

    Old Mexican’s Law of Public Policy:

    Solutions required to fix a problem create by a government “solution” will increase geometrically, and the number of new problems stemming from each of those solutions will also increase geometrically.

    1. My complications had complications!

    2. Bad law always reminds me of bad computer code…bad programmers just keep throwing more and more statements at it hoping to tweak and “fix” the previous problems until you ultimately end up with a completely unmanageable mess that nobody really understands.
      At that point, all you can do is scrap it and start over.

      1. The absolute worst code I ever saw was written by lawyers. They typical lawyer code didn’t actually perform the task it was for but nobody tested it and people quickly ignored the program altogether so it had no users.

        The next worse was written by accountants. The typical accountant code arrived at an approximation of the correct answer – so many fudge factors were built in you eventually had code that looked like it had mistakes in it on purpose but the mistakes eventually undid themselves to the point where the answer was “close enough”

        The most unintentionally hilarious bad code was written by programmers. Things named the exact opposite of what they meant, thing misspelled and then misspelled on purpose in every other program that used a common file. For example, a program named “netpay” actually only determined gross pay and the program named “gross pay” had gross pay as the input, not the output.

        None of it contained any comments.

        1. Hell, if you want bad code, you can’t beat a machine for generating it. I once worked with a database mgmt. & query program called FoxPro under MS-DOS, at Bronx-Lebanon Hosp. I wrote a program the way the designers of FoxPro clearly expected users to write them, so it took just a few lines of source code. The object program ran for hours on our database. Just on a whim, I rewrote the source program bypassing their clearly preferred syntax, breaking variables and loops out explicitly in a Fortran-like manner, which took maybe double or triple the source code. The object program completed running in about a minute and a half.

  3. Imagine what would happen if everyone waited to buy car insurance until after they got in an accident.

    The insurance company would, appropriately, direct you to an autoshop. Since you’re no longer in the market for insurance once the shit has already hit the fan.

    Nice argument AGAINST the PPACRAP requirement for health insurance companies to accept customers regardless of pre-existing conditions. Morons.

    1. also,

      and responsible drivers would be priced out of the market.

      Wouldn’t all drivers get priced-out? Or the irresponsible drivers keep getting more insurance somehow in this scenario? Oh, well, I guess if the insurance company was required to provide their product regardless of risk…no, I still don’t see how that would work.

      1. The fact that it doesn’t work is a feature, not a bug, to policy makers.

        1. So, our features are their bugs and viceversa. God fucking dammit.

          1. Any idiot can see what the effects of programs and legislation like EMTALA, Medicare, et al. are. The fact that these things are still in force means the effect is deliberate and intended. Then add to that the effects are now being used to *expand* the reach of the State into our affairs and it’s hard to argue that the effects are unwanted by the political class.

            1. Someone also needs to tell the clowns their Worst Nightmare on the highway is actually a reality. Who the fuck thinks everyone driving down the road is insured to legal standard? Uninsured motorists is like 13-16% of total drivers if I remember. Which, ironically, is close to the percentage of Americans with no medical insurance.

              1. While stopped at a traffic light, I was rear ended by a guy with what turned out to be a phony insurance policy, nonexistent address, and phony registration. I should’ve taken his offer of $50. He kept saying, “Look how bad my car is fucked up, man.”

  4. Part of me is hoping that Seblius and Holder are just being disingenuous about the whole car insurance analogy because they want to force single payer to become a reality, and bankrupting insurance companies is easily the quickest way to achieve this.

    This would be unethical and shameful, but at least it would have an element of intellectual insight from their perspective.

    If they are making this analogy on a serious level, then holy crap do we have some of the dumbest people running Washington in recent memory.

    I’m not sure what’s worse.

    1. I’m not sure what’s worse.

      Stupid or Malicious, Stupid or Malicious….I can’t decide either. Both options scare me. Slightly stupid (AKA, Average Intelligence) doesn’t concern me, but this level of retardation is going get nukes fired by accident when someone tries to buzz the door to let the pizza guy in.

      1. Why choose? Stupid and Malicious
        and they synergy forms “Stulicious”

        1. Stulicious

          Haven’t they used that on Life and Times of Tim already?

