Supreme court debate Affodable Care Act

[Falling]

With the exception of freeloaders who show up in emergency rooms for treatment and then leave, and some other anomalies not inherent to being uninsured, the uninsured cannot really be said to impact others' costs.

What about the people who are unable to pay and declare bankruptcy? This suggests that it's a fairly serious problem.

[++$_]

I'd either raise the money to pay for it by borrowing/dipping into savings or, for some theoretical ailment that costs an inordinately large amount, go without treatment, which is exactly what I'd do with insurance except that the threshold for "cannot afford" would be higher.

In that case, you are fairly unusual. Many uninsured people who get sick take a different course of action: they do nothing for a while, allowing the disease to progress, and then when they get so sick that they can no longer do nothing, they go to the emergency room or are taken there involuntarily, and afterwards discover that they are bankrupt.

[sardia]

I'd either raise the money to pay for it by borrowing/dipping into savings or, for some theoretical ailment that costs an inordinately large amount, go without treatment, which is exactly what I'd do with insurance except that the threshold for "cannot afford" would be higher.

In that case, you are fairly unusual. Many uninsured people who get sick take a different course of action: they do nothing for a while, allowing the disease to progress, and then when they get so sick that they can no longer do nothing, they go to the emergency room or are taken there involuntarily, and afterwards discover that they are bankrupt.

Why can't our seniors be more like lutzj? Those scum sucking leaches are bankrupting our country with their constant whining for more drugs and their precious social security. I say they should dip into their savings/borrowing or go without if they can't afford it.

[++$_]

Fortunately, our seniors are on medicare, so they aren't uninsured like lutzj. We're not yet that fucked up.

[Xeio]

I'd either raise the money to pay for it by borrowing/dipping into savings or, for some theoretical ailment that costs an inordinately large amount, go without treatment, which is exactly what I'd do with insurance except that the threshold for "cannot afford" would be higher.

I guess you just hope really hard that you're never in a car accident (or some other catastrophe) where you are injured so badly you get sent to the ER without them being able to ask you first?

[Princess Marzipan]

I doubt he drives. It's risky. Any accident would be his own fault for getting into a car.

[Krong]

I'm not sure of the legal reasons behind it, but the political reason for Congress / the White House's waffling on calling the no-insurance penalty a "tax" is likely because it would violate President Obama's campaign promise of not raising taxes on anyone making below $250,000. See here:

http://www.politifact.com/truth-o-meter ... -form-tax/

Honestly not sure how much that matters, though. I doubt "is there a tax in that thing?" is the main issue on people's minds when they decide whether or not they like the ACA. Also, that promise was broken, anyway, by higher taxes on cigarettes and tanning beds (see the article).

With the logic at hand, the result of "you can be forced to buy health insurance because everyone uses it at some point" and "you need to eat" would be "the government can force you to buy food". Not "the government can force you to buy broccoli".

If the government can force you to buy food according to the same reasoning that lets it force you to buy insurance, it seems like the government can force you to buy a particular type of food just like they can force you to buy a particular type of insurance. The recent contraceptive controversy was due to the government saying that insurance plans lacking contraceptive coverage do not meet the standards of the ACA, so clearly Congress has the power to specify what kind of insurance you must buy if the act is constitutional.

[Garm]

As I've pointed out elsewhere, you want to pay for other people's birth control. Same can be said about most of "all that other crap." The little bit of money you pay to help other people get the preventative care they need keeps your premium low and their premium low.

Heard on NPR this afternoon: The average person with health insurance, pays ~$1k more per year to subsidize all the uninsured folks who end up in the emergency room.

Thanks assholes.

[sardia]

As I've pointed out elsewhere, you want to pay for other people's birth control. Same can be said about most of "all that other crap." The little bit of money you pay to help other people get the preventative care they need keeps your premium low and their premium low.

Heard on NPR this afternoon: The average person with health insurance, pays ~$1k more per year to subsidize all the uninsured folks who end up in the emergency room.

Thanks assholes.

There's also the little things, like the "coupons" you get to offset your copays. We all know brand name drugs cost more than generic drugs, so insurance companies let you know by scaling your copay according to the price of the drug. Now what pharmaceutical companies do is print out these vouchers/coupons which reduces your copay down to whatever acceptable value. Except they charge the insurance company the full price for it. For example, a 150$ brand name vs a 10 $ generic. Your copay is 10$ for the former, and 1$ for the latter. What the coupon does is give you a refund for 9$. Great for you, except for the fact that the insurance company is stuck with the 150$ bill, which they send back to you in the form of higher premiums. This is like a credit card reward program from hell.

