In the Democrats' Health Care Bill: A provision to fine many of the uninsured $650 or so a year. Is this brilliant or brilliantly stupid?

From what I understand, there are subsidies for those who cannot afford it on their own.

It’s neither brilliant nor stupid, merely necessary. Insurance itself only “works” because of the law of large numbers. It is necessary for their to be a pool of healthy people who pay premiums which subsidize the needs of the sick.

Exactly as in car insurance, which is mandated, yet I hear no one complaining about it, the large pool of careful drivers who are forced to purchase car insurance subsidizes the smaller pool of reckless people and people who were merely unfortunate.

It is an actuarial process, and there is no other way for it to succeed. That makes this a rather uninformed question, which has been the problem with the entire reform debate: people have no idea what they are talking about, yet they dearly hold extreme positions.

@dpworkin How can you be so smart so early in the morning?

It’s stupid, stupid, stupid. Pay or play is the stupidest health care reform ever, for exactly the reason you point out. Unfortunately, Congress is too stupid to pass the only reform that will work (single payer), and so they “compromise” on this plan, which is designed to get everyone into the risk pool. Having universal insurance coverage is necessary to bring insurance costs down. But mandating purchase of insurance is about the stupidest way to do it, except for maybe asking the poor to pay for it all and giving the rich a free ride.

It’s a bit weak, but necessary since their is so much opposition to the socialist notion of single payer health care that everyone else in the civilized world uses to achieve better outcomes and lower overall costs than we have.

@Kraigmo, if they can’t afford health care, they get subsidies.

So no, it’s not stupid at all.

@wundayatta, you don’t seem to understand how insurance works. Right now, insurance companies can charge obscene amounts of money to cover people with pre-existing conditions. The HCR bill fixes this, and also makes sure that insurance companies can’t drop people once they get sick.

But with this new regulation comes a problem—if you are healthy, why would you ever buy health insurance? Why not wait until you get sick and just buy it then? (Since, unlike the current system, it would be just as cheap). Hence, the mandates, to punish such “freeloaders.”

And it’s not like “mandates” are any different than “universal coverage.” It’s just a less-nice sounding word. And since, if you can’t afford insurance the bill will give you money so you can, I fail to see why you or anyone thinks it’s “stupid.” Care to explain?

I’ll admit that I don’t fully understand this health care debate or the implications if it.
That being said, @dpworkin people don’t have to drive a car. I don’t understand how the two compare. If you don’t buy car insurance, you don’t drive. If you don’t buy health insurance?

@wilma, many people actually do have to drive a car. If you don’t live in a city, a car is basically required to work.

Also, if you say “you shouldn’t have to buy health insurance,” well… if you get sick or injured and go to an emergency room, guess who is stuck with the bill? Oftentimes it’s taxpayers. Health care is simply not something you can just opt out of, unless you are simply willing to die without any treatment if and when you get sick or injured.

@Qingu It still lets the insurance companies cherry pick. They insure the healthy, while taxpayers insure the people with expensive costs. The mandate is still a regressive way to fund health insurance. It also sets up a multi-tiered system where poorer people who buy insurance get a shit plan, and when that plan doesn’t cover what they need, the taxpayers still end up paying for it.

I’m not sure you understand how insurance works. It’s really quite simple. Why do people want to share risk? Because you never know who will get sick. What’s the best way to share risk? Over the largest group of people possible. What’s the largest group of people possible in the US? Every citizen in the US.

In addition, you mention pre-existing conditions. The insurance companies aren’t going to pay for that for free. Even if we force everyone to purchase insurance (and this is quite different from automobile insurance since you have an option to not have an auto; you don’t have an option to not have life), everyone’s rates will go up to pay for pre-existing conditions.

So-called “competition” between insurance companies gets us next to nothing. Any reduced prices for preventive programs are eaten up in administrative costs and profits. The insurance industry, as I said above, is quite adept at avoiding high cost beneficiaries with their risk assessments. They can still charge high rates to people they don’t want to insure, and those folks will not be able to find anything but a bare bones plan they can afford, and if they get care they can’t pay for (the other option is death), taxpayers still end up paying for it through disproportionate share payments and cost-shifting to public insurance programs.

If you wanted to design a more arcane, inefficient and just plain stupid program, you couldn’t. You know what they say about Americans? We’ll try everything else before we try the thing that works.

