My GMU colleague (and Marginal Revolution’s) Tyler Cowen explains in today’s New York Times why health-insurance mandates might well harm the very people that it is meant to help. Here’s a key paragraph:
The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages. In other words, millions of people would be compelled to spend lots of money on something they previously did not want, at least not at prevailing prices.
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Certainly making people pay for something they don’t want is what its all about. And I’m thinking that is what it has always been about. There is much to doubt about our political “leaders”, but we should never doubt their ability to manipulate.
the response to that would be that in the event of a major illness their inability to pay would be a burden on society as a whole.
The idea of “society as a whole” is a political construct – i.e., manipulation.
explain further
“Society” is a classification. An idea. A modern religion. Propaganda. But it doesn’t really exist.
Actually, people who die at a younger age cost less to “society” (whatever the heck “society” is) than those who live a longer life. Universal health insurance will lead to higher costs if it indeed leads to better health care outcomes.
It was a great article – I really enjoyed reading it this morning.
Why should health insurance be any different from car insurance – if you take a car out of your personal residence then you must have insurance. Whilst you can forego car insurance by not having a car, you can’t avoid health problems. Everyone gets sicks and requires treatment so why shouldn’t health insurance be compulsory?
“But then we are taking money away from the poor as they climb into higher income categories.”
How is this a bad thing? As people earn higher income their capacity to qualify for welfare stops. Besides as they climb into higher income categories the ‘poor’ are no longer poor.
Think of this: You and your neighbor get new cars. You spend time every month working on it, maintaining it, making sure to keep it going strong. Your neighbor drives it into the ground and neglects it, big time. Then the day comes when his car breaks down and you get a knock on your door… your neighbor says his car is broken, and yours is running well, and that this means you should pay for his new car… Is this fair Gil?
If the obese smoker down the street from me starts needing a great deal of healthcare then why is it my responsibility to help him pay for it?
I’m a 21 year old male with no serious health conditions, shouldn’t I be allowed to ‘risk it’ if I want and thus not get health insurance? If I choose to forego health insurance and elect to pay out of pocket for my doctors visits then why is it ok for the government to force me to buy insurance from them and subsidize others unhealthy lifestyle? It’s just plain stealing, not to mention it causes all the wrong incentives.
A few things… first, why is it stipulated that it is OK to force car insurance?
and… when it comes to risk Joe and myself, a 28 year old, don’t need every doctor visit paid for. I would love to be able to buy high deductible insurance.
I don’t have a problem with mandatory car insurance. Car insurance is required so that if you are at fault in an accident, the people you injure will be treated and the property you damage will be repaired at your expense.
Health insurance is intended to treat yourself at your expense.
Didn’t you just answer the problem brotio? People should have compulsory health insurance because no one knows when they’re going need health services. A young healthy person could be diagnosed with cancer the next day. A person can get out of car insurance by not driving a car but no one can get out of health insurance because anyone get sick or injured at anytime.
I don’t have a problem with mandatory car insurance. Car insurance is required so that if you are at fault in an accident, the people you injure will be treated and the property you damage will be repaired at your expense.
Health insurance is intended to treat yourself at your expense.
Are you saying you don’t like the concept of insurance Joe?
If theres a 1 in 100,000 chance of me getting an illness, and I voluntarily contract out my risk and ask to be put in a pool with 99,999 other individuals with similar risk as me – and then we all group to offset anyones catastrophic loss, that’s fine with me. That’s voluntary trade.
Forced insurance is simply subsidizing. Plus there are many things which don’t belong in insurance plans, like paying for each doctors visit and insuring people for things which are a direct result of their behavior (like can an insurance company insure an obese smoker against heart disease? He’s not going to ‘randomly’ get heart disease, his actions directly attributed to it – these areas are where insurance gets awkward IMO.
Well, first of all, let’s not call something which is supposed to cover all health care incidents from soup to nuts insurance. It is something else, something like a health care financing program.
Gee so you’re genetically healthy or do you believe health costs should be direct user pays because insurance is inevitably a business in which the safe and sensible subsidise the clumsy and dull-witted?
As I stated above, people who make poor health care choices are less costly than those who do not. Longevity means higher health care costs down the line.
Maybe he’ll live for another 5 – 10 years, hopefully I’ll live 10x that long. In which case I would agree that my ‘total health costs during my lifetime’ is going to be greater than his ‘total health costs for his lifetime’ but what does this matter? I’ll pay for my total health costs how I deem nescessary and he’ll do likewise. This gives me incentive to stay healthy as long as possible because being unhealthy, and living a risky lifestyle (drinking excessively, abusing drugs, driving recklessly, starting fights, etc.) is personally very costly – and it should be, otherwise everyone would do these things much more frequently.
