Health Insurance Requirement Not a Bad Idea
I don’t like the new health care reform because we can’t afford this right now. We are facing trillion dollar deficits for years to come! We should get our financial house in order before trying to use government funds to subsidize health insurance for millions of new people.
However, many on the right are overreacting to certain aspects of the bill. For example, the idea that you must buy health insurance or else pay a penalty is not so bizarre. It is normal practice now that you must buy insurance to drive on the roads. And everyone must pay Social Security and Medicare taxes. Thus, these programs require your mandatory participation. The requirement to have health insurance will one day be mainstream thinking too. (Consider the alternative to achieving near universal coverage: a single-payer government-run system like in Canada and Europe.)
In fact, the idea that you must buy health insurance or pay a fee is a Republican idea:
WASHINGTON – Republicans were for President Barack Obama’s requirement that Americans get health insurance before they were against it. The obligation in the new health care law is a Republican idea that’s been around at least two decades. It was once trumpeted as an alternative to Bill and Hillary Clinton’s failed health care overhaul in the 1990s. These days, Republicans call it government overreach.
Mitt Romney, weighing another run for the GOP presidential nomination, signed such a requirement into law at the state level as Massachusetts governor in 2006. At the time, Romney defended it as “a personal responsibility principle” and Massachusetts’ newest GOP senator, Scott Brown, backed it. Romney now says Obama’s plan is a federal takeover that bears little resemblance to what he did as governor and should be repealed.
March 27th, 2010 at 12:37 pm
Dan. I have a question - I get the impression that we both support everyone having health
coverage but we differ on the method of implementing this coverage. My support for single
payer has to do with minimizing the overhead involved [1-2% versus 25-30% with our current
hodgepodge] but if CATO can come up with more efficient means of providing everyone with
health care then I am open to reason.
March 27th, 2010 at 3:46 pm
William,
I don’t like single-payer because it puts too much power in the hands of government. Part of the reason the system can cost less is because rationing is used. I prefer a system of private health insurance, and private health care providers, even if it costs more.
March 28th, 2010 at 4:16 pm
Wouldn’t the issue of rationing depend pretty much on how much of the GDP we were willing to
spend on health care?
March 28th, 2010 at 11:20 pm
Sorry this is long, but there are so many things wrong with this post and the following comments.
Car insurance and health insurance are two completely different things. Car insurance that you are required to buy is actually liability insurance against hurting someone else or their property, unlike health insurance which is insurance against things that happen to you, not someone else. Adults should be able to make choices for themselves and not be compelled to have to purchase something that they don’t want if it is only affecting them. It is your health, not someone elses. It only becomes someone else’s problem because we have gone away from individual insurance to collective coverage, so people have to be concerned about how others live their lives because it may cost them money.
As for Social security and Medicare, they were wrong too. They just were appealing because they are basically a pyramid scheme. The first people or in these cases the people who reached 65 in the first 20 years or so after the inception of these programs got something for nothing or very little. The people in the next 10-20 years or so did alright as well as we just kept raising the tax level to compensate them. After this, however, and people would have been vastly better off putting the money they put into social security & medicare into their own accounts. They would likely have enough money that we wouldn’t have even needed a medicare program and most could have retired millionares.
I do agree with you, however, that if this mandate isn’t repealed within four to six years the requirement to have health insurance will become mainstream thinking. That doesn’t make it right, however, just like forcing you to put your hard earned money into a collective pot for someone elses retirement, is not right either.
The reason that mandates are appealing is because they are simple. Just force people to do something and then we don’t actually have to provide a better product or service or something that people would be willing to buy without the mandate. Mandates make us lazy and allows for much lower quality.
I also believe we could achieve nearly universal coverage if we let the free market work far more then it is today and then help the people that are still in need after this through charity or if necessary through gov’t. If insurance companies were allowed to sell bare-boned high deductible plans and could charge different prices based on risk we could cover most people. I would even allow for telling companies that they had to cover everyone including pre-existing conditions. Just allow them to charge not for the condition but the lifestyle choices that may have made the condition possible such as smoking, obesity, high cholestrol, high blood pressure, age, sex. This would eliminate higher charges for people that have genetic problems or were in accidents but charge the people more that are not taking responsibility for their own health. Younger people wouldn’t be priced out of the market. Then to entice freeloaders tell companies that after a short sign-up period where everyone with pre-existing conditions will be covered immediately, they can then not cover pre-existing conditions for say up to one year (with the exception of newborns). They will have an incentive to not wait until they need the insurance to get signed up.
As far as Romney and the other fake conservatives, we should be running as fast as we can away from them and their ideas that chip away at our individual liberty. They can be part of the movement, but they should not be leading it as they have been leading us astray.
