Conservative roots of Obamacare
by Kenneth Thomas
Conservative roots of Obamacare
The pile-on continues. As I discussed in February, Stuart Butler of the Heritage Foundation wrote a breath-taking op-ed in USA Today (via Don Taylor) denying that he fathered the individual mandate. In fact, his revised 140-page research paper was published January 2, 1989, before President George HW Bush came into office, let alone President Clinton, whose proposals Butler says his research was directed against. Two conservatives, Avik Roy of Forbes and James Taranto of the Wall Street Journal, played strong roles in locking down the point that Butler was the first to propose the mandate.
Today, J.D. Kleinke of the American Enterprise Institute goes straight to that 1989 report in a New York Times opinion piece to once again lay the mandate at the feet of Heritage. And why not? According to him, the Affordable Care Act is a conservative’s dream.
The rationalization and extension of the current market is financed by the other linchpin of the law: the mandate that we all carry health insurance, an idea forged not by liberal social engineers at the Brookings Institution but by conservative economists at the Heritage Foundation. The individual mandate recognizes that millions of Americans who could buy health insurance choose not to, because it requires trading away today’s wants for tomorrow’s needs. The mandate is about personal responsibility — a hallmark of conservative thought.
Kleinke argues that Romney’s incoherence on health care stems precisely from rejecting his accomplishment in Massachusetts. Romney can’t offer anything better than the ACA because it is the only conservative way to overcome the problems of the health care market while remaining based on the market and individual responsibility. With no single payer and no public option, it is not surprising that, as he puts it, “the health insurance industry has been quietly supporting the plan all along.”
Aside from his odd notion that single payer represents a “government takeover of health care” (Canada’s Medicare is not the United Kingdom’s National Health Service), Kleinke’s column is on the money: historically, the mandate was developed by Heritage economists, the ACA more broadly relies on conservative rather than liberal principles, and many liberals have been unenthusiastic for just that reason.
Heck, I’m unenthusiastic (single payer!). But it’s a big improvement over the status quo that is already providing benefits to millions of people, whether for young adults, the millions of consumers getting rebates due to the medical loss ratio rule, or for seniors getting rid of the donut hole and gaining free preventive care.
crossposted with Middle Class Political Economist
Hi Ken:
Since you wandered ino my neck-0f-the woods and my healthcare insurance paid ~90% of a $24,000 bill; I think I can add to your post a bit.
It was cited at Demos that 71% of the youth of America did not have healthcare insurance not because they did not want it; but the prime reason was, there were no suitable alternatives and they could not afford what was being offered. The PPACA takes care of this several ways; increasing the age limit in which parents can keep children on their plans; offering plans such as the Bronze plan which while minimal in coverage is stll a suitable coverage and affordable; and by having subsidies for those making low wages and up to 400% of poverty. One million young people can seek coverage under their parents plan. 27% of all young people after schools loans and credit card debt claim medical bills are one of their highest concerns. http://www.demos.org/publication/state-young-america-poll
Besides also eliminating the maximum on insurance policies, what we willl gain in 2013 and onward::
– Medicare currently reimburses providers 70% of bad debt. That will reduce to 25% (starting in 2013) Savings: $10 billion/decade
– “Better align GME with actual costs of patient care” i.e. pay teaching hospitals 10% less (starting 2013) Savings: $9 billion/decade
– “Better align payments to rural providers i.e. no more add ons for remote hospitals starting 2013. Savings: $2 billion/decade
– Lower payments to Critical Access Hospitals from 101% of reasonable costs to 100% and eliminate the designation altogether for hospitals within 10 miles of another hospital. Savings: $4 billion/decade
– Medicare Payment Advisory Commission has determined that Medicare pays too much for skilled nursing, long term, inpatient rehab and home health. Payments will be gradually “realigned” starting in 2014. Savings: $32 billion/decade
– Equalize payments for post acute care for certain conditions ie knee and hip replacement, hip fractures, pulmonary diseases.
Savings: $4 billion/decade
– Currently drug companies rebate to the govt. Medicare would get the same rebate as Medicaid Savings: $135 billion/decade
– Simplified Medicaid and CHIP matching rate that has automatic increases in recession. (begins 2017) Savings: $14.9 billion/decade
http://www.cms.gov/apps/docs/ACA-Update-Implementing-Medicare-Costs-Savings.pdf
And what’s even better is the Free Market will provide the 28 year old man with the RIGHT to pay the same as a 60 year old women while merely adding in the RESPONSIBILITY that he do so.
What a deal for him!
Not like car insurance where the 60 year old woman would throw a hysterical fit if she had to pay what a young male pays.