This argument is akin to the bailouts. If Banks make the decision to behave in an unhealthy and risky behavior it gives the wrong incentives if we don’t let them take the loss which is the result of their behavior. By bailing them out, we tell them there is no consequence of their risky behavior – and this tells them that going onward, there is no check on their behavior so it’s perfectly rational to continue acting in a risky and unhealthy manner.
Back to your time perspective argument… I don’t want to pay more then I need to TODAY. I need to pay for food and tuition. TODAY if me and the incredibly unhealthy and risky person were in the same pool then I am paying for their healthcare. I have more urgent needs then healthcare atm so I try to optimize my lifestyle so that I don’t have any expenses in that area.
I am an individual with rights and responsibilities. Let me make my own decisions, and let me profit or lose from my decisions.
Cowen’s work was very good, but I still think you were more to the point when you said that “the only health care reform that some people want is one in which someone else pays for it.”
The issue is still redistribution. Without that, there wouldn’t be any other, not health care, nor anything else.
As you said, redistribution was “the bottom line.”
And there is no substitute for the conclusion that it doesn’t work, but, like any other intervention in the market, is completely counterproductive, bringing about the exact opposite result of what was intended, and, therefore, not reducing but increasing income inequality and “social injustice.”
That is the point that, whatever else we may say, we must never let them forget, that, first, foremost, and above all else.
Sorry to be such a nag about this, but, if you kids would pick up your clothes, your Mommy wouldn’t have to keep nagging you about it, would she.
Gil,
You claimed to have refuted my theory of redistribution.
The theory again: taking from the rich to give to the poor does not reduce but increases inequality.
Your supposed refutation of it: the equality after a complete, communist redistribution.
You are right, once there is no more market.
But since the theory assumes the market’s reaction to interference with it, the conditions when there is no more market are irrelevant to the theory.
Anyways, at least you’re facing the challenge, and I respect you for that.
Well, the actual practice of communist states demonstrates that they are quite unequal – which is why party members have special shops, etc. Capitalist nations are far more equal.
The problem with the mindset of deciding not to get coverage because you are healthy implies that when you do get sick, everyone should turn their back on you and let you fend for yourself. Otherwise, you are assuming that people’s good will should look after you such as the case of the doctor who decides to pay your costs out of the goodness of his own heart. While the obesity problem can frustrate those of us who take effort to look after ourselves, there are many conditions that are built into our genes and for which we have little control.
If the risks were minimal versus the costs, nobody would want to pay for health care, but for anyone who has experienced illness, the reality is that costs can escalate quickly and often at a time, when your ability to earn income has been affected.
While there is an argument that the poor will be affected by reform, the subsidies are intended to address this to some level. At the same time, keeping those with low income able to earn a living is the best way of having an option of collecting taxes from them later on.
The key phrase within the key paragraph here is “at least not at prevailing prices.” It’s foolish to think that all people currently without health insurance simply don’t want it. The Kaiser Foundation and PBS did a great survey on the uninsured that shows that the majority are employed but in low-income jobs, and that they don’t have insurance because it is too expensive (74%) and their companies don’t offer it (48%).
We (in the comments section here) seem to be losing sight of the cost issue here in our philosophical debate over the fairness of cross-subsidizing. If people need health care but are denied access because of the inefficient structure of the current system and resultant high cost, that’s a fundamental human rights issue, and that’s what the legislation (however bastardized it is becoming) is ultimately trying to address.
The main problem, as Cowen points out, is not as much the idea of universal care as the fact that we are trying to provide universal care at a time when health care costs continue to soar. If universal care and other actions don’t bring cost down, we’re all in trouble.
Health Insurance in the US today is really a buying club. You are paying someone to negotiate your health care rates and pay a portion of the charges by being a member of the club.
The difference with car insurance is that you can freely choose whether you want to own a car. You can take a taxi, train, bus, walk, etc rather than buy a car. The auto insurance requirement is liability only, so the mandate won’t fix your car.
The govt mandate for health “insurance” gives no one a choice. It’s forced on the individual. Any product that is forced on the individual cannot be expected to respond to market forces. I have no idea what the consequences will be, but I would guess they won’t be good.
Events which are distributed randomly, like 1 in 100,000 get disease XYZ or like 1 in 1,000,000 people in this region will have event ABC cause property dmg, these are insurable because every person in the pool has an equal % chance of having the incident.
I am not convinced about insuring smokers for lung disease, or obese folks for heart disease, or alcoholics for car insurance, etc. These events are not randomly distributed within a population but are the cause of the persons behavior.
Well then Democrats are trying to ramdown ‘health care financing programs’. Mommsen, it’s very difficult to get coverage besides ‘soup to nuts’ because of the perversion that has gone down in the insurance industry. Americans have come to expect the 1st dime of cost for every doctors visit to be offset by insurance.
People should buy health insurance because no one knows when they’re going need health services. No compulsion. I’m perfectly willing to let people gamble with their own lives.
The compulsion for auto insurance is to prevent your negligence from causing me financial harm. It’s none of my business if your negligence does you harm.