[lutzj]

I'd either raise the money to pay for it by borrowing/dipping into savings or, for some theoretical ailment that costs an inordinately large amount, go without treatment, which is exactly what I'd do with insurance except that the threshold for "cannot afford" would be higher.

I guess you just hope really hard that you're never in a car accident (or some other catastrophe) where you are injured so badly you get sent to the ER without them being able to ask you first?

I have enough savings for a short hospital stay and friends/family/loans for anything I might need in the $10-100k range. Insurance doesn't make financial sense when I don't need the cushion on catastrophic accidents nor any coverage at all for, say, insulin. In the meantime, I can save my $2000 a year and be much more financially secure in the long run, which is a huge deal.

[omgryebread]

I'd either raise the money to pay for it by borrowing/dipping into savings or, for some theoretical ailment that costs an inordinately large amount, go without treatment, which is exactly what I'd do with insurance except that the threshold for "cannot afford" would be higher.

I guess you just hope really hard that you're never in a car accident (or some other catastrophe) where you are injured so badly you get sent to the ER without them being able to ask you first?

I have enough savings for a short hospital stay and friends/family/loans for anything I might need in the $10-100k range. Insurance doesn't make financial sense when I don't need the cushion on catastrophic accidents nor any coverage at all for, say, insulin. In the meantime, I can save my $2000 a year and be much more financially secure in the long run, which is a huge deal.

We have no way to assure that everyone coming into a hospital can pay for it. Should we leave them to die until we do a financial check to make sure they can pay for it? If they can pay 10k, but during the surgery complications happen and the price spikes to 15k, should the doctors seal 'em up and call it a wash?

[CorruptUser]

As I've pointed out elsewhere, you want to pay for other people's birth control. Same can be said about most of "all that other crap." The little bit of money you pay to help other people get the preventative care they need keeps your premium low and their premium low.

Heard on NPR this afternoon: The average person with health insurance, pays ~$1k more per year to subsidize all the uninsured folks who end up in the emergency room.

Thanks assholes.

Except that extra 1k is because of the people who are uninsured and can't pay, not the people who are merely uninsured. If they aren't paying and the hospital can't collect from them, chances are they couldn't afford insurance anyway; the typical emergency room visit is much less than what private insurance costs per annum. The people who are uninsured and can pay actually subsidize you, as they tend to have to pay higher rates since the insurance company didn't negotiate the price down on their behalf.

[PossibleSloth]

I was under the impression that the individual mandate was originally included because of the provision in the law which prevented insurance companies from denying coverage because of pre-existing conditions. The individual mandate prevents people from waiting until they develop an illness to get health insurance coverage.

The people who are uninsured and can pay actually subsidize you, as they tend to have to pay higher rates since the insurance company didn't negotiate the price down on their behalf.

The majority of uninsured persons are unable to pay their hospital bills. This study found not only that, on average, uninsured patients were only able to pay for 12% of hospital stays, but also that even those in the top 10% of uninsured in terms of personal assets were only able to pay for half of potential hospital visits.

[lutzj]

The people who are uninsured and can pay actually subsidize you, as they tend to have to pay higher rates since the insurance company didn't negotiate the price down on their behalf.

The majority of uninsured persons are unable to pay their hospital bills. This study found not only that, on average, uninsured patients were only able to pay for 12% of hospital stays, but also that even those in the top 10% of uninsured in terms of personal assets were only able to pay for half of potential hospital visits.

Again, as CorruptUser said, the correlation between not having insurance and not being able to pay bills has more to do with the fact that insurance and hospital visits both cost money, and therefore aren't affordable to many people. Being uninsured doesn't inherently prevent people from paying for healthcare.

Furthermore, if we attribute all the costs imposed by the uninsured to freeloaders in emergency rooms, then the non-freeloading uninsured are paying just as much in extra costs as the insured, because they also pay to use hospitals.

[bentheimmigrant]

The people who are uninsured and can pay actually subsidize you, as they tend to have to pay higher rates since the insurance company didn't negotiate the price down on their behalf.