@wundayatta, the bill pretty stringently limits how insurance companies can “cherry pick.”

I agree that the best way to share risk is to insure everyone. Hence the mandates.

You said that insurance companies will raise their rates to cover increased costs for sick people. Exactly! This is why healthy people need to be mandated to buy insurance. By increasing the total health of the pool, the costs are kept down.

I agree that more could be done to contain the wastes of private insurance industries. A public option would have helped, but the Senate bill contains a similar nonprofit option—private, but administered partly by a federal agency. Another problem is that insurance companies don’t really compete with each other now (hence your scare quotes)—but the bill’s insurance exchanges would help a lot with that. (What would also help is tightening antitrust enforcement for insurance companies).

Again, I don’t think you actually understand the rationale behind the bill, and your opposition to it seems spiteful more than a desire to actually help people afford health care. The bottom line: the bill will extend health care to 30 million people and provide $900 billion in subsidies to help sick and poor people afford health care. If you are going to oppose that on the basis of “it mandates private run insurance instead of government run insurance,” I think that is cutting off your nose to spite your face.

Just to be clear, if you support single-payer coverage you also support mandates. The difference involves who runs insurance, not who gets coverage or how it is paid for.

@Qingu Except with single-payer the entire thing is funded in a progressive way. How it is paid for is a very big deal. Also coverage is a big deal. This jerry-rigged proposal can not possible end up with universal coverage. Maybe 95% or 97%, but there will still be people who are left out. Just watch.

Here’s my concern. Sure, the bill means well, but its inadequacies will gradually appear, and each time one appears, there may or may not be an attempt to plug the hole in the dike. We’ll end up with a ridiculously complex and inefficient system and for what? What good does a private insurance system add?

This system will not hold down costs, which is the most important thing. Perhaps you will say there is this provision or that that addresses cost containment, but a mixed finance, fee for service system will continue to grow health spending, probably even more than it has been over the last twenty years. Eventually, I suppose, people will decide that the benefit in additional health is not worth the next dollar, and costs will stop rising.

As to expanding the risk pool—did you think about my argument that people who are mandated to purchase insurance will only purchase minimum plans which will not be adequate for them, nor will spread the cost enough?

How do the insurance exchanges help with competition?

I don’t know if you understand how clever the insurance industry is. There will be many legal techniques to get around anti-cherry picking legislation. This has been tried in the past without success. The insurance industry hires the best actuaries who are quite creative in understanding the health insurance market, and they will always be one step ahead of legislative efforts. I don’t see that changing.

Regarding “spitefulness.” I’ve had this argument before. People say that people need help now, and so we should do what we can to extend coverage, no matter how bad the system is. My position is that we are not going to get significant reform until we have a real disaster (surprisingly, the recent recession was not big enough to really scare people). So I think we should hold out for the right thing instead of compromising.

That’s a pretty draconian and possibly unfeeling point of view. I could be wrong about this. I don’t know. It’s an issue of strategy and what your time horizons are. I tend to take a long term view. I’m looking fifty years down the road. People who want this reform are only looking at the next five years. Some hope that this reform will open the door to single-payer, eventually.

I do support the passage of this legislation because it would be better than nothing to some degree. But I also would not be entirely unhappy if it failed, even though it would probably kill Obama’s reelection chances. But then, I always thought Hillary would have done a better job with this. People who screw up learn a lot more than people who have never tried it at all.

Fortunately, I can’t influence things one way or the other. It’s all up to Congress. My Congressman is a single-payer supporter. He’s been on board since the beginning. All we can do is sit back and watch the train coming down the track. Will it get shunted onto the other track before it runs headlong into the engine coming full speed the other way? We’ll see.

@Qingu I live in a rural area, and there is no public transportation, most people here do need to drive to get to work. But there is a difference between having to drive and having to live.

Can someone explain this to me, I don’t know anything about it..but will you be fined for just not having_any_ health insurance, or no health insurance through their plan? And who would you have to prove to that you have health insurance? They can barely staff the County Assistance Offices as it is.

I’m in the “uninsured” group (currently have it through the state from having a baby). I don’t know how I feel about this. I mean, it makes sense. As long as it’s not having to be paid all at once. If you can’t afford health insurance, you can’t really afford 650 all at once.

