health insurance

Archive for Tag “health insurance”

Any way you slice it, Obamacare fleeces some to pay the medical bills of others

Thursday, May 9, 2013 by

3466862143_c9005b6fdd_bObamacare requires young people to pay higher health insurance premiums in order to subsidize older people’s coverage. But don’t worry, say Obamacare’s defenders: Many young people will qualify for federal subsidies to offset the higher premiums. For example, health policy analyst Austin Frakt says, “[M]ost of the cross subsidization is not flowing from younger to older individuals. It’s flowing from the treasury to everyone with low enough incomes.”

This defense doesn’t hold water.

First, only those earning below 400% of the federal poverty level are eligible for subsidies, which means if you are a young single worker who makes more than $45,960 a year, you must pay the higher premiums imposed by Obamacare entirely out of your own pocket. In my view, even one young person fleeced to pay for the older generation’s health care expenses is too many.

Second, the government obtains money for the promised subsidies by confiscating funds from its citizens—in the form of taxes, borrowing, or printing money (this last effectively depletes savings). So when Frakt says the federal government will effectively be subsidizing the coverage of those older, what he means is that everyone (including young people) whose earnings are drained by the government will pay for the coverage of those older. But it’s wrong for the government to force any group of people—be they young, of higher-income, or classified by any other category—to pay the medical bills of others.

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Topix.com: How Obamacare Fleeces the Young

Friday, April 26, 2013 by

I have an op-ed today on Topix.com’s Politix page about Obamacare’s age-related rate restrictions, which require younger people to pay higher insurance premiums in order to subsidize the coverage of those older. I say in the article:

No one, presumably, would be comfortable with the idea of fleecing our children and grandchildren in order to lighten our bills. But supporters of the Affordable Care Act have taken to arguing that forcing young people to subsidize older people isn’t some new consequence of the health law—all insurance, they claim, requires some people to subsidize the expenses of others. Take fire insurance. Ten thousand people might sign up to insure their homes, but only a couple of those homes may end up burning down. The premiums paid by those whose homes did not burn down go toward rebuilding the homes of those whose did.

“That’s how insurance works,” insists health policy analyst Aaron Carroll, who concludes that the health law’s age-related rate restriction is “really not much different than how insurance is supposed to function, by transferring money from the more-healthy to the more-ill.”

But by equating traditional insurance with the health law’s age-related rate restriction, commentators like Carroll ignore a key component of insurance in a market absent government intrusion: the freedom to buy a policy that is priced according to your own risk—a policy that subsidizes no one.

Check out the whole article here. I previously addressed another argument made by proponents of this restriction, here.

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Posted in Business & Economics, Government & Policy

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The Obama Administration thinks more expensive premiums are good for you

Wednesday, April 10, 2013 by

Health_insurance_reform_bill_signature_20100323Recently the Obama administration finally acknowledged what everybody else already knew—Obamacare is going to send premiums through the roof.

How do you defend a reality (e.g., 27-year-old males will see premiums rise by 189%) that you not so long ago insisted was fiction (“My health care bill will cut the typical family’s insurance premiums by up to $2,500”)? One way is by playing the “Yeah, but this is better for you” card.

That was basically the approach taken by Kathleen Sebelius, secretary of the Department of Health and Human Services, when she addressed reporters the other day. Sebelius insisted that people “are going to see much better benefit for the money that they’re spending.”

In other words, if you’re a 27-year-old who is forced to shell out three times as much for premiums next year in order to, as Obamacare requires, foot the medical bills of 55-year-olds, according to Sebelius you’re better off. If you’re a male who must now, as Obamacare mandates, buy coverage for services you’ll never use, such as contraception, breast pumps and in vitro fertilization, according to Sebelius you’re better off. If you prefer a low-deductible policy that offers only catastrophic coverage, yet Obamacare makes such a policy illegal to sell, according to Sebelius you’re better off.

This paternalistic attitude makes my blood boil. By what right does the government presume to decide what’s best for me in the realm of health insurance and then outlaw all the policies I might choose? Only the individual can determine his or her needs when it comes to health care—and if those needs can be met by health insurance, every individual should be free to select and purchase an appropriate policy from among those offered on a free, private market.

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A Conversation on Health Insurance with John C. Goodman [podcast episode #02]

Thursday, March 7, 2013 by

On this episode of Eye to Eye, I had the opportunity to interview John C. Goodman, an economist and a leading proponent for greater freedom in health care. We discussed a variety of issues surrounding health insurance.

One point he made that I found particularly illuminating was his attitude towards the possibility, on a free market, of being charged higher premiums when you have higher expected medical costs. Most people would consider this a flaw of the free market (charging higher risk individuals higher premiums is severely restricted under Obamacare), but according to Dr. Goodman, we should view this as a good thing. Listen to the podcast to hear his reason why.

Another subject we discussed is why health insurance is so controlled when other types of insurance, such as life insurance, are left relatively free. Dr. Goodman mentioned the role of pressure groups such as the American Medical Association in suppressing market forces.

