What if the individual mandate fails?

Jun 13 2011 Published by under Medicine

I've always been ambivalent about the Obama health care reform plan.  It's good---no imperative---to cover as many Americans as possible.  But the creation of an individual mandate under the Commerce Clause seems to be causing a bit of a stir.  I have no idea what the legal outcome will or should be, but this might have been avoided.

Mandating that every American be covered by health insurance creates an economically feasible way to take care of sick people.   The law essentially requires insurance companies to take all comers, whatever pre-existing conditions they may have.  Without an individual mandate, there would be no incentive to buy insurance until you get sick, something that could no longer be called "insurance".   By creating a risk pool that includes healthy people, insurance companies are protected from collecting premiums only on people who are spending every cent and more.

But "requiring" people to buy insurance seems to rankle many Americans' sense of "freedom" (yes, I used scare quotes twice in one sentence---sue me).  What people really mean by freedom is freedom to be free riders, to let others pay for their healthcare.  This is what happens in a private system: everyone tries to maximize their profit and minimize their losses, as they should.  But we cannot afford that.

When we lost the single-payer or public option in the health care negotiations, we made the individual mandate, er, mandatory.  Both a single payer system (basically Medicare for all) and a public option (basically a safety valve on the private insurance system) would have made a Commerce Clause mandate irrelevant.  The solution is to simply make everyone pay for medical care, one way or another.   Create a health tax that supports everyone creating the largest risk pool.  How that gets divided up---whether by private or public insurance---can be fought out.

14 responses so far

  • marcus says:

    Absolutely true, but leaving the question of private versus public insurance to be fought out is a mistake. Private insurance options in such a system is essentially a pure deadweight loss offered up as a payoff to ideology. Why pay for duplicative insurance bureaucracies?; why limit options by creating competing "networks"?; why tolerate efforts to game the risk pool? A better result would come of the collective negotiation of a universal single payer (as in Medicare) with the various drug, hospital, and other provider interests (as in some, but not all, European countries). And you've bracketed entirely the possibility of using such a tax to fund a national health service, as in the UK, effectively making doctors, nurses, etc. salaried employees rather than small businesspeople (with the inevitable conflicts of interest that implies).

  • PalMD says:

    Yeah, I dig it, but you're a dreamer. Same dream as mine, but...

  • nathan says:

    No, the real issue that so many Americans have with these laws stepping on our freedom is that it's just another step of the growing federal nanny state, a growing tyranny (aka government) that snootily and subtly ignores the wishes of the majority of Americans. It says, "we know what's best for you" and makes big promises in pretty speeches. Gerald Ford said it best: "The government big enough to give you anything you want is big enough to take away everything you have." (often misquoted to Thomas Jefferson apparently). The ambivalence you mentioned at the beginning of your post is a good thing--this all sounds nice on the surface, but look at the big picture, what's slowly happening to this country: our liberties are being eroded by a government that claims to know what's best for us and our lives, when it can't even do something as simple as manage its own money well. Interesting post, but I'm afraid we are going to find this ends badly.

    • PalMD says:

      If a mature adult looks at the "big picture" and the little picture---each human being needing care, and the cost to the system of not treating them properly---a rational, humane person would see that it's not a "nanny state" question, but a human state question.

    • Fine; let these idiots sign a waiver that says "I am free" and we can let them lose their job and their house and they and their families can starve to death when they get sick and can't afford the hospital bills.

      You talk about liberties - what about MY liberty to make responsible choices and not have to drag your sorry ass out of the hole you dug for yourself? Fuck you; I will pay for your hospital care one way or the other, but I will NOT pay for your weak-minded ideology that drives up the cost of hospital care.

  • Neuro-conservative says:

    Do you take Medicare in your current practice? I recall that you previously discussed the possibility of dropping it due to low reimbursement.

    • PalMD says:

      Ive always taken medicare. It is the most hassle-free of all insurance.

    • Dianne says:

      I take medicare and medicaid. As Pal said, they're low hassle (except the HMO medicares which are really for profit insurance companies trying to scam seniors) and their reimbursement really isn't bad considering. However, my favorite "insurance" is the VA hospital: just do it and forget about it. No fuss, no muss, no arguing about whether the pancreas is covered or only the liver. Ironically, working with uncaring bureaucrats is one of the best features: uncaring bureaucrats are MUCH easier to deal with than bureaucrats with a monetary incentive to deny care.

      In short, I think that the US federal government is quite capable of running an insurance plan and should do it in preference to the current insanity.

  • I don't see what the problem is. Public and private medical practice coexist without any conflict here in Australia. Most doctors run their own practices. Either they charge their patients the full price and the patient claims most of that back from the public system or the practice bulk-bills, the patient just signs a form and the practice claims from the public system. Specialists often run their own practices and also work for salaries as sessional consultants at public hospitals. Large public hospitals are generally teaching hospitals, so such speciallists are at the top of the profession.

    Health insurance is reasonably affordable and most people have it, paid for by themselves, so there is none of this "lose your job, lose your health insurance". I am told that some companies pay for health insurance for their employees, but it is very rare and I do not know of any such company.