Equality must be carefully applied, and indeed it is here.
And yes, yes, children, I KNOW the ONLY WAY ONLY WAY ONLY WAY ONLY WAY to cover people with pre-existing conditions is to make everyone pay the exact same amount. I mean, really, dividing people into 10 year age groups and by gender, while ignoring pre-existing conditions is EASY, but DOES IT MAKE THE WORTHLESS YOUNG MALE ANIMAL PAY UP? DOES IT? NO.
And remember, young male, your parents had every right to kick you out of the house at 18…. nobody owes anyone anything. What’s wrong, can’t take care of yourself?
Personal responsibility, I wish more young male animals had that.
whatever
i got a little confused by the end of your rant
but as for the young male paying the same rate as the 60 year old… that is a step in the right direction:
older people tend to need more expensive medical care than younger people… and less money to pay for it.
what makes sense in stead of calculating your risk for the current year and charging you a premium accordingly is to take the risk for everyone for the current year…. or for each person over a lifetime… it amounts to the same thing… and charge a premium accordingly and pro-rate it over the working lifetime of that person.
i don’t think insurance companies can do this, but the government could.
it might help you if you could remember that you won’t always be a worthless young man. some day you may be an old man glad to have already paid for your health insurance.
Dale –
Well done. And high marks for politeness, too.
Cheers!
JzB
whatever:
No, a young person does not pay the same as an older person. Within the MLR there are ratios with the younger crowd being judged at 100%, smokers at a higher ratio, and the oldsters paying up to 3 times more than the younger crowd. So there is a difference in who pays what by age and why smokers do not pay a higher amount than oldsters is ridiculous.
To answer your other point about pre-existing condition? You, I, Dale, Jazz, and everyone pays for people without insurance who come in the back door. It is picked up by Medicaid and paid back to hospitals by the gov. By requiring insurance, the fees are paid by people who have no insurance, can not afford insurance by the commercial market, and come through the back door. No one, no one has ever determined how much this cost is. Urban Policy Institute has calculated what the cost might be if the PPACA was never passed. You may want to read it sometime to gain a better understanding of what those hidden costs might be.
Dale:
Nice thoughts and you are dreaming again. If I did the same with SS, you would be all over me. Instead of imagining, why not study the PPACA and understand what is in it rather than potentially confuse the issue? It would help to have an informed contributor.
Jazz:
A for politeness by Coberly and a D for content on the PPACA.
run, thanks for the additions and comments.
No, a young person does not pay the same as an older person. Within the MLR there are ratios with the younger crowd being judged at 100%, smokers at a higher ratio, and the oldsters paying up to 3 times more than the younger crowd. So there is a difference in who pays what by age and why smokers do not pay a higher amount than oldsters is ridiculous.
Link or you are just making things up. Here is a link to “gender discrimination” being outlawed in Obamacare:
http://www.americanprogress.org/issues/women/report/2012/05/02/11512/women-and-obamacare/
Thanks for “addressing” that point by ignoring it. Maybe Coberly can “politely” explain to me how I might at some point have a gender change surgery at which point it would benefit me.
older people tend to need more expensive medical care than younger people… and less money to pay for it.
That is an outright lie. The average net worth of Americans in their 60s and 70s is hugely, hugely higher than the average net worth of Americans in their 20s. Though it is true that most people in their 20s today are stuck at near zero. So their net worth will probably also be low in their 30s. Who cares about them? Coberly will never be 20 again. Ha ha.
it might help you if you could remember that you won’t always be a worthless young man. some day you may be an old man glad to have already paid for your health insurance.
And if the program is canceled or cut so I get little or nothing from it, you’ll already be dead having taken my money. Well it looks like you can’t lose. That’s smart.
run
i think we can safely ignore “whatever” for the present (not forever. his kind is what makes it possible for the politicians to get away with stupid lies).
but first, i was not commenting on ACA… i know almost nothing about it… as you correctly observe. I do know that i believe that it will prevent “single payer” which is the only way we will ever have lower medical care costs… but i was hardly debating the details of ACA.
as for Social Security.. feel free to comment on my arguments about SS. I believe those arguments… mine… are simple enough for anyone to understand who takes even moderate care with the details of the argument as presented… i do not send anyone off to research arcane law, or worse, the opinions of “non partisan experts.”
but as to health care… let me state my opinion again, as clearly as i can:
charging a premium based on “age” is not sensible. young people tend to be healthy and “don’t need” insurance.. or at least are very likely to feel that they don’t need it at the price offered. on the other hand by the time someone is old enough to see the need for insurance, he cannot buy it at a price he can afford… unless, of course, he is one of those seniors that drive up the “average net worth of seniors” as “whatever” stupidly misunderstands (sorry, did i lose my politeness merit badge there?).