I suspect an additional factor was at play, which the AMA surely cashed in on: people’s underlying moral views. A common view is that it’s immoral to pursue profit in the field of medicine and that health care is not a good to be earned but a right. These kinds of views are incompatible with a free market and have surely contributed to the growth of government in medicine.

Some of the other topics Dr. Goodman discusses in the podcast include:

  • His view of the most problematic government interventions in health insurance
  • How Obamacare will impact the health insurance market
  • If we’ve ever had a free market in health insurance
  • Why health insurance looks nothing like other types of insurance (e.g., auto, homeowners, life), which work relatively well
  • How our health care system compares to those of other countries

Dr. Goodman is president of the National Center for Policy Analysis and a research fellow at the Independent Institute. He is most recently the author of Priceless: Curing the Healthcare Crisis. He provides daily commentary on his blog.

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Younger People Should Not Be Forced To Subsidize the Health Coverage of Older People

Friday, February 15, 2013 by

An issue receiving some attention recently has been the age-related rate restriction in Obamacare. Under the law, starting in 2014, health insurers may charge older people no more than three times higher premiums than they charge younger people.

But restricting how much insurers can charge older people does not remove the higher costs associated with covering such individuals. For example, 64-year-olds tend to have six times higher health care costs than 18-year-olds. If insurers can’t charge older people according to their risk, this means they have to make up those costs by charging higher premiums to younger people. A new study estimates that once Obamacare’s various rate restrictions and other provisions kick in, 27-year-old non-smoking males may see premiums rise, on average, by up to 190%, while 55-year-old women who smoke may see their premiums fall, on average, by almost 20%.

There’s been much debate about whether this subsidization from the young to the old is proper. Matthew Yglesias of Slate says that “today’s young people will be tomorrow’s old people,” so while this system may not be good for young people right now, they will eventually benefit from it. A senior official at the AARP echoed this sentiment, saying, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”

There’d be nothing politically objectionable with such an arrangement if it were voluntary—if the individuals in it decided this was the arrangement they wanted to be in, and if they came to think differently, they were free to leave.

But in today’s health care system, this arrangement is not a choice. If you buy insurance, the government forces younger and healthier people to subsidize the health coverage of older and unhealthier people—and this has gone on long before Obamacare. The only alternative has been to forego carrying an insurance policy, which starting next year, Obamacare will make illegal.

The fact that these kinds of provisions are coercive is too often left out of the conversation. If a 27-year-old decides that he does not want to shell out higher premiums in order to subsidize those older than he, if he’d rather purchase a policy from an insurer willing to charge him according to his own risk and use the money left over for his own purposes—such as saving for a down payment on a home or buying a new computer—can he exercise that choice under Obamacare? If he does, he is breaking the law and will be punished accordingly.

It’s not the purpose of government to conscript people into such schemes. Individuals should be left free to act on their best judgment. If an insurer is willing to charge a young and healthy person a low premium and that person wants to buy the coverage offered, by what right does the government ban that trade and force him to enter another arrangement? This is the question we should be asking when thinking about rate restrictions and other such controls in Obamacare.

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Insurers Should Be Left Free to Discriminate Based on Your Genetics

Thursday, January 24, 2013 by

DNA helixA recent NPR story described efforts to extend the Genetic Information Nondiscrimination Act (GINA) to long-term care insurance providers. GINA, passed in 2008, prohibits health insurers from taking into account genetic information about you when deciding what coverage to offer you and at what price. The goal of GINA was to prohibit insurers from charging a higher premium to those whose genetic markers suggest they may develop a costly disease down the road, e.g., cancer.

Risk assessment is the bread and butter of insurers on a free market. The more accurately insurers can price risk, the better premium they are able to offer you than their competitors. Gaining and evaluating the best data available on potential risks, therefore, is a crucial activity.

On a free market insurers would typically charge higher premiums to individuals they judge more likely to file claims because the insurer will likely have to pay out more for those customers. When insurers are barred from charging higher premiums to higher-risk individuals, they have to make up costs elsewhere—mainly by charging higher premiums to lower-risk individuals, i.e., those who are less likely to file claims.

Accordingly, in health insurance on a free market, we would expect insurers to charge a higher premium to those they judge more likely to incur costly medical expenses because insurers will likely have to pay out more in claims for them. When insurers are forbidden from doing this, they have to make up the costs by charging higher premiums to those who are less likely to incur medical expenses. Under such a scheme, those less likely to get sick are forced to subsidize the coverage of those more likely.

Forced subsidization—such as that instigated by GINA—is common in government-regulated health insurance pools. Rate bands and community rating laws, for example, have the same effect by requiring insurers to turn a blind eye to factors such as age, health status, family medical history, gender, etc. (By contrast, insurance, if left unregulated, does not involve subsidization—each policyholder pays a premium reflective of the individual risk the insurer has to take on to cover that person).

Now, as the NPR story reports, there are calls for the government to force long-term care insurers to ignore genetic information when pricing policies. For example, genetic tests can reveal if you have a greater risk of developing Alzheimer’s disease in old age. Right now long-term care insurers in most states (some already forbid it) can utilize this information to potentially charge a higher premium to someone who tests positive for the associated genetic markers—studies show these individuals are 50% more likely to enter nursing homes, which long-term care insurers must pay for.