    There are both private and public hospitals. If you have insurance, you can generally afford a private hospital. The food is better (though the last time I was in one I was fed brown glop through a tube directly into the stomach until the last couple of days) , but they tend to be restricted in the conditions that they treat. For anything out of their specialities you have to go to a public hospital. As a private patient you are more likely to get a private room and you don't have to pay for your television. If you aren't insured you go to a public hospital and get the same level of care as a private patient at the same cost, nil.

  • genewitch says:

    As someone who lives in a household with a government employee with befefits, a veteran with VA benefits, a blue collar worker with company "insurance" and a couple of uninsured parties... The government employee gets the most attention when needed but still pays a bit ($5 copay on medicine, for instance, and under $100 for an emergency room visit, not sure of the exact cost.) The veteran has the best diagnoses done, but the VA won't pay for treatment (patella pain syndrome or something similar and loss of most connective tissue near the knee and shin splints - something that evidently can be fixed with Stem Cells in Utah or thereabouts) and the only one who pays for their own insurance is too scared to use it, and has to be dragged to the doctor after months of chronic pain and suffering - because of fear of the costs of going and lab work and medicine and everything else.

    One of the uninsured recently went through a county-paid medical insurance system thing, and, barring administrative issues, probably did and still receives the most consistent care and best prices on medicine overall.

    I can definitely, with these stories, see a need for each of them except the government employee, to have sort of a parachute medical insurance as a backup. Catastrophic insurance is a good idea, yes. But when you can't work because your shoulder hurts so bad you can't lift your arm and you don't want to go to the doctor due to cost, well...

    And don't get me started on the VA. the person who was on county funded medical services received exponentially better treatments than most of the veterans i know personally, especially the older ones.

    single payer public option whatever. I don't care. We're a civilized country that has people dying because young people see health care as an avoidable cost at higher and higher age ranges, and yes, insurance is a business, and they can't make money if their risk isn't mitigated. As long as they don't fleece the public with a new system i am all for everyone having care, even if it means the richest 10% pay an extra 16th of a cent in taxes for every dollar they make.

  • SurgPA says:

    Pal, You reflect my thoughts about this as well; I'm not sure they approached the mandate in the best way, but it is certainly needed. As a country, we are conflicted about health care as a human right. On the one hand, we don't want to be forced individually to pay for care (ie no mandate), but God forbid someone be turned away for lack of ability to pay (I'm thinking of EMTALA, leaving the moral compass of physicians out of this for the moment.)

    The opponents of the individual mandate are intellectually dishonest (perhaps with themselves) in failing to deal with a couple of issues:

    1. EVERYONE participates in the healthcare market sooner or later. I defy you to find me an individual who goes their entire life without seeing a doctor. The argument that we are being forced to participate in commerce (buy insurance) is thus laughable; we all participate already. What is being regulated by the individual mandate is the manner in which we pay for our participation.

    2. Insurance is a communal practice. A pool of people lump their money together to *cover costs* of a service. Insurance is not a cost-shifting trick to make someone else pay for my care. It is designed to spread the cost over the entire pool and over time, so that the cost of an episode of care doesn't drown an individual in the financial tsunami that occurs. If I opt out of the pool for 20 years (the period where my financial contribution to the pool exceeds my withdrawals) and then join when I get sick, the cost of my care is shifted to the others in the pool. If enough of us do this, the pool goes bankrupt.

    One cannot argue against exclusion of prior conditions without mandating that people join the pool early; that is not a financially viable option, although it's one the many individuals are trying. The underemployed working class do it out of financial necessity. I would argue that libertarians do it out of intellectual dishonesty.

  • DrugMonkey says:

    The underemployed working class do it out of financial necessity. I would argue that libertarians do it out of intellectual dishonesty

    This. Although for libertarians it is the generalized result of their overall intellectual dishonesty, nothing specific. For the Repubs, though, they do it not out of pure dishonesty (of which I admit they have plenty) but out of their reflexive selfishness.

  • JustaTech says:

    This is one thing my fiance and I just can't agree on (in the abstract). I really don't understand why anyone would want to choose to let all their problems fester until what was pre-diabetes becomes blindness and amputation (for example). He says that the cold hard facts are that the economic incentive is to wait until you are in an emergency, and then buy insurance.

    What is wrong with "Be prepared" and "an ounce of prevention is worth a pound of cure"? I feel like some people's philosophies are deliberately short-sighted, but my fiance just says that this proves I'm a blue-bleeding liberal (which is true).

    I can understand not having heath insurance if you can't afford it, but if you can't afford it, why would you fight it?

  • genewitch says:

    justatech: The plain fact is that even with health insurance you're not really covered, insurance companies will try to weasel out of paying out UNLESS you're in a non exclusionary pool, like a company healthcare pool. But the general american, even with health coverage through their job is woefully under-insured; be it only catastrophic insurance (what most 'young' people i know have) or extremely high deductibles (the other majority). The high deductible crowd really only uses the insurance when it becomes an emergency or interferes with their lives (pneumonia, for instance, or a shoulder problem that over the course of a few months makes it impossible to do your job.)

    This is a function of the way insurance works for young people. Medicare and Medicaid have their own issues but when an older person gets sick they go to the goddamned doctor (generally.) 25-40 year olds generally don't.