what makes sense is to figure a lifetime “expected cost” of medical care, and then prorate the premiums over a working life time, so that by the time you reach retirement age you will have already paid your expected costs. since its a little hard to guess where “medical inflation” will leave us forty years in the future.. an easy way to accomplish the same thing (paying expected future costs) is simply to pro-rate the current costs across the entire population and make the premium the average of those costs… instantly solving the “prior condition” problem at the same time. (we all have prior conditions… just don’t know it yet. and of course making the “old” pay for the motorcycle accidents of “the young.” life being so unfair and all.
to me the ACA is a stupid clumsy way to pay for health care, and only the political power of the insurance companies “justifies” it. so don’t mind if i keep on “dreaming” about a rational way for a country of 300 million people to pay for the health care they hope they never need.
btw
to the extent i made my point clear some will object that a flat premium (tax) would be hard on the poor.. even “unfair.”
i don’t think it would be unfair, but i agree it would be hard. so i would be in favor of making that premium a “flat” tax based on income but capped at a reasonable cost for the insurance at the higher income levels. some economics sophomores (with ph.d’s) would still object that that is a “regressive
tax” because the rich pay a lower percent of their income than the poor. what they forget is that it’s not really a tax, but a premium, and we should no more expect the rich to pay for our health care than we expect them to pay for our groceries. but since the rich would be paying more actual dollars for the same “risk” than the poor, the “tax” would actually be wildly progressive. the “rich” would have to rationalize their higher premium as an “extra premium” to cover the risk that they could one day become poor. at a capped level this could make sense. with no cap it becomes untenable.
one good thing about a direct, transparent, and capped “tax” to pay for health care is that it would direct everyone’s attention to the cost of health care and away from the fantasy that “someone else should pay for it.”
but as long as the body politic consists of people with the intelligence of “whatever” this will remain a dream of those without hope.
to be fair… a little… there are those with more intelligence than “whatever” who are too close to being medically needy themselves to be able to resist the immediate promise of some help from the ACA to have much patience with ideas from people like me that depend on the people and politicians suddenly getting sensible.
whatever:
I do not have time to pull it out of the PPACA so I pulled a recent Democratic Underground article which links to a WSJ article specifically addressing the issue of seniors paying more than younger people. http://upload.democraticunderground.com/1002888729
In fact the insurance companies do not like it and companies such as Humana and Aetna are lobbying mightly to change it to 5 times which defeats the purpose of providing affordable healthcare for all. These ratios are established and based upon the lowest cost insuree which in my best guess would be you. The elderly are paying 3 times what the younger insurees are paying under the PPACA. What is a joke is smokers getting by at 150% of the payment made by the younger insurees . . . why should they be granted such a boon??? It is one of the few things other than salt, fat, and sugar which is guaranteed to cause health issues.
Your initial post deliberately stated a 28 year old versus a sixty year old, compared it to auto insurance which has far less financial cosnequences and you can out grow it, and then drew another parallel to a small percentage of elderly rich as opposed to the vast majority of the elderly who survive on SS. In each case you are drawing a comparison to young versus old. I answered you in an old versus young fashion.
Your point of you paying the same as a 60 year old has no basis. I will read the American Progress Org if inded they make the point of a 28 year old paying the same as a 60 year old. This is not the same as gender discrimination and your brief remarks do not establish a basis for claiming such either. You are not clear.
run
i guess the insurance giants are figuring that a young smoker won’t get sick until he is old, so no reason to charge him high rates while he is young,when they can charge all old people high rates to pay for that smokers emphysema.
as for “whatever” being a “lowest risk,” surely there is some added risk associated with being stupid.
If someone is embarrassed or put-off by personal stories, I advise skipping this post. It doesn’t add to the ACA debate as it is just an isolated datum.
Yes, car insurance is priced by risk but medical costs from extremely bad car accidents often, if not almost always, are born by the medical insurance of the victim(s). Illness does not tap car insurance except in rare cases.
My personal datum. I was crippled in a car accident caused by a 19 year old thinking he could work overnight, party all the next day and work a second night. He fell asleep at the wheel on his way home and robbed me, my insurance company, and my medical insurance company of several hundred thousand dollars PLUS the enormous health consequences since the accident happened. (I was an avid bicyclist who ran up a couple of hundred miles per week and now I am a physically worthless slob.)