But once insurers are prohibited from using this information, they will be forced to spread the cost across all of their policyholders, thereby charging higher premiums to those less likely to develop Alzheimer’s.

In my view, government shouldn’t force us to subsidize the health coverage of others. If people want to do this voluntarily, they should be left free to do so (here’s one example of that). But it’s no business of the government to coerce us into doing so.

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How Obamacare Will Increase Your Health Insurance Premiums

Friday, January 18, 2013 by

Untitled pictureIn a recent appearance on PJTV’s Front Page, I discussed, among other things, a couple of the ways by which Obamacare will raise your health care costs. You can watch the appearance here.

There are many more ways than those I mention in the video, some of which are only being discovered now. (Remember Nancy Pelosi, who said about Obamacare, “You have to pass it to find out what’s in it.”) For example, employers recently uncovered a “sleeper” fee in their insurance policies that the government has imposed to pay, in part, for some of the law’s provisions. This fee can amount to tens of millions of dollars for the largest employers, who will pass on the cost to employees (as they do for all health care benefits they provide) in the form of lower wages, benefits cut elsewhere, or fewer hires.

Even though the major provisions of Obamacare don’t go into effect until next year (e.g., the individual mandate, the state exchanges, and the expansion of Medicaid), people are already experiencing “sticker shock” as premiums in 2013 begin to reflect what’s to come in 2014. And the federal subsidies to purchase insurance that will kick in next year won’t make a dent for many people—going forward, individuals will still be forced to shell out a lot more for insurance than they pay now.

Keep in mind that when promoting his health care bill, President Obama promised that it would reduce a typical family’s insurance premiums by up to $2,500 a year. Not a chance.

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Earth to the New York Times: American Health Care Is Not “Mostly Private”

Monday, January 14, 2013 by

A recent New York Times article wrongly portrays the American health care system in order to argue for a complete government takeover of medicine. There are many factual and philosophic errors in the piece, but I want to focus on just one for now: the author’s running premise that America has a “mostly private” health care system.

My response when reading the article was: you’ve got to be kidding me.

We’ve got a mostly private health care system? A day before this article was published, NYT published another article, this one on how health insurance companies have to plead with the government to change their premiums. When the government dictates how much you can charge for your product, would you say your business decisions are “mostly private?”

When the government mandates what you must sell, would you call that “mostly private?”

When the government controls how much money you can make, would you call that “mostly private?”

And has the passage of Obamacare, the largest government expansion in close to fifty years, been forgotten entirely?

I could go on—but you get the idea.

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Medicaid: The sleeper issue of the 2012 election?

Monday, November 19, 2012 by

Recently on PJTV’s Front Page, I discussed the current status and also the future of Medicaid under Obamacare. You can watch the video here.

In one part of the segment I commented on the alternative typically presented today when it comes to Medicaid: either you’re for expanding Medicaid coverage to millions of people under Obamacare, or you’re for keeping all those people in today’s dysfunctional health care system.

Here’s my (expanded) take: the alternative between greater government involvement in health care (which is what Medicaid’s massive expansion under Obamacare will bring about) and the status quo (which is admittedly quite dysfunctional) is a false one.

What’s important to know is that the status quo in health care today consists of a market that is already deeply controlled in every aspect by government intervention.

Just take health insurance: the government was already deeply involved in the business of health insurance prior to Obamacare, dictating many aspects of how insurers operate—from deciding who is licensed to sell insurance and where it can be sold, to regulating how insurers organize their finances, to dictating how they price their policies, to specifying who their customers will be, to mandating what benefits they must offer, to restricting how they can advertise—and the list goes on.

It’s in that context we must consider all the problems with health insurance today—problems like continually rising premiums, the difficulty of finding insurance, etc.

The typical alternative presented today guarantees, in practice, just one outcome: heavy government control of health care, resulting in more market distortions.

The real alternative we should be debating is: government controls in health care vs. freedom in health care.

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TownHall: I’ll Buy My Own Contraception, Thanks

Wednesday, November 14, 2012 by

Yesterday I had an article published on TownHall.com. In it I comment on coverage that health insurance companies are required by law to include in all policies–such as for contraception, in vitro fertilization and many other services–regardless of whether people actually want or need that coverage. State governments have imposed these benefit mandates for more than sixty years, and now Obamacare will impose a variety of them on the federal level.

In the article, I say:

This election season, perhaps in an attempt to win the so-called women’s vote, the marketing efforts for Obamacare targeted my gender. “Thanks to the Affordable Care Act,” Representative Nancy Pelosi and Secretary of Health and Human Services Kathleen Sebelius cheered in one editorial, “a new day for women’s health has arrived.” They’re referring to the provision that all health plans must now include coverage for contraception and other women’s services—and must do so without charging co-pays or deductibles for them.

Given that I have two X chromosomes and am not Catholic, you might be surprised to learn that I’m not cheering along. After all, what woman of child-bearing age would be against free, FDA-approved birth control?

But the alternative is not really between free contraception and contraception I have to pay for. It’s between two visions of the American health care system: one in which I’m free to make decisions and one in which that freedom is eroded.

Read the whole thing here.

 

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