The majority of uninsured persons are unable to pay their hospital bills. This study found not only that, on average, uninsured patients were only able to pay for 12% of hospital stays, but also that even those in the top 10% of uninsured in terms of personal assets were only able to pay for half of potential hospital visits.

Again, as CorruptUser said, the correlation between not having insurance and not being able to pay bills has more to do with the fact that insurance and hospital visits both cost money, and therefore aren't affordable to many people. Being uninsured doesn't inherently prevent people from paying for healthcare.

Furthermore, if we attribute all the costs imposed by the uninsured to freeloaders in emergency rooms, then the non-freeloading uninsured are paying just as much in extra costs as the insured, because they also pay to use hospitals.

You seem to be ignoring the facts presented - including the part about people in the top 10%. No, being uninsured does not preclude people paying, but only 12% of people manage it. I think you're severely underestimating a few things, namely how much a lengthy hospital stay would cost and how difficult it would be to get a loan if you did fall ill. If you got leukemia and were unable to work for a year or more, who is going to give you a loan? That's great if you know some people who might be able to cobble together a good amount of money, but that pales in comparison to the amount you'd need for some treatments. And if you die then you've basically taken away their savings for when they get sick.


On another note, I don't know why everyone is immediately jumping on the hostility in the court to some of the government's arguments as confirmation that it will be overturned. I was following it yesterday on WSJ's live blog and basically got the impression that at least Kennedy, and maybe Roberts are willing to consider it in terms of market regulation, and the case that this is indeed a unique market that everyone is involved in whether voluntarily or not.

[omgryebread]

I was under the impression that the individual mandate was originally included because of the provision in the law which prevented insurance companies from denying coverage because of pre-existing conditions. The individual mandate prevents people from waiting until they develop an illness to get health insurance coverage.

Pretty much. Both so that people don't only get insurance after the fact, and because some people with pre-existing conditions are going to be net losses for the company. The only way to get the company okay with taking those losses is to give them what they want: more healthy clients. Some of those healthy customers are going to actually be injured or sick, but on average, it's going to mean more profits.

[Dauric]

On another note, I don't know why everyone is immediately jumping on the hostility in the court to some of the government's arguments as confirmation that it will be overturned. I was following it yesterday on WSJ's live blog and basically got the impression that at least Kennedy, and maybe Roberts are willing to consider it in terms of market regulation, and the case that this is indeed a unique market that everyone is involved in whether voluntarily or not.

This is a good point. The SCotUS has a long history of being difficult to predict, in some cases judges who's political leanings might tend to support a certain side have been known to grill that side extra hard just to be sure that the materials presented in the case are ironclad and they won't have to revisit some interpretation of their ruling in a few years down the road. Other times they lob (relative) softball questions.

We're not going to know how they'll rule until June (at least I believe June is when their deliberations are expected to be finished), we're just going to know about the arguments presented by the 26 states arguing against and the Obama Administration in chambers. Once that is done he justices and their staffers are going to be pouring over existing case law and how the arguments presented in court relate to those laws and interpretations.

[Heisenberg]

Everyone participates in the health care market on one level or another. It starts as soon as you're born (anyone else had to pay for birth? It's expensive! And I have great health insurance that I pay a lot of money for. Having my son was still expensive and there were few complications), ends when you die and is more expensive at the extremes of age (kids get sick a LOT, holy crap!).

I'm confused why this assertion hasn't been challenged in the Court. Yeah, having a kid is expensive, but that's my health care, not the kid's. Kids might benefit from health insurance, but ultimately their parents are the ones who control their decisions. Arguably, one does not gain control of one's health decisions until 18.

So from 18 on, does EVERYONE participate in health care? I have a crazy uncle who distrusts doctors and hospitals and refuses to go to them. Granted there have been times where he's endangered his life by taking this position, but really it's his decision, and I'd say no, he doesn't participate in the system, and when he dies it'll be in his own bed and likely earlier than absolutely necessary. Even if children are required to "pay back what they owe" the system, there are a growing number of home births taking place which are entirely outside the health care system.

I think there is a tiny minority of mostly old and extremely rural folks who don't participate in the system. This law applies to them to, and would force them to participate against their will.

But, like I said, it seems the Court is ignoring that point.

[Ghostbear]

I think there is a tiny minority of mostly old and extremely rural folks who don't participate in the system. This law applies to them to, and would force them to participate against their will.

