Posts tagged with: insurance

sebelius comicAvik Roy of Forbes has never been what you’d call a fan of Obamacare.  Now, however, he’s calling the mandated insurance program “lawless” and “unconstitutional.” Why?

The White House—having canceled Americans’ old health plans, and having botched the system for enrolling people in new ones—knows that millions of Americans will enter the new year without health coverage. So instead of actually fixing the problem, the administration is retroactively attempting to force insurers to hand out free health care—at a loss—to those whom the White House has rendered uninsured. If Obamacare wasn’t a government takeover of the health insurance industry, then what is it now?

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“We have to pass the bill so that you find out what is in it, away from the fog of the controversy.”

Nancy Pelosi was the House Speaker when she made those remarks about Obamacare at the 2010 Legislative Conference for the National Association of Counties. At the time, Pelosi was mocked for not understanding what was in the legislation she was supporting. But the reality is that with all legislation that is considered by Congress, we almost never really know what is in it until it has been passed.

obamacare-redtapeIf you took civics class in high school (or just watched Schoolhouse Rock), you likely know how a bill becomes a law. But what most people don’t understand is the process by which a law becomes policy.

We often think that the judiciary is the branch of government responsible for interpreting the law. But in reality most interpretation is done by the executive branch, through the various regulatory agencies. Regulatory agencies handle administrative law, primarily by codifying and enforcing rules and regulations. When Congress passes a new law it usually goes to a regulatory agency to determine how the law will be put in place.
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Pieter de Hooch - A Woman with a Baby in her Lap, and a Small ChildOne of the justifications for the HHS mandates (amended now to require insurance companies to provide contraceptives free of charge) has been purely economic. The idea is that the use of contraceptives saves insurance companies (and by extension the rest of us) money, as it is less expensive to pay for condoms or birth control pills than to pay for a pregnancy and birth.

Of course the calculus to come up with such a conclusion is flawed in myriad ways. But even if we were to assume the veracity of the contention, many questions immediately arise. For instance, why wouldn’t insurance companies voluntarily offer birth control coverage gratis if it would lower their costs? Aren’t these the same profit-maximizing institutions that politicians have been demonizing for years? Aren’t the insurers the professionals, whose business it is to know what ways are available for minimizing exposure? The very fact that up to this point insurance companies have not added free birth control as a preventive care measure is powerful evidence against the economic argument in favor of contraception.
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Blog author: kschmiesing
Wednesday, September 22, 2010
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Among the warnings sounded as the Democratic health care reform bill was being debated was that the federal insurance mandate included in the bill—even though not national health care per se—would essentially give the federal government control of the insurance industry. The reason: If everyone is forced to buy insurance, then the government must deem what sort of insurance qualifies as adequate to meet the mandate. This piece of Obamacare promises to turn every medical procedure into a major political fight, with special interest lobbying rather than objective medical expertise being more likely to determine what kind of health care gets covered and what kind doesn’t.

The problem goes beyond ugly politics, however, and into the realm of moral repugnance. The contention has already started, as the Catholic bishops have formally protested the pending inclusion of contraception and sterilization among items that must be covered in every American insurance plan.

Whether one agrees with Catholic morality is beside the point. The point is that this is no way to deal with a major economic sector in a free, pluralist society. Some medical doctors think chiropractors are quacks; some chiropractors think medical doctors are quacks. Some people think marijuana is an excellent pain killer; others think it is an immoral drug. The goods and services that the 300 million people in this country consider to be effective—or objectionable—instances of health care vary, sometimes dramatically, according to geography, culture, religion, and ethnicity. Now a single institution, the national government in the form of the Department of Health and Human Services, is charged with arbitrating which goods and services make the cut and which don’t. Those who lack the political clout to get their preferences included will pay coming and going: their insurance premiums will cover things that they don’t want and they’ll have to pay out of pocket for things that they do.

The variety offered by a medical market is a beautiful thing. Monolithic medicine mandated by a law that most Americans opposed is not.

I still haven’t quite gotten to a thorough fisking of “Exhibit B,” yet, and will have to be satisfied with arguing the following thesis in the meantime:

It is impossible to increase insurance coverage in America without increasing medical spending.

We cannot save enough on bureaucratic reform and government-induced “competition” to offset the new costs associated with an influx of 40+ million new participants. Certainly the newly mandated premiums, paid by those who have determined for themselves that it is not worth it to pay in to health insurance, will also offset some of the new costs. But how many of those 40+ million uninsured have voluntarily opted out?

If even a large minority, say 1/3 of the uninsured, is made up of those that have been denied coverage outright or cannot afford it because of various health factors (many estimates place that number far higher), then guaranteeing coverage to 15 million new patients will certainly surpass any of the potential gains seen in those other revenue sources. The very reason that so many of these folks do not have insurance coverage is because private firms have determined them to be too risky (that is, too expensive) to cover.

How can we mandate coverage of this group and not increase health care spending? It seems like an impossible promise.

The contention really cannot be that we can spend just as much as we are right now and extend the same qualitative and accessible health coverage to everyone. The honest situation is that we would have to spend more to guarantee coverage, and as a nation we need to decide whether that public good requires governmental mandates, regulations, and administration or if it doesn’t.

There will be new costs. We need to determine whether and how they ought to be borne.

Our latest health care video short is up: “Why Consumer-Driven Healthcare Beats Socialized Healthcare.” And John Hinderaker of Powerline has an incisive analysis of the president’s speech last night to a joint session of Congress. The passage that stood out to me was this one about competition:

This seems to me to be the most critical moment in Obama’s speech:

My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down.

In fact, Obama and Congressional Democrats have zero interest in increasing choice and competition. If they did, there is an easy solution. There are over 1,000 health insurance companies in the United States; why do you think it is that in Alabama, one company has 90 percent of the business? It is because there are major legal obstacles to insurance companies operating across state lines. State legislatures, and lots of the companies, like it this way. Competition is hard. But if Obama really wanted to expand “choice and competition” in health care, all he would have to do is go along with the Republican proposal to allow health insurance companies to sell on a national basis. Like, say, computer companies, beer companies, automobile companies, law firms, and pretty much everyone else.

The video and transcript of President Obama’s speech is available here. And more Acton analysis of healthcare policy is available here.

Today Dr. Donald Condit looks at a new federal proposal called the Patients’ Choice Act, which promises more freedom in choosing health care insurance. “The PCA will enhance patient and family ability to afford health care insurance and incentivize healthier lifestyles,” Condit writes. “In addition, it would surpass other options in fulfilling our social responsibility to the poor and vulnerable.”

Read the commentary on the Acton Website and comment on it here.

I haven’t started Marvin Olasky’s new book yet, but here’s a bit from the abstract of a new NBER paper, “Rules Rather Than Discretion: Lessons from Hurricane Katrina,” by Howard Kunreuther and Mark Pauly. Speaking of property owners who suffer severe damage and don’t have the resources to rebuild:

To avoid these large and often uneven ex post expenditures, we consider the option of mandatory comprehensive private disaster insurance with risk based rates. It may be more efficient to have an ex ante public program to ensure coverage of catastrophic losses and to subsidize low income residents who cannot afford coverage rather than the current largely ex post public disaster relief program.

That solution doesn’t sound too promising to me, and it strikes me as a false dichotomy. Are the only two options government action before or after the fact?