Republicans’ Refusal to Understand Insurance Still Matters
When attempting to repeal and not really replace Obamacare, various Republicans demonstrated opposition to the idea of insurance. They objected that healthy people shouldn’t subsidize the health care of sick people — that is their honest view of health insurance is that they are against it.
I didn’t keep track of recent examples, googled, and have old examples
Paul Ryan (paraphrased — listen to him if you must — I can’t force myself to listen)
“The conceit of Obamacare,” he said at his press conference on Trumpcare, is that “young and healthy people are going to go into the market and pay for the older, sicker people.” That’s why Obamacare is in a “death spiral,” he noted.
Their immediate problem is to explain why they don’t think health insurance should be eliminated entirely. Their much more serious problem (which I hope will be fatal to their ideology) is that they have to explain why it is reasonable to want there to be health insurance, want there to be community rating and coverage of treatment of pre-existing conditions, and oppose equalitarian redistribution in general.
They ususally understand that they must carefully avoid trying to explain how they are for insurance but against community rating (or for community rating but against welfare) because people might decide to support community rating (and universal basic income and who knows what else) if they understood why Republicans oppose them.
Republican logic is that due to the will of the market or God (to the extent that they distinguish Them at all) people get what they deserve, so the poor deserve to be poor and so do the sick. Most grownups (hell most 4 year olds) have noticed that the world doesn’t work that way.
AFter the jump, I will try ot make an honest to
God the market effort to make sense of Ryan et al. I hope this shows how dangerous the discussion is to them.
The logic must be that insurance should cover new conditions but not pre-existing conditions. That is, insurance against risk (uncertainty which is not yet resolved) is good, but ex ante redistribution is bad.
It is very easy to understand why unregulated insurance doesn’t cover treatment of pre-existing conditions (is medically underwritten). Any insurance company which paid to treat them would select the sick. This is the very classic case of adverse selection. Economists have understood for decades that this implies that the free market outcome can be Pareto inefficient. It is easy to write a model in which everyone is made better off by an individual mandate to buy insurance & regulation of insurance companies (in 2 words by Obamacare).
So the fact that the market selects medical underwriting doesn’t imply that it is efficient in even the weakest possible sense.
Opponents of Obamacare have to find some other justification for insurance against risk (uncertainty which is not yet resolved) but not ex ante redistribution based on bad outcomes which once were mere risks.
It is hard for them to convince people who know that bad things may have happened in their bodies, which don’t give symptoms and of which they have no clue but which can be detected if they try to get insurance.
One of two apparently healthy people can have a small malignant tumor. In this case the uncertainty is resolved (one is in deep deep trouble already) but no one knows. If an insurance company requires a diagnostic test (say look for CEA in the blood) which reveals the tumor, that person has an additional (less horrible but horrible) problem. Whether uncertainty has or hasn’t been resolved depends on how closely you look. There may be geniuinely random events (quantum mechanics say so) but most of what we perceive as chance is, in fact, events determined by things we don’t observe. The perception of a probability between 0 in 1 is due only to our ignorance. It can’t be central to what is right and what is wrong.
Brooks’s argument is that some differences in health are due to behavior, so equal access to care means helping people who have taken poor care of themselves. His logic is that sin can lead to bad outcomes and sin must be punished so bad outcomes must not be ameliorated. Many find this argument powerful. It is separate from the argument that amelioration will affect incnetives (no one has ever thought “hey I’ll smoke another pack — sure I’ll get cancer but my chemotherapy will be financed by Obamacare”). I can’t argue with people who think that human suffering is sometimes good (and that would include anyone who believes in hell, that God is good, and elementary logic). I can only hope that they are in the minority.
The point of this post (if any) is that support for community rating is deadly to the Republican ideology. It is redistribution from the currently healthy to the currently sick. It is not enforcing an insurance contract which people voluntarily signed. It is very hard to explain why health insurance premiums should be community rated yet all other misfortunes but pre-existing conditions should be just the sufferer’s tough luck.