Those people would be forced into the system, regardless of their protests, the moment they get in a car accident, or have an emergency at work, or some other variation of "sudden medical emergency". Even if you aren't immediately in the health care system, you can be shoved into it against your will in an instant. Which is something that at least Kennedy has brought up, by noting that people have a very close proximity to the health care system (omgryebread even him talking about it on the first page). So no, the justices haven't ignored this point; even the skeptical ones accept it as having some level of truth to it.

[Yakk]

The reason that young/healthy people aren't buying insurance is because they are being charged the same rate as old/sick people. Let the companies discriminate, and they will quickly adapt their prices to get more people insured. That's kind of my profession's job (Actuary, soon) to do that. The problem most people have with that is that the people that expect to need the most care will have to pay the most cash.

Actually, you'd expect that any seemingly young, healthy person will be a presumed lemon. So you'll either have contracts where buying health insurance doesn't actually provide insurance against health problems (so that lemons can be jettisoned), or the lemon market problem will cause the price to skyrocket (either because you'll end up with a barrage of tests to determine if you are lemon, or simply because they have to maintain lemon-level pricing).

When health care can be socialized (say, over the employees at a company), the lemon problem mostly goes away, and prices become reasonable. When it cannot be socialized (small business, individual purchase, etc), the lemon problem makes the costs stupidly high.

An actuary, working on population dynamics, cannot solve the lemon problem because it is a problem of information asymmetry (I know more about my health than you do, and I can hide information about it far better than you can reasonably be expected to be able to pry loose for a reasonable cost), not of understanding the information that the companies have about the demographics of the person who wants to buy the insurance.

What is worse is that there is the "amazon" pricing problem -- the Monopsony of power of health insurance companies. Health providers are encouraged to set ridiculous prices for their services so they can offer steep "discounts" to insurance companies, as the insurance companies have lots of market power. As an insurance company, I'd rather have a 50% discount on a 1000$ bill than a 33% discount on a 750$ bill, because higher prices for non-insured make my customers even more likely to pay me money.

[Arrian]

Kennedy's quote above seems to indicate he's at least considering that the health care market is unique.

The commentary I'm hearing (much coming from Volokh) seems to think that Kennedy is likely to vote in favor of the ACA if he can find a limiting principle that will actually separate the health care mandate from other mandates. From what I'm seeing, most of the mandate's defenders are trying to say the limiting factor is that other mandates wouldn't be politically feasible, but I doubt that will be sufficient for Kennedy. He's aware that what isn't politically feasible today might well be feasible tomorrow (the 16th Amendment didn't specify the maximum tax rate because it was though politically impossible to raise an income tax of more than something like 3%, for example.)

I'm not sure why Kennedy thinks health insurance is a special market simply because the marginal cost curve is downward sloping (i.e. the healthy, young people who choose not to buy insurance will lower other people's premiums.) Any product will have a downward sloping demand curve when produced at inefficient levels (that's why you can get discounts for ordering custom products in bulk.) I could totally see the same argument made for solar power, for example: Mandate every building owner cover a certain fraction of the roof in solar panels and you'll see the unit cost of solar decrease, with the added benefit of saving the planet! (Still won't be competitive with natural gas, but hey, save the planet!)

There's also the little things, like the "coupons" you get to offset your copays. We all know brand name drugs cost more than generic drugs, so insurance companies let you know by scaling your copay according to the price of the drug. Now what pharmaceutical companies do is print out these vouchers/coupons which reduces your copay down to whatever acceptable value. Except they charge the insurance company the full price for it.

And this is the biggest reason I dislike the healthcare law, since this type of thing doesn't just happen with drugs, but with all sorts of care, driving up overall costs. Patients are insulated from the actual costs so it doesn't enter their decision process, classical externality model. The best way to get health insurance to actually work like insurance instead of a pre-paid health care plan is high deductible insurance: Let the patient pay for minor things like regular checkups and birth control, and insurance acts like insurance and covers the big, unexpected costs. (You might note that high deductible plans are cheaper per dollar of coverage than low deductible plans.) Couple that with HSAs, and you're golden. But the ACA effectively outlaws high deductible plans.

One of the biggest bad assumptions in the whole healthcare debate is that changing health insurance will not impact anything else. If we were to move to a system where high deductible plans were prevalent and most people paid for office visits out of pocket, the cost of office visits would NOT stay the same. You would see many more providers like Doctor in a Box offering affordable office visits, and you would see patients paying more attention to those minor costs and seeking out the cheaper services. That's a big lever for bending the cost curve that the ACA literally took away, rather than employed.