          1. Fine, have it your way: Maliciopid.

        2. Stupicalifornmaliciousextraaddeddouchebag

          1. A++ for use of California.

      2. Stupid AND Malicious

      3. As when the adjacent buttons are “lunch” and “launch”?

        1. Precisely. *Applause*

    2. Single payer would turn the US into third-world health care.

      The only thing worse than a patient who doesn’t pay is waiting for the state to pay. My sister works in the legal dept. at a hospital is a poor community in IL – state payments are almost a year behind now. Over 80% of their patients are on Medicaid. The hospital itself is insolvent, the only thing keeping them afloat is urgent care facilities in communities with very little poverty (another sister works at one of them).

      They are starting to see patients who are 1 mile from the hospital getting driven 12 miles to an urgent care facility for emergency care because the wait in the emergency room for services can be over 4 hours; the urgent care facility is seeing gunshot victims show up after being driven for 25 minutes (the facilities are not equipped to perform major surgeries that require a medical surgery team and gallons of blood). Naturally, the loved ones file lawsuits because they were turned away. The emergency room would take the gunshot victim immediately, but the reputation of the long waits are so bad that the (dimwitted) people in the neighborhood think it applies to every emergency visit.

  5. Without an individual responsibility provision, controlling costs and ending discrimination against people with preexisting conditions doesn’t work.

    So what? They say that like it’s a bad thing.

    1. DISSSSSCRIMINATION!!!!!!!!!!!! YOU RACIST!!! errr…..Pre-existingist!!!!

  6. Whatever happened to the days when people just paid doctors for their treatment?

    “Health” insurance used to be “medical” insurance – i.e., it was, like life insurance and car insurance, for catastrophic events requiring extensive (and therefore expensive) medical treatment.

    Modern “health” insurance pays for nearly every little doctor visit. Why should my health insurance pay for a “wellness” visit? Or if I have a toenail fungus and go get some ointment for it? Or pay for the ointment itself?

    The only reason I have “health” insurance is in case I or a member of my family gets in an accident or something and suddenly needs tens of thousands of dollars of medical care.

    Nobody expects their car insurance provider to pay for oil changes, brake jobs or new tires.

    1. Nobody expects their car insurance provider to pay for oil changes, brake jobs or new tires.

      Hell, then there’s liability-only, so autoinsurance customers don’t even expect the company to fix their car when they do have an accident.

      1. And for a minimal amount (about $10/month), I can insure my truck that I keep in the garage and never drive. So, can I get a mandated healthcare insurance policy comparable to that?

      2. Safe and sensible drivers only carry liability insurance; maybe uninsured motorist also if they can’t afford to pay for a wreck with a deadbeat.

        Collision and comprehensive insurance just subsidizes wreckless drivers and those who operate vehicles in unsafe places and times.

        The auto insurance analogy does work in this particular way.

      3. Hell, then there’s liability-only, so autoinsurance customers don’t even expect the company to fix their car when they do have an accident.

        ahem!

    2. That, overbearing federal and state mandates, and the unhealthy tax system that ties insurance to employers, are what are truly broken about our health system. Put insurance back in the hands of the customers, and nearly all our health insurance problems go away.

    3. When gubermint becomes an intermediary, the incentive of the consumer becomes poo poo, and the incentive of the seller becomes, SELL MORE or, as the consumer doesn’t care about the cost either, SELL MORE AT A HIGHER PRICE. Funny how dentistry, as well as eye care, it still reasonable.
      But the problem is us…or more accurately, many consumers. I have a friend, who absolutely must have dental insurance, even though there is nothing wrong with his teeth, because it just PAINS him to pay for teeth cleaning, or the fear of how much having an extraction costs! The premiums are somehow invisible to him, and the math comparing the yearly cost of the premiums to the yearly cost of the teeth cleaning is like…quantum mechanics.

    4. The way I understand it, Insurance Companies pay for wellness visits because they have found that if people don’t get regular checkups they have more catastrophic events.

      1. Everyone dies. Everyone.

      2. they do it because people who think they’re smarter than they really are have convinced the world that prevention saves money. screening might be good for the individual, but you’re spending resources on testing people who would have never gotten the illness or will get the illness regardless of what you do. the kerfuffle over the recommended schedule for mammograms is good example. the panel found that routine screening was causing more harm than good b/c of the the false positives and needless discomfort of undergoing the exam. they tweaked the guidelines to reflect that and somehow it was translated into some sort of hate crime.

        1. Do you hate boobies?

      3. So is the government going to require wellness check ups then?

        1. Unavoidably. See also: Clause, Interstate Commerce.

  7. This is a great post.

  8. “They argue that “unfair cost-shifting” by uninsured patients “harms the marketplace,” which justifies federal intervention.”