@Qingu Tightening antitrust enforcement against the insurance companies? Hell, right now they have an antitrust exemption. Whereas, if doctors so much as talk to each other about prices, it’s considered an antitrust violation.

The insurance companies need to be on the same playing field as the rest of us.

@wilma Let me use a different analogy, if that one confused you. People who have no children and never will still pay school taxes. Better?

Bottom line is it’s essentially a giveaway to the Insurance interests, basically a necessary evil (which wouldn’t have been necessary if Insurance companies, Republicans and Blue Dog Democrats weren’t holding up the whole damn process). Single payer universal health care has been proven throughout the world to be the best system out there, but the corporate interests are too strong, the opposition party too vocal, to ever let that happen. So, in order to keep the existing for profit system and still manage to insure the 31 million people who currently don’t have health insurance, something needed to give. As I recall, it wasn’t exactly the Dems’ idea to put this in the bill in the first place, but in order to make it work, as @dpworkin has explained quite well, there had to be a way to ensure compliance in order for there to be enough healthy people in the system to balance the costs of the sick people, in order to keep the profit margins high enough so this thing could actually pass and bring at least SOME relief to the people who most desperately need it. Since the giveaway to the corporate interests who would have bankrupted themselves to avoid losing any more of their profit margins than they had to became ultimately a “necessary evil”, Dems at least provided subsidies to those who couldn’t afford insurance, so there really is no excuse for a person who can’t afford insurance not to get it, leaving the only people really subject to the fine those who have enough money to buy insurance, but don’t do so, because it’s economically better for them right NOW not to. Problem is, these same people will gladly get insurance if they ever get sick enough to need it, and by running around uninsured, they are presenting a potential liability as what happens if and when they do get sick or injured and can’t quite afford to pay for the treatment themselves because a) it’s just too damn expensive without insurance, and b) they didn’t exactly put away all that money they saved by not buying insurance during the period when they were uninsured.

Yes, @dpworkin that analogy does make more sense to me, but I pay taxes to fund public education. I don’t mind that, we need an educated population for the good of our society. It is a tax, that I vote on or I vote for a public official to vote on.
If this health care for all, is to be funded the same way, then they should call it what it is. A tax.
We already pay for many peoples health care with our tax money. So this would just be an increase in that? If that is what they are talking about, why don’t they come right out with it?
Is it a case of ”you can’t handle the truth’’? that line of Jack Nicholson’s always reminds me of the government skirting around the truth with different words.

and before you say it, yes I know we need a healthy population for the good of society as well as an educated one.

@wilma Yes. I agree. If we called it what it is, we would call it a tax, and like every other developed nation in the world we would be doing a responsible job of ensuring our entire nation’s health. We are the only developed nation in the East or the West which does not do this, and it is idiotic that we don’t. The sole reason we don’t is that someone is making lots and lots and lots of money, has been for many years, and uses it to purchase influence and to demagogue thoughtless people into taking a stand that is against their own best interest.

@wundayatta, single-pay insurance would be progressive… but providing $900 billion in subsidies to poor and sick people so they can afford mandates isn’t progressive? Explain your logic there, please.

And yes, it won’t achieve universal coverage. It will extend coverage to 30 million more people. What is your point exactly? That drastically extending coverage is bad because it’s not perfect?

When you say “this system will not hold down costs”—do you have any evidence or expertise to support this assertion? The Congressional Budget Office says it will.

If you don’t understand how insurance exchanges will help increase competition, I think it’s relatively clear that you don’t know enough about this bill to criticize it.

And when you say things like “I wouldn’t be unhappy if it failed,” I hope you understand how utterly callous that sounds, because a lot of those 30 million people who would get insurance from this bill are going to die before the next chance to reform insurance come along. I can’t stand the attitude that it’s better to do nothing than compromise so people will “learn their lesson.” You are talking about people’s lives. Why don’t you try making that argument to someone who is dying of cancer but can’t afford insurance right now.

@casheroo, if you can’t afford insurance… the government pays subsidies you so you can afford it.

I feel like we should make a sign.

@Qingu You seem to be under the impression that I’m against it or something… I understand it helps you pay for insurance. I’m all for that. So what people are saying is, people who are against it won’t take the insurance and have to pay the 650. That’s all I’m trying to understand.