What about the people who are unable to pay and declare bankruptcy? This suggests that it's a fairly serious problem.

That article, through an honest mistake, no fault of the author's, I'm sure, left out one minor, niggling really, little detail: The bankruptcy law was changed in 2005 making it much harder to declare bankruptcy for non-medical reasons. So the number of medical bankruptcies stayed right on trend but the number of non-medical bankruptcies plummeted after 2005, translating to a much larger share of overall bankruptcies being due to medical costs despite no absolute change in their number. Always be careful of studies that compare bankruptcies before and after 2005.

Simple oversight, I'm sure.

While it seems like splitting hairs, it is really important whether this is a mandate or a tax. If it is a tax, then Congress has the authority to enact it under the "we can enact taxes" provision, but unfortunately a flat fee on every American citizen is a "head tax" which is so egregiously regressive and nasty that it was forbidden by the writers of the Constitution.

Off topic, but it's interesting to note that, aside from being regressive, a head tax is the most economically efficient tax possible*: It doesn't distort either consumption or production decisions, leaving the market to allocate resources as efficiently as possible. (*Pigouvian taxes notwithstanding.)

[Heisenberg]

I think there is a tiny minority of mostly old and extremely rural folks who don't participate in the system. This law applies to them to, and would force them to participate against their will.

Those people would be forced into the system, regardless of their protests, the moment they get in a car accident, or have an emergency at work, or some other variation of "sudden medical emergency". Even if you aren't immediately in the health care system, you can be shoved into it against your will in an instant.

Sure, and that itself may be a violation of their right to refuse medical care (for example if they have a living will). But while there's a possibility that they will be forced into the system by another law, it's also possible they'll live their entire lives without seeing a doctor.

I think the argument that we need this extra law to keep people from gaming the system via a completely separate law (ERs can't turn away patients) isn't valid because it assumes the rationality and constitutionality of the first law. The way to correct problematic laws isn't to violate citizen's rights with broader, more expansive laws, but rather to amend or abolish the problematic laws.

[bentheimmigrant]

So you're saying ERs should turn away patients?

[Ghostbear]

Sure, and that itself may be a violation of their right to refuse medical care (for example if they have a living will). But while there's a possibility that they will be forced into the system by another law, it's also possible they'll live their entire lives without seeing a doctor.

And your point was that the justices had ignored this completely. They didn't. Greater minds (or, for those among us with a great ego: greater legal minds) than ours have gone over it in the supreme court hearings. It was not an issue the justices avoided or skipped passed, and at least four of them disagree with you outright. Some others also expressing some agreement with the "healthcare is a unique market" argument, even if it isn't enough to convince them of the overall law's constitutionality.

I think the argument that we need this extra law to keep people from gaming the system via a completely separate law (ERs can't turn away patients) isn't valid because it assumes the rationality and constitutionality of the first law. The way to correct problematic laws isn't to violate citizen's rights with broader, more expansive laws, but rather to amend or abolish the problematic laws.

You.. you think that requiring ERs to not turn people away.. is.. violating the rights of the people that they care for? I can't possibly see how you have reached that conclusion: "keeping you alive when you are unable to give input otherwise" is about as far from violating your rights as you can get when dealing with healthcare. The alternative is a fucked up bureaucratic quagmire that would result in more people dying for no conceivable gain to society.

[Heisenberg]

So you're saying ERs should turn away patients?

I'm saying that ER freeloaders is a problem created by Congress via legislation, not one inherent to the Constitution. So if the law would be unconstitutional if not for a relatively recent law, it's unconstitutional. The Constitution trumps Congress's poor legislating.

[bentheimmigrant]

It's a problem created by the desire not to see people suffer and die when something can be done.

[Ghostbear]

I'm saying that ER freeloaders is a problem created by Congress via legislation, not one inherent to the Constitution. So if the law would be unconstitutional if not for a relatively recent law, it's unconstitutional. The Constitution trumps Congress's poor legislating.