    The sort of cost shifting they’re complaining about here may exist, but it isn’t the uninsured who are the largest perpetrators of that cost shifting.

    The biggest perpetrators of that cost shifting–by orders of magnitude larger than the uninsured–is the Medicare and Medicaid system, which–by statute–only pays a fraction of the true costs of hospital care and leaves the privately insured and uninsured to make up the difference…

    Indeed, the uninsured often have to pay many times more than Medicare or Medicaid will pay–for the same hospital services! Our government, in other words, is treating the uninsured like the solution to their systematic underpayment of hospitals. That’s why private insurance costs so much. That’s why the uninsured paying cash costs so much.

    …watching the government turn around and blame the uninsured for the high price of healthcare? That would be freaking hilarious if the outcome wasn’t so tragic.

    1. They blame other programs too. If you go to a MedPAC meeting, someone is always concerned that Medicare is subsidizing Medicaid. This is also recognized in Medicare’s bad debt policies.

    2. Don’t forget the sharks. No one notices all the fins swimming around the healthcare debate tank…it amazes me how unscathed the toothed fish have been throughout this whole mess. No one even mentions them.

    3. “Indeed, the uninsured often have to pay many times more than Medicare or Medicaid will pay–for the same hospital services!”

      What ever happened to that whole Equal Protection Under the Law thing?

  9. The sophisticated version of the car insurance analogy is that states require you to purchase liability insurance to protect other drivers who you might get into an accident with. If you didn’t have liability insurance, the other driver might have to take a loss, and the cost of collision insurance would go up. The “cost shift” is from uninsured drivers to other drivers and collision insurance premiums.

    This is analogous, supposedly, to requiring you to purchase health insurance to prevent the cost shift to health care providers and health insurance premiums.

    Except for hospitals, the cost shift to health care providers doesn’t exist: they can turn you away if you aren’t insured. And the cost shift to hospitals is required by EMTALA. So that side of the analogy breaks down.

    And, if the cost shift to providers breaks down, then the cost shift to premiums breaks down, too, because premiums go up to cover the cost shift to providers.

    So, analogy FAIL.

  10. We’re going to stop unfair cost-shifting …. by forcing taxpayers to buy them insurance.

    1. Well, it’s fair when you force everybody, right?

      1. Which brings me to an idea that might be able to gain some traction with today’s progressives:

        Slavery itself isn’t bad. The problem with slavery in America is that it was racist. So, I say, bring back slavery. It’s cool as long as it’s equal opportunity. We can start with doctors. A multi-racial, heteroethic, mix of of doctors.

        The Equal and Prosperous Slavery Act of 2015. (TEPSA)

        1. Hey, that’s MY idea.

        2. Ahh, the slavery meme!

          1. Yes, it is.

            1. Enslaving vast swaths of the population provides freedom for other vast swaths.

          2. It’s not a meme you dipshit! Forcefully extracting knowledge and labor from someone, for your own personal gain, IS slavery.

        3. In other news, Fed Chairman Ben Bernanke began monetizing the populace today…a process termed “populative easing” by the Fed…

    2. I’d argue, again, that it’s Medicaid and Medicare that’s the cause of cost shifting–by orders of magnitude larger than the uninsured.

      The cost shifting they’re supposedly trying to protect us from isn’t primarily coming from the uninsured–it’s coming from their own government run programs.

      If the government actually covered hospitals’ costs of treating patients on government programs, the cost shifting they’re talking about from the uninsured would be about as big a problem as shoplifting is at Wal*Mart.

      …by which I mean, not a big enough problem to really harm the market.

      1. Agreed. But the central idiocy of their message is what I was trying to point out.

        They’re pretending to be all outraged that hospitals shift costs from the uninsured to those with generous insurance plans, but their SOLUTION is to shift costs from the uninsured to taxpayers, and from the sick ot the healthy.

        ObamaCare is in fact entirely about INCREASEING cost-shifting. The whole point of it was to cover people who currently don’t have coverage at taxpayer expense.

        It is not, and never was, about cost fairness or cost control.

        1. I guess what they are getting at is having cost-controls for their shifting program. You start with a moral imperative to have everyone covered and then try to cut down the cost increases that such a plan could induce.