William, do you seriously believe that overhead would only cost 1-2% in a single payer system? One of the biggest problem with single payer is that since you are not paying for the product or service with your money, you will demand more and more. Supply is limited. This causes rationing, long lines, low quality, and drastically increased prices. This is a big part of why our costs are increasing so much today (roughly 90% of costs are paid by a third party). The most vulnerable and the people most in need are the ones that usually get the short end of the stick. Contrast that with a free market where the individual makes the decision about where they want to spend their money. Instead of going to the doctor for the sniffles you take some OTC medicine and use your money for something else. Instead of ordering that test that has a 1% chance of finding something, you decide to take your chances and do something else with your money. Maybe they will make the wrong choice in the end, but it will be their choice, not some bureaucrats. While I don’t agree with you at all about the overhead costs, in fact, if you counted all overhead, administrative, fraud, and abuse costs it wouldn’t shock me if businesses actually do it cheaper then the gov’t. Why? Because they have the right incentives to keep costs low, while the gov’t does not. And even if the gov’t could do it somewhat cheaper in this regard, the increase in costs due to what I discussed above would overwhelm any benefit from lower administrative costs.
What it all boils down to is that we are addicted to OPM (other peoples money) and until we can break this habit we will be doomed for failure.
March 29th, 2010 at 8:25 pm
TerryP,
“After this, however, and people would have been vastly better off putting the money they put into social security & medicare into their own accounts. They would likely have enough money that we wouldn’t have even needed a medicare program and most could have retired millionares.”
Yes, if all people would save. But tens of millions of people (and perhaps the majority) would not save nearly enough to retire and cover their living expenses and medical expenses. And then we would end up supporting them on some type of welfare program. I would rather have saving mandates than welfare for the retired.
“I also believe we could achieve nearly universal coverage if we let the free market …”
I know young people in their twenties who simply refuse to bother getting health insurance. For a healthy young person, catastrophic health insurance is only about $50/month. But they would rather use that money for a better cell phone service, eating out, and partying. Of course if they get injured, hospitals can’t turn them away. Taxpayers, or other customers of the hospial, end up paying for the medical care.
March 29th, 2010 at 8:28 pm
William,
Here is a table of wait times for medical care in Canada. This is a form of rationing. If I want medical care, I want to work this out between myself and a private medical care provider. I don’t want the government limiting my plans.
http://1.bp.blogspot.com/_otfwl2zc6Qc/S7Cav6vzJtI/AAAAAAAANGQ/_bZZZKlo2-4/s1600/canada.jpg
March 30th, 2010 at 9:28 am
Dan, If a young healthy person decides to not get health insurance and spend that money on something else, that is his choice and he has to live with it. It is not our responsibility then to bail him out when a problem occurs. He will have to live with that decision. If we always come to the rescue of these people that don’t want to take any responsibility, how do you think they will ever learn how to take on responsibility. And why should they if we continue to bail them out? Where are the parents? Should they not be the first in line to have to bail them out. What about charities?
I agree that people may not save as much as they need to, but that is because we have coddled them with our current system and basically told them they didn’t have to save. At least initially to overcome this I am not necessarily opposed to mandating that a certain percentage of pay is taken out for retirement, but that money must be left up to the individual to decide how to invest, be their property not a collective pot of money, and if necessary be able to get to it for emergencies, possibly with a penalty or taxes. The gov’t should have very little to no influence on what is done with this money other then saying it needs to stay in a retirement account until say 65 or there will be a penalty or tax. This is different then forcing someone to purchase health insurance that may not resemble anything close to what they would buy without gov’t influence (ie mandates, covering other peoples risks, not allowing for price difference based on age or risk, not allowing high deductibles, forcing the price up through many regulations, rationing, telling me what procedures or drugs I can and cannot use, etc.).
My suggestion with regards to retirement savings would be to have a flat tax with the first say $3,500 individual or $7,000 married of the tax go into a private, individual retirement account. If this money is taken out prior to retirement age you would pay a tax or penalty on the withdrawal amount, otherwise you have pretty much free rein to do what you want to with it within the account.
I agree we have a problem in that for the past seventy five years or so the gov’t has always come to the rescue of people not taking responsibility for themselves. We need to change this and get people to learn again how to take care of themselves and their families and not expect the gov’t or others to bail them out. We will still need charities to help people that still fall through the cracks, but the gov’t needs to get out of the business of bailing people out.
April 3rd, 2010 at 3:54 pm
Dan, I think the Obamaite goal is to see many people simply opt to pay the penalty fee on their tax-form at the end of the year instead of buying health insurance, therefore placing more and more people on the government plan. Companies can pay something like $750 dollars and drop employees onto the government plan if I understand correctly (might be wrong about that). Its a plan seemingly -designed- to get people onto government health care and to eventually run most private insurance companies out of business according to some commentators on the subject. I hope they are wrong about that, but I wouldn’t put it past the bill’s writers to have had this goal in mind. These are democrats and even their olive branches are usually trojan horses. I know…..Im cynical, can’t help it, -years of reading the newspaper.