Now, why am I telling you this seemingly off topic story? (And some of you have had to hear it before.) It is because I shouldn’t have to pay more for my insurance than the person who caused most of my health problems. I know, I know – let me say it because if you do, I will probably explode in bitter anger. LIFE’s NOT FAIR and it’s too bad this happened to me but, who cares? It is besides the point.
Or is it?
How many ways can we price health insurance. Some ideas are:
1) Genetics is in the top five of the indicators of ultimate cost.
2) Children age -9 mo. to 2 years are pretty costly too.
3) People with hard labor jobs; people with dangerous jobs; people with stressful jobs. There must be a way to sort these.
4) Along with genetics comes race and sex.
5) Some people are bad for the health of others – young or alcoholic or elderly …. drivers, smokers, drinkers, some mental health, etc.
6) (I don’t want to put smokers and drinkers because, quite honestly, most studies say that these die young and cost society less.) But, OK, I’ll put it here anyway along with people who eat too much (unless they have accommodative genetics), etc.
7) It is imperative that people who have died be back charged if their deaths cost too much. This is ease the societal burden of end of life costs.
8) Insurance for someone with pre-existing conditions must be charged according to true cost and insurance companies should be allowed to raise their premiums if the insured person becomes ill since it eats into the shareholder’s dividends.
If you have gotten this far I am surprised. However, if a 28 year old goes skiing and breaks his neck, shouldn’t we just leave him laying there since he didn’t insure enough to justify treatment for a broken neck. And if he gets married and has the misfortune to have a child with a heart problem, should society pay to cover those missing age-based premiums? Of course not!! Society should raise his insurance above the cost of the treatment.
Anna
i tried to cover that by saying we all had pre existing conditions, just didn’t know it yet. i think the answer is a single payer plan in which we all pay the same premium irrespective of age and other pre existing conditions. it’s too hard to sort out what is a greater risk, and what is a lesser… and not “fair” in any case if we understand the whole point of insurance.
i made the concession that since this would probably unaffordable to the poor, that the premium should be based on income… but not to the point where people with very high incomes felt they were paying for the health care of everyone else.
i’m willing to pay my share. not so willing to pay “what the market will bear” which is what the insurance companies have been offering, aong with fine-print refusals to pay.
i am paying “mandatory car insurance” because there is no way to tell me from, say, “whatever” in terms of having an accident some time in the future.
i didn’t like that at the time i had to face it. still would prefer that if the state makes be pay for insurance it would provide the insurance and not make me deal with lying corporations.. and pay for everyone’s wrinkled 50,000 dollar sheet metal sculpture they leave in the safeway parking lot..
but this is a ramble turning into a rant.
i do hope you see yourself as more than “a slob,” and that the universe turns out to be such a place that such things have answers. we have been offered the hope.
anna:
You and many of the others are forgetting something, commercial insurance and even the much slower growing Medicare are reflective of the overall rising healthcare industry costs. Commercial insurance has been extracting more to line the pockets of their execs and for other costs not related to the care of the insuree.
Homeowners, healthcare, and automotive insurance companies invest their premiums in the stock market which is mostly why you may see premiums fluctuate. The PPACA say regardless, 80% and 85% for individual and group insuree premiums must be applied to the care of the insuree or refunded (MLR). Many people saw refunds this year and even the owner of this blog (MA resident) saw one also because he probably had no or little care. The PPACA today applies a ratio of 3 times the cheapest premium for the elderly. It is enough to distinquish the difference. There is much for the healthcare industry to give back to people. 100 tablets of Ferrolip Iron tablets sold for ~$6.00 and cost Baxter Travenol < than a $1 to make. Sodium Levothiroxine (thyroid tabs) is even less in cost. A Fenwal blood bag is relatively cheap to make. Shall I go on??? Raising the age for Medicare disenfranchising physical laboring peopl, those who live in poverty, blacks, those in jobs of extreme risk or stress (veterans pre-1980s), the disabled mentally, genetically, and physically, etc. In many cases the Medicare age should be lowered. What some like Romney, Ryan, Cowen, Feldstein, Rosser, PGL, Obama, etc. refuse to acknowledge is why Medicare is increasing at 2.4% yearly and Commercial Insurance at ~8%; both are driven by the healthcare industry. Attack the root cause and not the reflective halogram of it. Obama has pledged to turn Medicare loose in negotiating more pricing. If you wish to pay for expensive death, cut military costs first. We invest way too much money in our military at the expense of domestic productivity and programs. Since the Chin dynasty, every country who has done so has found itself relegated to tier 2 or 3 status globally. We are well on the way to such. Anna, good luck to you. Having a brain and the ability to apply your intellect is worth far more as it is surprising absent today. Thank you for your comments.