I don’t know what you mean by people being against “it.” Against the bill? Many people who are against the bill already have insurance.

If you’re against having insurance in general, for whatever reason, then I suppose yes, you would have to pay 650. Though the main reason for the fine is to prevent someone from only buying insurance when they get sick, which would be gaming the system (in a way you can’t do now, because the insurance companies are allowed to charge whatever they want).

I agree that single payer would work better and probably be far more efficient, @wundayatta. However, that is far too “radical and socialist” to ever get past a vote by people who believe that for-profit is the best way to get things done. Hence, we have to choose – something that will never get passed and have no change at all, or something that’s a kind of half-breed compromise that might get something done and save some lives. I say go with the half-assed thing now, and try to clean up the system to something more efficient later if possible.

@Qingu So you think the HIEs are going to hold down costs? I hope you’re right. Here’s why I’m skeptical. Remember Medicare Part D and how after the first round, so many insurers dropped out, and the cost of plans started rising?

There’s nothing, as far as I can tell, that forces insurers to participate in the HIE. So they may dip their collective feet in it at the beginning, but soon some will start pulling out. Maybe more than some. Why? Because they won’t be making enough money. And as they drop out, there’s less competition, and then where is the incentive to reduce costs?

In addition, insurance companies are being required to keep loss ratios to 85% or less (House plan) or 80% or less (Senate and Obama plans). I’m not sure if I’m remembering this correctly—it’s been a while since I last looked at the numbers, but I recall loss rations being a good deal higher than that in some cases. The average —well, I’m not sure. It may have been around 85%. In any case, I think this is another thing that will keep some insurers out of the HIE.

There will be some risk pooling, but how effective it will be—I’m not sure. I just know the behavior of insurance companies, and I know they are very good at cherry picking, and they’ll still find a way to do it under the HIEs.

The CBO? Well, I’m glad they found what they found about costs, but cost projections all depend on your assumptions. I don’t know what kind of latitude the CBO has in choosing which assumptions to use, and I haven’t looked at the analysis, myself, so I don’t know if I agree with it, but in my general experience, things always cost a lot more than you think, and you have to be very conservative in your assumptions in order to make a decent approximation about how it will really turn out.

Don’t forget, health spending has been the fastest growing sector of the economy for several decades. When I first started looking at this stuff, it was at around 9% of GDP. Now it’s what, 16%? Won’t be long before one in five of every dollar spent in the US will be on health services. With universal coverage and no global budgets or negotiations with providers, health spending will rise even faster. People love longer lives.

Speaking of which, you talk about the lives of 30 million people, of whom probably 99 percent are healthy. People don’t go uninsured unless they are healthy or they are sick and totally can’t afford it. The few who are sick are probably drastically sick, and there are more of them now, due to the recession.

It’s easy to look at them and, believe me, I want to help them. But I also want to help their children and their children’s children, and if we screw it up now, we will be making it so much harder and more expensive for our descendants they’ll want to kill us, if we weren’t already dead. There is a cost to getting stopgap reform, but it’s hidden.

Having said that, I want this reform bill to pass. I’m just saying there are worse things that could happen if it doesn’t pass.

I spent twelve years of my life as a health policy analyst. I built single-payer health insurance models for about six states. I’ve consulted with the CBO and the Urban Institute and the Economic Policy Institute on these issues. I’ve got buddies at Health Canada, and I’ve been on the Hill for the presentation of my analyses to staffers of various Congress persons.

Of course you could say “so what? What did you accomplish?” And you’d be right, because we didn’t do shit. I may have wasted that time as far as change is concerned, but at least I learned a thing or two along the way.

So—how far can you pee? ;-)

Sorry, but I trust the CBO’s projections more than your speculation, even though you do appear to have expertise. And it’s fair to be skeptical, and to be unsure that this will work, but it seems spurious to oppose a bill because “I am not sure it will work.”

Do you agree that if it does work, it will be a very good thing? Not as good as possible, but good nonetheless? I mean, you’re not even making an argument that it will make things worse.