You've called it poor legislating twice, implied it is unconstitutional twice, and called it's rationality into question once. You have provided reasoning for this zero times, so I would like to ask: under what grounds do you think the ER laws are unconstitutional? The requirement to not turn people away from ER treatment is tied to whether or not the they receive government funding through medicare. It has already been ruled constitutional for the federal government to tie funding to specific requirements. So I have no idea under what grounds you are reaching your conclusion.

[Silknor]

I think you're misreading him. He's saying that if the individual mandate is unconstitutional in a world where we don't require the ER to give uncompensated care, then it is still unconstitutional even if we do pass a law requiring the ER to give uncompensated care. He might think the ER law is unconstitutional, I don't know, but what you quoted doesn't say that. (A separate issue is would writing the uncompensated care provision into the constitution change the constitutionality of the individual mandate.)

The counter argument to this of course is that if Congress does have the power to require ERs give uncompensated care, that bolsters the constitutional case for an individual mandate, because such a mandate is arguably necessary and proper to a legitimate goal for national legislation (ensuring that those who show up in the ER get care provided regardless of their ability to pay while preventing the costs from shifting onto health insurance policyholders as a class, as opposed to taxpayers).

[bentheimmigrant]

Well, yes, that specific quote does not say that, but this does:

I think the argument that we need this extra law to keep people from gaming the system via a completely separate law (ERs can't turn away patients) isn't valid because it assumes the rationality and constitutionality of the first law. The way to correct problematic laws isn't to violate citizen's rights with broader, more expansive laws, but rather to amend or abolish the problematic laws.

[Ghostbear]

I think you're misreading him. He's saying that if the individual mandate is unconstitutional in a world where we don't require the ER to give uncompensated care, then it is still unconstitutional even if we do pass a law requiring the ER to give uncompensated care. He might think the ER law is unconstitutional, I don't know, but what you quoted doesn't say that.

No, Heisenberg did bring the constitutionality of the ER requirements into question:

[...] assumes the rationality and constitutionality of the first law. The way to correct problematic laws isn't to violate citizen's rights with broader, more expansive laws, but rather to amend or abolish the problematic laws.

That wasn't quoted here because I had already quoted it here. If they don't question the constitutionality of the EMTAL Act, then they worded their statements very poorly.

[Silknor]

My point was not that Heisenberg didn't question the constitutionality of the ER law, but rather that, the portion quoted by Ghostbear in the post I was responding to is an actual argument that functions whether or not you believe the ER law is constitutional. And it's an argument that was raised in yesterday's oral arguments (I believe it was Scalia or Alito, though I don't recall).

That argument (that it's odd that Congress has additional powers because they need to fix problems that occur due to another law in absence of the individual mandate) is at the center of the debate: since the primary justification for the individual mandate is that there are major problems in a system with: uncompensated ER care and guaranteed issue+community rating* but without an individual mandate, and that since Congress has the power to impose those 3 conditions (something not at dispute in the case), the individual mandate is a necessary and proper exercise of the commerce power. The force of this argument applies regardless of if you believe that any of those 3 provisions are constitutional.

*Together these provisions state that insurers can't deny you coverage because of pre-existing conditions and can't fully price your pre-existing condition into your premium.

[Heisenberg]

It's a problem created by the desire not to see people suffer and die when something can be done.

And the Federal government's unwillingness to PAY for the services they require hospitals to perform.

under what grounds do you think the ER laws are unconstitutional?

I'm not arguing that at all. Silknor is correct, I am saying that if, in a world without the ER mandate, an insurance mandate would be unconstitutional, the existence of the ER mandate (as a law) does not make the insurance mandate constitutional. The entire argument is building a house on sand. If the Constitution doesn't specifically allot Congress the power to mandate purchases of individual citizens, then it's forbidden regardless of which unfunded mandates Congress imposes on hospitals.

Edit: Here, this might help, when I said "So if the law would be unconstitutional if not for a relatively recent law, it's unconstitutional." I meant "So if the ACA would be unconstitutional if not for the ER mandate, it's still unconstitutional." So the existence of the ER mandate is irrelevant to the discussion of whether the ability of Congress to regulate Interstate Commerce allows them to force every American to buy health insurance.

[CorruptUser]

The reason that young/healthy people aren't buying insurance is because they are being charged the same rate as old/sick people. Let the companies discriminate, and they will quickly adapt their prices to get more people insured. That's kind of my profession's job (Actuary, soon) to do that. The problem most people have with that is that the people that expect to need the most care will have to pay the most cash.