          1. First we get rid of the Jews…

            1. Er, yeah, trying to cover the less fortunate and needy among us=HITLER!

              1. less fortunate and needy = fat drunk and stupid

              2. No, it addresses the folly which is your myopic view of reality.

      2. I agree with the first part of your premise.
        But are hospitals underpaid…or overpaid?
        It depends. Whenever you separate the consumer from the cost, and supplier from demand contraction if prices are too high….well, your gonna have a dysfunctional market.

        I have a very high deductible on my health insurance – I wish it was possible to have an even higher one. I have a bad thumb – if insurance paid all of it, I would have them do all sorts of tests and treatments. But as it costs me so much, I can make do without high thumb function.
        It has however, reduced the number of sex partners I have from 2 to 1.
        Righthandmia: “Leftlina was a slut!”

        1. I’m not claiming any authority here. …but I am claiming some familiarity.

          I did 7 years hard time working reimbursement for a private hospital on the edge of what used to be called SouthCentral Los Angeles. After that, I got hired by a software company to write and test payor calculation software–for hospitals and different plans all over the country. I can be as wrong as anybody else–but I’m not makin’ this stuff up either.

          Dollars billed may not be an accurate measure of cost, and I’ve been out of the business for years now. I doubt it’s changed that much since the end of the ’90s, however, and it used to be that Medicaid pays approximately 12.5 cents on every dollar billed. Medicare paid about 25 cents on every dollar billed. What are the hospitals supposed to do–make it up in volume?

          Because older people spend more time in hospitals, Medicare and Medicaid make up a huge chunk of the healthcare dispensed out of hospitals. In our hospital, in order to break even, we used to need about one private pay patient to make up for the losses we took on every four to seven Medi/Medi patients–depending on what they were in for.

          In urban, blighted areas, like South Central Los Angeles, areas that don’t have the demographics to provide 1 out of every 4 to 7 patients with private insurance? They go out of business. That acute care hospital I used to crunch numbers for is no longer in existence–it’s now a nut house.

          Most hospitals lose money on every Medi/Medi patient. The rates are set up that way–and the hospitals are supposed to make it up by what they charge private insurers. …and the uninsured AKA cash only patients.

          So, the cost shifting they’re talking about is real. That really is the problem. The relative magnitude of the uninsured makes a practically negligible impact, however, compared to burden Medicare and Medicaid put on our health system.

          So why don’t Medicare and Medicaid pay full price for the services provided to people on the plan?

          How’d you like to double your income taxes?

      3. Ken
        Are you talking about price discrimination (selling similar goods at two different prices to two different groups, i.e., the well insured and those on government programs)? If so it’s not like the first time that has happened in the world…

        1. No, I’m talking about them blaming the problem of non-payment on the uninsured–when the problem is the government’s systematic non-payment.

          Inner city hospitals cannot break even on Medicare and Medicaid patients. If you’re losing money on every Medi/Medi patient, then the only way to make up for those losses is with cash patients (AKA the uninsured) and private insurance–that’s why healthcare costs so much for cash only patients and the insured. That’s why private insurance plans want to limit you to going to hospitals they have a contract with–’cause otherwise, you’re getting gouged to cover all the inherent, pervasive losses such hosptials take on every Medi/Medi patient. That’s why the guys in the business office would high five every time a private insurance patient got admitted through the ER.

          The losses hospitals lose to nonpayment by the uninsured is a pittance compared to how much they lose on all the Medicare and Medicaid patients they treat. People have this conceptual issue–they think that since they don’t have to pay for something, that means the government program does. But that’s baloney.

          I remember the day Obama’s healtcare commission “discovered” that it was less expensive to put patients on Medicaid than to buy them private insurance! Gee, I wonder why? Could it because they set the payment rates below cost?!

          P.S. I’m also talking about the government arguing that the problem is that the uninsured are being forced to pay for everybody else’s healthcare–so the solution is to coerce the uninsured to pay for more of other people’s healthcare.

          1. “government arguing that the problem is that the uninsured are being forced to pay for everybody else’s healthcare”

            They used to argue that a few years ago. Find the stories of the uninsured with huge bills that were evidence of insurance companies not paying enough — hospitals wouldn’t have to gouge these people if not for low rates from big insurance. somehow that’s switched to if you don’t have insurance, you’re a freeloader who must be compelled to buy coverage.

            1. They just say whatever’s relevant to the situation at hand.

              In this case it’s one thing, in another case it’s another…

              But it’s all supposed to be to help the uninsured, isn’t it?