I also fail to see how passing this bill would make it remotely harder to help sick people’s children (i.e. to improve it down the line). I mean, this is one of the weirdest statements I’ve heard from liberals. The alternatives are not “current HCR bill vs. single payer.” The alternatives are “current HCR bill vs. NOTHING, possibly for a decade or more.” If this fails, we will probably have a Republican Congress (we might have one anyways) and it’s not like they’re going to do jack shit. Can you explain what you mean by the “cost” of stopgap reform?

@dpworkin , I understand what you and others pointed out about the pool of participants and the costs going down overall.

But many people simply do not have the money to buy health insurance. They literally don’t have it.

So how can they pay up the $650 fine? Much less the mandated policy? They don’t have the money.

People who cannot afford car insurance, but who must drive to get money to be able to afford the car insurance someday…. they simply don’t buy the insurance. That’s what all low income people do, if they literally have to.

And the same is going to happen here.

And which European countries with huge single-payer systems require everyone to pay into it no matter what, with a fine over their head if they don’t?

And as far as the government subsidies to those who cannot afford it… so far those subsidies only apply to “families” 400% above the poverty level.

What about single indidividuals? Do they get subsidies up to the 400% above poverty level line?

Or are they gonna get screwed like they did on payroll taxes to begin with?

If I’m wrong:

then after this thing passes…. there won’t be a single American who cannot afford to buy healthcare because the government will subsidize those who really need, and fine those mysterious rich individuals who are super healthy and don’t want health care, and never bought a policy of any sort.

The Democrats are assuming that there’s selfish healthy people out there who will refuse to purchase health insurance of any sort.

It is extremely stupid.

And yes, I originally favored Obama’s goals on this, but the goals have become perverted.

Shouldn’t we just do what the Single Payer Healthcare countries do… something that actually usually works?

I think @wundayatta put it quite nicely.

@Qingu Why do you believe CBO projections?

Opportunity cost. We can limp along for the next three or four decades with a system that sort of covers people, but not all that well. That means we have to spend a lot more for a lot less. Which means we have less money for other things, like research and development or education, both of which would have a significant positive effect on the nation’s health.

@Qingu calls people who don’t buy insurance “freeloaders” (because in the future when there’s universal access, they won’t be paying in).

But right now there is no freeloading, and these “freeloaders” don’t buy insurance because they cannot afford to.

You claim these people will be able to buy insurance with “subsidies”.
Does this mean a single individual who earns $30K in California will be allowed to buy health insurance for $15 a month? (and even that’s stretching it) Because that’s all a person like that can afford after food, rent, car, emergencies, payroll tax, and housekeep. People in that situation not only have no money, many of them are in credit card debt because they don’t even have any alternative.

Does this new plan make sure they can actually AFFORD the new insurance with the subsidies?

If Qingu is correct here, then all is well.

I’d like to see that happen.

I sure doubt it.

@Kraigmo That’s why there are subsidies built into the act.

@dpworkin, I hope I’m wrong. I really hope these subsidies will cover all people who really need subsidies.

And i’m still confused as to who these healthy rich people are that aren’t buying in? Where are they?

Democrats in Congress assume that those who don’t buy-in to insurance do so because they’re healthy and blind to the future.

That is a fallacy. And yes, the Republicans spout even more fallacies

The reality is that the only people who don’t buy health insurance are people who cannot afford it.

@Kraigmo, I don’t know the exact numbers for how much poor people get helped out, but it’s significant.

And it’s not the case where Democrats assume you’re a freeloader if you don’t buy insurance. You are correct, there aren’t freeloaders now because the insurance companies have the power to fuck you over for “pre-existing conditions.” Removing that power means introducing the ability for people to freeload—i.e. wait until they’re sick to buy insurance.

Hence the mandates.

And thus, hence the subsidies ($900 billion) to help people afford the mandates.

And thus, hence the taxes and attempts to reign in costs.

@wundayatta, I believe CBO projections because they are the most credible experts I have access to and have had ample time to look at this stuff in depth. I don’t think they’re infallible, but it’s not enough to simply say “I am skeptical of the CBO’s claims.” It strikes me as knee-jerk skepticism, similar to climate-change deniers.

I also am not sure what your point about opportunity cost is. Why would enacting this bill prevent progressive Democrats from pushing even greater reforms towards single-payer in the future?

I do agree with you that the bill could do a lot more to contain costs—but I think helping people afford health care to avoid dying is a higher priority than ensuring greater cost savings than the current bill affords. And again, if you want more cost savings, let’s elect more and better Democrats and get Congress to enact a public option.