It is very hard to accept any trace of the GOP’s ideology or policy program, once one accepts that insurance is good (and almost everyone does in that they want insurance) and that there is no profound moral difference between insuring against uncertainty which is unresolved, uncertainty which is resolved but we don’t know how, and uncertainty which is resolved & we do know what happened.
If we should insure people with pre-existing conditions, we should insure people born to poor parents. Once one understands that the distinction between insurance and ex ante transfers is operationally impossible and would be morally irrelevant even if it were possible, then the whole case for Laissez Faire collapses.
~150 million people get healthcare insurance through employers. Another 100 million qualify for Medicare and Medicaid. What was left was the young and healthy those who were old, or those who had pre-exiting conditions in a non-group setting. If they could afford it, the young and healthy were able to get insurance leaving the rest to fend for themselves.
With the advent of community rating, the dynamics changed. The sliding scale of subsidies up to 400% FPL caused insurance to become within reach. Kaiser Family Foundation estimates that, among people currently buying non-group insurance, the average subsidy was $2,672. For poorer, often younger people, that check was often times larger. So while the young and the healthy might be subsidizing the old and the sick, they’re receiving an even bigger subsidy themselves from the federal government.
Republicans skew what is really happening with the ACA creating an illusion of millions of people when in fact those not gaining subsidies is smaller. Again Kaiser suggested the numbers were about 8% of those in the individual healthcare markets. Even though young they still suffer risk which can be accidents, disorders, or diseases which at life threatening. “Young people grow old. Healthy people get sick. Rich people become poor. The people overpaying to keep costs low today are the people underpaying 10 or 20 years from now.be accidents, disorders, or diseases which at life threatening.”
The one issue I have is the concept of having skin in the game by ever increasing deductibles and co-pays. It is here I believe the impact is greater on more people than those beyond 400% FPL. This was an idea that Congress would not leave alone. Congress felt individuals and families would make smarter and cost effective decisions in using healthcare. Instead they chose not to go to the doctor to avoid the costs. This needs to change. Some descent reading on the topic. https://www.washingtonpost.com/news/wonk/wp/2013/08/19/why-obamacare-is-good-for-young-people/?utm_term=.c59d8f010c1c
They just haven’t found the right words to sell pre-existing conditions and they know excluding them is popular. Nor it is solely a matter of personal responsibility. They may not believe in evolution but they do believe in natural selection and those with poor genes should be weeded out and wealth is genetic as much as effort.
The social Darwinian notion of weeding them out ignores the fundamental reason the human species has done so well: cooperative action. Whether it’s hunting in “packs”, farming as cooperatives, or other examples of improving and sustaining life and welfare, the basic fact of successful cooperation is a major theme in human history. A lay version of this observation is “we’re all in this together”. That is really the basis for insurance; mutual care through the generations. Ignoring it and retreating to the jungle is suicidal and I think, deep down, we all know that.
The loudest impetus against ACA seemed to come from people insured in the individual markets prior to ACA. They expected minimal changes because the President told them they could just keep what they were happy with. So I perceive that the first cut thinking by Republicans was what might address the concerns many of these people had that the plan they had, and particularly the pricing of that plan, was okay and they just wanted it back. The natural answer to that is money, but since it was also important for Republicans not to increase the public funds going into this they tried to reintroduce certain commercial practices that might move the individual market back in the direction of pre-ACA (very, very imperfectly) without just a special subsidy for those whom the promise of keeping a plan was broken. To me, Republicans should have more directly addressed this than try for some giant reform. They might have said: “well this broken promise cost this group of people about $20B a year (no idea but someone probably has an idea), so we are going to find $20B a year out of the income subsidies and Medicaid expansion and give it to them. It will be imperfect because the former President and Democrats should have just let them have their plans, but it is the best we can do without ripping this new individual insurance market from its moorings entirely.” But no, they had grand ideas instead of just addressing the biggest raw spot their base had over ACA.