              They want to sic the IRS on uninsured individuals and families–to help the uninsured?!

              It’s all bullshit. They’re trying to save Medicaid and Medicare.

          2. I don’t understand. The doctors willingly treat the Medi/care/caid patients at a losing price and make it up by charging those with insurance more? How is that not price discrimination?

            1. Hospitals, not docs (although they lose money too) — basically, because what they “charge” is very different than what they are paid. the uninsured are getting the rack rate because they haven’t flashed their membership card.

              and it’s politically difficult for a hospital to exit either of these programs.

            2. There’s an entire profession devoted to matching different codes with diagnoses and procedures.

              This is way oversimplified, but the government determines how much it will pay for each diagnosis and procedure, how much it will pay per diem to keep a patient with whatever diagnosis per procedure, etc…

              And then it determines how much of the percentage it will pay of that price–it can vary from code to code.

              The profession is called a “coder”.

              1. The coding is complex enough and involves enough judgment that in combating fraud there are both false negatives — providers who get away with it on a big enough scale to be professionals at it — and false positives — criminal convictions for errors (or differences in judgment) in good faith.

            3. If you want to get detailed, check out
              http://www.medpac.gov/document…..spital.pdf

              but that’s just hospital inpatient for Medicare. outpatient is different system. it’s hopelessly complex.

              1. Pay particular attention to “DRG weight” in that document.

                That’s Diagnostic Related Group.

                “The prospective payment system implemented as DRGs had been designed to limit the share of hospital revenues derived from the Medicare program budget,[1] and in spite of doubtful results in New Jersey, it was decided in 1983 to impose DRGs on hospitals nationwide.”

                http://en.wikipedia.org/wiki/Diagnosis-related_group

                DRG weights are a big deal.

                https://www.cms.gov/AcuteInpatientPPS/

            4. How is that not price discrimination?

              I think they look at it from the other end–how could you possibly discriminate against someone who needs care for not being able to pay?

              I believe the vagaries are in the contract with the Medicare intermediaries. Like I said, I’ve been out of it for a long time, but it used to be that we couldn’t operate a hospital without a Medicare contract. That contract has all sorts of language in it.

              As I said before too, if you’re insured through a PPO with XYZ Insurance company, they often restrict you to what hospitals you can go to. It’s not that the hospitals not on the list are making you pay more than everybody else–it’s that they’re not giving you the discount you’d get by contract if they’d had a contract with XYZ Insurance company.

              Have you ever been in a PPO?

              We’ll pay 85% if you got to ABC, or 123 hospital. Anywhere else? We’ll pay 33%–but only if it’s preapproved!

              The only way around that usually is if you’re admitted through the ER.

              I don’t think the insurance company can tell people in the middle of a cardiac arrest that paramedics should take them to a contract hospital.

  11. Like President Obama, Holder and Sebelius exaggerate the significance of uncompensated care. According to a 2008 report from the Henry J. Kaiser Family Foundation, the annual cost per family is something like $200, with uncompensated care accounting for “less than one percent of private health insurance costs.”

    This point cannot be made often enough.

    Even this morning the San Jose Mercury News had an editorial against the decision that opened with a number an order of magnitude higher.

    For many reasons, treating the uninsured in emergency rooms is far and away the cheapest way to do it. ObamaCare doubles or triples the costs to treat those now uninsured while making insurance more expensive for everyone and thus driving even more people into government insurance subsidies. It is insane.

  12. magine what would happen if everyone waited to buy car insurance until after they got in an accident.

    I suspect the cost of the “policy” would be strikingly similar to the cost of the repairs.

    1. I have a feeling you would be right. Funny that.

    2. If only; plus the administrative costs of passing the payment through the insurance company.
      And in the case of healthcare, add the administrative costs of a whole new government agency.

  13. “According to a 2008 report from the Henry J. Kaiser Family Foundation, the annual cost per family is something like $200, with uncompensated care accounting for “less than one percent of private health insurance costs.””

    People growing marijuana in California affects the interstate market by a lot less than $200 per family, and that’s covered by the Commerce Clause.

    1. I don’t think that “Well, the Commerce Clause allows the government to restrict the growing of marijuana” is the winning arguement you clearly think it is.

  14. [T]he main reason ObamaCare compels people to buy insurance is not so they can pay their own bills but so they can pay other people’s bills. To prevent a disastrous “adverse selection” spiral, the government needs the money of people who hardly use health care to subsidize the expenses of people who use it a lot.