There’s nothing in the bill preventing us from doing that. And the way liberals such as yourself are reacting to it strikes me as counterproductive to that purpose.

@Kraigmo – having been a person responsible for enrolling people into company health plans, I can tell you first hand that I’ve seen COUNTLESS examples of people, usually younger, who make decent money, who declined to enroll for employer subsidized health insurance, not because they couldn’t afford it, but because they rarely get sick and they just don’t go to the doctor. There have been times in my life where I just had major medical in case something really bad happened because I was pretty healthy. And some times it’s not that you “can’t afford it”, but it’s a matter of that even though it costs $400 a month let’s say to insure yourself, and let’s say your employer picks up 75% of that, and so it costs you $100 a month, and even that is taken out pre-tax….even if you visit the doctor twice a year you’re probably getting your money’s worth as than you would have, but the people who just never go to the doctor unless they’re at death’s doorstep, look at at this and say, well, it’s been 5 years since I went to a doctor, in 5 years, I’ll have paid $6,000 in for something I don’t use, I can spend that money on a iPhone contract (or whatever). But say 5 years down the road, they get diabetes, well, they’re going to take that deal, even if it now costs $150 a month because of annual increases in premium. Because I can tell you first hand as a diabetic, between my routine checkups, lab work, and prescription drugs, even though I’m unemployed, I’m spending $3,500 a year out of pocket on insurance premiums for myself, and I STILL have a $1,000 annual deductible for office visits, but just what I save between the discount on what the doctor charges insurance vs. what they’d charge me, plus my prescription drug coverage, it still saves me several thousand dollars a year. I can’t afford $3,500 out of pocket a year now, but I REALLY can’t afford not to have that coverage. But there was a time in my life when what it would have cost me for health insurance would have been just as much of a hardship as it is today, but I COULD at that time afford NOT to have health insurance, so I didn’t. And THAT is an economic fact of life for many, many people these days.

There are two groups of people, people who can’t afford the insurance, so they just hope they don’t get so sick they wish they had it, and they if they get too sick go to the emergency room on the taxpayer dime anyway, these people WOULD buy insurance IF it was made affordable and accessible to them. This plan should reign in costs, and provide subsidies for the portion of the costs that couldn’t be reigned in. And there are people for whom at this point in their lives, health insurance seems like an expensive, unnecessary luxury item. And they too if they get desperately sick or injured may have to go to the hospital and stick the taxpayer with the bill, because they didn’t plan for the what if, they didn’t think it would happen…it’s like taking an investment risk. And that’s how it is for way too many people right now, you have to actually look at insurance as a cost/benefit issue…and if you get more than what you pay for, i.e. if it saves you money, then you will buy it, if you will be paying for more than you will ever get back out of it, it’s worth taking the risk…and it’s the people who can afford to take these risks that understand enough about money to know what a cost benefit analysis is, in order to be able to make these decisions that they don’t “need” it. The point is, make sure everyone gets it in order to make it work economically within our for profit system, and then make sure that by doing so, we don’t increase the burden on someone who doesn’t have it because they don’t have the money to get it at this point.

I have not seen the details but $650.00 seems pretty cheap to me. It is the uninsured that cause the biggest burden on our health care system. The rest of us pay more to pick up the slack when they show up in the ER. If they are to poor to pay $650.00 then they would be eligible for Medicaid, or the Medically Indigent Adult program, so it is not for the poorest of the poor.

@Judi The working poor most likely can’t afford that 650.

@casheroo; They can afford it a lot easier than they can afford a $2,000 ER bill!
Hopefully the incentives for employers to offer medical insurance will help provide coverage for the working poor and it won’t even be an issue.
I would prefer to have universal coverage. Hopefully this will evolve into something better over the years.

Now I wonder if you pay the $650 fine… are you covered in any way? or not?

So, are they gonna make poor people pay $650 and then still not give them health care? I suspect this, but I could be wrong. If I’m wrong, then good.

Everyone here gave really good answers

You are definitively wrong. Read the bill. People will be subsidized well into the middle class, and no poor people will go unsubsidized.

I believe subsidies go up to $88k. Extra taxes don’t kick in till 200k. Seems like no one really gets hurt here.