Actually, you'd expect that any seemingly young, healthy person will be a presumed lemon.

By what logic?

When health care can be socialized (say, over the employees at a company), the lemon problem mostly goes away, and prices become reasonable. When it cannot be socialized (small business, individual purchase, etc), the lemon problem makes the costs stupidly high.

Explain. AFAIK, having it not socialized prevents the lemons from even getting the care. Which may not be fair to lemons, but the lemon problem doesn't exist.

An actuary, working on population dynamics, cannot solve the lemon problem because it is a problem of information asymmetry (I know more about my health than you do, and I can hide information about it far better than you can reasonably be expected to be able to pry loose for a reasonable cost), not of understanding the information that the companies have about the demographics of the person who wants to buy the insurance.

Umm, no. With access to all your information and medical history, plus a check-up and blood-work, there's very little you can hide.

What is worse is that there is the "amazon" pricing problem -- the Monopsony of power of health insurance companies. Health providers are encouraged to set ridiculous prices for their services so they can offer steep "discounts" to insurance companies, as the insurance companies have lots of market power. As an insurance company, I'd rather have a 50% discount on a 1000$ bill than a 33% discount on a 750$ bill, because higher prices for non-insured make my customers even more likely to pay me money.

I will grant you that much, though that problem does very much exist in other markets. I was always convinced that the banks were doing similar with the housing bubble; issue debt to inflate housing prices, which causes people to need more debt to buy houses, repeat.

[Yakk]

The reason that young/healthy people aren't buying insurance is because they are being charged the same rate as old/sick people. Let the companies discriminate, and they will quickly adapt their prices to get more people insured. That's kind of my profession's job (Actuary, soon) to do that. The problem most people have with that is that the people that expect to need the most care will have to pay the most cash.

Actually, you'd expect that any seemingly young, healthy person will be a presumed lemon.

By what logic?

People who are actually sick have a higher chance of seeking health care services. So the act of seeking health care actively is evidence that you are (or have reason to think you will be) sick, and sick people who actually look healthy and young are "lemons" as far as the health care industry is concerned.

When health care can be socialized (say, over the employees at a company), the lemon problem mostly goes away, and prices become reasonable. When it cannot be socialized (small business, individual purchase, etc), the lemon problem makes the costs stupidly high.

Explain. AFAIK, having it not socialized prevents the lemons from even getting the care. Which may not be fair to lemons, but the lemon problem doesn't exist.

The lemons can get health care. They just need to pay ridiculously high prices for the insurance, have some kind of long waiting time, exclude prior conditions, and pay out of pocket.

With enough money, anyone can get health care. Without socialization of risk, the lemon problem boosts the cost of insurance to pretty ridiculous levels (but, in theory, not (much) above just buying it directly).

An actuary, working on population dynamics, cannot solve the lemon problem because it is a problem of information asymmetry (I know more about my health than you do, and I can hide information about it far better than you can reasonably be expected to be able to pry loose for a reasonable cost), not of understanding the information that the companies have about the demographics of the person who wants to buy the insurance.

Umm, no. With access to all your information and medical history, plus a check-up and blood-work, there's very little you can hide.

Really?

I can get my doctors to lie in their charts (ie, if I lack insurance, don't give my real name, because I know anything in my medical history can be used against me -- my charts now say I'm Mary Sue, not me...), or avoid going to a doctor about a condition until I have coverage. A huge chunk of diagnosis needs honesty from the person being diagnosed. Not everything, but a lot of it.

And maintaining a "clean" health history just consists of visiting doctors, and saying "no, I'm good" in your own name.

People do this all the time with car insurance, where they omit accidents from their record if the damage is low enough (and deal with it privately), because the insurance industry uses minor accidents as a sign that you are more likely to get in a serious accident, and you end up paying more for the minor accidents in increased premiums than the minor accidents cost to pay off out-of-pocket.

Now, I suppose you could start paying for full body cat scans of every 20 year old that wants health insurance, get multiple specialists to look over it for signs of problems, wait a year and repeat the scan and see if anything has changed, and from that eliminate lemons. But at that point, you just added how many thousands of dollars to every single sign up for health insurance?

The other method is to include draconian clauses in your policies that let you kill the policy on some pretext if it turns out that the person is a lemon (sometimes, this has a time limit -- like "if you get sick in the first year, we can terminate your policy because we fell like it" clause. Of course, this simply makes getting the insurance an even worse mugs game for the young, healthy person, and is just another "lemon" cost.