    But that defines government: Every single thing government program or act comes from making some people pay for other people’s choices, be it as welfare, as “services”…

    … even the so ubiquitous ROADS!

    So why would HC be any different? It is just yet another wealth redistribution scheme, nothing more, with the added bonus that bureaucrats will obtain their cut.

    1. I’m not sure that’s right. It’s not so much A and B making C pay for services for D, it is about making A, B and C pay for services which all of them, including C, can use. C just doesn’t think he needs them or doesn’t want them, but they are open to him.

      1. Re: MNG,

        I’m not sure that’s right. It’s not so much A and B making C pay for services for D, it is about making A, B and C pay for services which all of them, including C, can use. C just doesn’t think he needs them or doesn’t want them, but they are open to him.

        Again, your thinking is like Khan’s: two-dimensional.

        Change the above “services they can use” for “tatoos”:

        “I’m not sure that’s right. It’s not so much A and B making C pay for tatooing for D, it is about making A, B and C pay for tatooing which all of them, including C, can have. C just doesn’t think he needs them or doesn’t want them, but they are open to him.”

        Does that make the action of taking from A, B or C more palatable to you, less palatable, or the same, as if it were just “services”?

        When it comes to obfuscation and double-speak, nothing beats government (and their worshippers.)

  15. “The majority of Americans who have health insurance pay a higher price because of our broken system. Every insured family pays an average of $1,000 more a year in premiums to cover the care of those who have no insurance….

    We have to stop imposing extra costs on people who carry insurance, and that means everyone who can afford coverage needs to carry minimum health coverage starting in 2014.”

    Why does this same sense of care about working people paying for other peoples shit not extend to welfare and all the government freebies? Is that not a concern to these people? I don’t see any liberals calling for all their constiuents on welfare to get a fucking job because they are costing the rest of us all money and draining our funds.

  16. It is actually about forcibly redistributing the costs of people who are unlucky enough to require a lot of medical care.

    You’re assuming their bad health is entirely due to bad luck, rather than lifestyle choices.

    1. I’m sure some of it is due to luck, some to lifestyle choices. I’m not sure if it matters to people like yourself who oppose universal coverage or people like myself who support it.

    2. It mostly is. Mostly.

  17. If everyone waited to buy car insurance until after they got in an accident,” Holder and Sebelius write, “premiums would skyrocket, coverage would be unaffordable

    I don’t see why insurance premiums would go up when there is no claim to pay. You already had the accident. You’re on your own on that one. Seems like premiums would fall.

  18. So what is the problem we are trying to solve here? Is it

    (a) Health insurance costs too much? Because larding on benefit mandates, guaranteed issue, community rating, and incentivizing insurance companies to run pure volume shops via the new rules on medical cost ratios sure isn’t going to make it any cheaper.

    (2) Not enough people carry health insurance? Because guaranteed issue and community rating incentivize people to not carry insurance.

    (3) People not getting health care? Because we have seen in Massachusetts that the ObamaCare model actually leads to reduced access to care.

    Not only is what problem we are supposed to solving a (conveniently) moving target, but I don’t see anything in ObamaCare that doesn’t make any of them worse.

    1. you know what does work? minute-clinics. good hours and low costs for routine illness and non-complex care. stuff that I don’t need to waste my doctor’s time with, like a respiratory infection. i think that model goes a long way to solving the access problem.

    2. I’m pretty sure the problem we’re trying to solve here is variable insurance company profits.

      1. I’m pretty sure the problem we’re trying to solve here is variable insurance company profits.

  19. ObamaCare not only requires insurers to cover people regardless of their health; it forbids them to set rates based on expected claims. As commenter Tman notes, that’s another reason the analogy to car insurance is inapposite.

    Indeed, one buys auto insurance (regardless of mandates) not with the expectation of crashing your car into a tree – one takes care NOT to do that, as a matter of routine.

    Health insurance does NOT even work like auto insurance: it covers a host of routine services, making H.I. more of a paying system than insurance.

  20. If this is all about preventing cost-shifting by the uninsured to hospitals and the insured, and that cost is $43B a year, they could just solve that with a payment of $43B to hospitals that treat the uninsured. There is already a program to do that that pays hospitals about 85% of the cost of uncompensated care ( http://www.kff.org/uninsured/u…..ending.pdf) and paid out $34.6B in 2004. So, Mr. Holder and Ms. Sebelius, please explain to me why we need to spend (conservatively) $95B a year on the health reform bill to solve a problem that is, at most, $6.45B (15%x$43B) a year.