Both of these are attempts to break the information asymmetry. But they aren't free.

Socialized insurance clears that lemon problem statistically -- be it in a company health plan (which is a form of socialized insurance), or a universal mandate.

Wanting to vary the price sharply depending on details of how expensive you figure the person is simply returns you closer to the non-socialized state. Once you increase prices significantly for a given policy level, it pushes the healthy people away, and pulls the lemons in, which inflates prices...

[sardia]

The people who are uninsured and can pay actually subsidize you, as they tend to have to pay higher rates since the insurance company didn't negotiate the price down on their behalf.

The majority of uninsured persons are unable to pay their hospital bills. This study found not only that, on average, uninsured patients were only able to pay for 12% of hospital stays, but also that even those in the top 10% of uninsured in terms of personal assets were only able to pay for half of potential hospital visits.

Again, as CorruptUser said, the correlation between not having insurance and not being able to pay bills has more to do with the fact that insurance and hospital visits both cost money, and therefore aren't affordable to many people. Being uninsured doesn't inherently prevent people from paying for healthcare.

Furthermore, if we attribute all the costs imposed by the uninsured to freeloaders in emergency rooms, then the non-freeloading uninsured are paying just as much in extra costs as the insured, because they also pay to use hospitals.

You seem to be ignoring the facts presented - including the part about people in the top 10%. No, being uninsured does not preclude people paying, but only 12% of people manage it. I think you're severely underestimating a few things, namely how much a lengthy hospital stay would cost and how difficult it would be to get a loan if you did fall ill. If you got leukemia and were unable to work for a year or more, who is going to give you a loan? That's great if you know some people who might be able to cobble together a good amount of money, but that pales in comparison to the amount you'd need for some treatments. And if you die then you've basically taken away their savings for when they get sick.


On another note, I don't know why everyone is immediately jumping on the hostility in the court to some of the government's arguments as confirmation that it will be overturned. I was following it yesterday on WSJ's live blog and basically got the impression that at least Kennedy, and maybe Roberts are willing to consider it in terms of market regulation, and the case that this is indeed a unique market that everyone is involved in whether voluntarily or not.

It's been statistically correlated that justices that question one side more or extra harshly are more likely to vote against them. Meaning if you get a rough interrogation, chances are you're gonna lose.

[Choboman]

The discussion about 'lemons' implies that once someone has health insurance they get to keep it forever. Most health insurance policies I'm aware of renew every year. Which means that if you look healthy but actually have lung cancer that isn't found in the entry exam, you've got to get as much treatment as possible within that first year, because the insurer will choose not to renew your policy. (In large companies it's different, because they have bargaining power through negotiating as a team.)

[CorruptUser]

Not exactly; if the person has insurance the insurer can't drop it, only the insured can. But, if the insurance company can prove the lung cancer was pre-existing, then it doesn't get covered.

[Diadem]

What the heck is a lemon (I know, I know, Life is, but I assume we're not talking about that here).

From context, it seems to be someone who has a pre-existing condition while attempting to get insurance? In that case, I have to ask: What exactly is it about being ill that makes it right that your life should be ruined? I can think of absolutely no reason why insurance companies should be allowed to turn down people with pre-existing conditions. I can think of reasons why companies would want to. But that's hardly the same thing.

[jareds]

What the heck is a lemon (I know, I know, Life is, but I assume we're not talking about that here).

A lemon is a product (canonically, a car) that is found to have serious flaws only after it is purchased. There is further a strong connotation that the flaws were known but not disclosed to the purchaser. By analogy, a person who appears healthy when they buy health insurance, but secretly had a serious health problem at the time, can be considered a "lemon" from the insurance company's perspective.

[Bubbles McCoy]

"lemon" is a term used for an element of an economic transaction with hidden costs. It comes from an old American term for a car with reoccurring problems (you might also hear the term come up in "lemon laws," which allow a buyer to return a product within a set time after purchase).

Otherwise, I think the logic of pre-existing condition coverage is that no one would ever have motivation to get cancer coverage until they actually get cancer if they could just go out and get coverage as soon as they get cancer. Which is what the mandate tried to fix - most people (and probably insurance companies) are fine banning pre-existing condition discrimination, but unless everyone's forced to buy insurance no one will buy it until they have to.