  21. Every application of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction, or deed placed in motion by an individual or legal entity,” Judge Hudson noted. “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

    As I said a few days ago, while I agree with the outcome, I don’t see how this is an argument that the law is unconstitutional. It’s not like Congress has to wait for judicial approval before it can pass new laws. Hudson’s morals are correct, but his reasoning is specious.

  22. I am curious if anyone would mind less if the Feds simply use tax money to subsidize high risk people and the poor. At least that wouldn’t require further widening the scope of the commerce clause.

    1. Re: non,

      I am curious if anyone would mind less if the Feds simply use tax money to subsidize high risk people and the poor. At least that wouldn’t require further widening the scope of the commerce clause.

      I do mind it, as we already have that: Medicare and Medicaid, and BOTH are underfunded, now.

      1. I mean would you mind LESS if instead of the health care mandate, they used tax money to pay for pre-existing conditions, etc. As you note, this would be little from current government programs which are already accepted as within legitimate Federal authority. I think upholding the mandate would be the most expansive use of the commerce clause to date.

  23. I sure want to live in a world where if I get mugged, beaten and have my wallet stolen, the emergency responders just walk away and let me die because I don’t have proof of insurance or a big fat wad of cash on me.

    Ahhh, libertopia…

    1. Nobody’s talking about that at all.

      I haven’t heard anyone here suggest that Emergency Rooms should refuse service to people based on their inability to pay…

      But I did mention that there’s one less Emergency Room in South Central Los Angeles than there used to be! It’s a funny farm now!

      I guess if you were mugged and there wasn’t a hospital in your neighborhood anymore–because the way the government pays for services drives marginally profitable hospitals out of business…?

      You probably wouldn’t know why it wasn’t there though–they just know it isn’t there anymore.

    2. Chad likes the rough trade.

  24. Well I want to live in a world where the government provides free health care for everyone without any limitations. I want to spend my last decade in ICU with a whole hospital keeping me alive. Everyone deserves this standard of care. In fact, we (not me) should properly fund health care so we all live forever, and can retire at 50, and its totally free. It’s my right!

    1. Incidentally, I think one of the worst, least talked about aspects of Medicare/Soc. Security is the sorts of moral hazards it creates in people’s treatment of their elderly parents.

      Part of the reason so many Americans end up spending the last 10 years of their lives in some nursing home hell has to do with the money the government churns out to keep them there. It’s like giving people cheap loans/free money for college…

      The college’s don’t compete on price–and there’s a lot more people in college than there would be otherwise. That’s kinda the way it is with the nursing home industry too.

      When I’ve traveled abroad, that’s one of the first things people have asked me about life in the United States. They say that you never see any old people anywhere–that Americans don’t even take care of their own elderly parents–they just ship them off somewhere to rot.

      There’s a reason we’re kinda like that, and things didn’t used to be that way.

  25. The core story here is a blatant attempt by the government to “newspeak” the real meaning of “cost shifting.” Cost shifting in actual actuarial terms is the rather huge amount of underpayment by government programs (Medicare and Medicaid) to providers that in turn drives up the price to all other payers as those providers attempt to make up the generally below cost payment from the government. This amount more than likely dwarfs this $43 Billion figure, and is the main source of destabilization, disruption, and distortion in the US medical expense system. If providers were required to set (by provider) and charge a consistent price for their services to all payers, and those payers (including the government programs and all insurers) had to accept those charges without an ability to negotiate discounts (thus requiring balance billing to be an accepted and in fact expected and required element of the system), a truer market equilibrium would largely solve the “cost curve” problem within both the medical services sector and the medical insurance sector. This in itself would not take care of the voluntarily uninsured “problem,” but it would make for an environment where the true cost of such care can be evaluated and addressed. Right now, no one really knows what medical care is “worth” because of true cost shifting.

  26. Ask yourself how expensive medical care would be without the government in the picture? No prescription laws, no laws forbidding you to purchase medicine from wherever you found the most suitable price. Anyone who had medical knowledge would be allowed to help you. Wouldn’t the cost be a lot less than it is now? Isn’t government the problem more than it is the solution?

  27. Anyone who had medical knowledge would be allowed to help you.

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