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March 28, 2012

Quote of the Day

Via Betsy Newmark:

You can correct me if these figures are wrong, but it appears to me that the [Congressional Budget Office] has estimated that the average premium for a single insurance policy in the non-group market would be roughly $5,800 in—in 2016.

Respondents—the economists have supported—the Respondents estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the act wishes to serve, but isn't—if those figures are right, isn't it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.

Posted by Cassandra at March 28, 2012 07:18 AM

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Comments

"isn't it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else."

Not really. It is predicated on the idea that a certain number of people will be injured or contract a disease that will require certain medical expenses. The numbers of people who will be affected, and the associated costs, is known but not who will be affected. The premium is based on the idea that some people will "win" the medical lottery and need the payout. Everyone else gets to hope they won't be the one who gets it.

In the realm of, you ain't seen nothing yet. Wait until genetic testing becomes commonplace and your premiums are based on genetic predispositions. It will be much akin to automobile insurance based upon your zipcode. The screaming will be loud and long.

Posted by: Allen at March 28, 2012 04:35 PM

Not really. It is predicated on the idea that a certain number of people will be injured or contract a disease that will require certain medical expenses. The numbers of people who will be affected, and the associated costs, is known but not who will be affected. The premium is based on the idea that some people will "win" the medical lottery and need the payout. Everyone else gets to hope they won't be the one who gets it.

Scalia's point, if I remember it, was that the government premiums would be higher than the average health care spending for a given group. So the purpose really is not to hold down individual spending, but rather to force young, healthy, low risk patients into the market on the theory that this will lower costs for high risk patients.

What Scalia is referring to here (and I agree) is the false conflation of health care spending with health insurance spending. They are NOT the same but the government keeps implying that they are -- their argument is that everyone is already "in the market" (health care market). But the mandate doesn't force anyone to consume health care - it forces everyone to buy HC insurance. The entire reason for ObamaCare is that everyone is NOT already in the insurance market.

A further distortion is that the proportionate remedy for the alleged harm (uninsured people going to the emergency room and passing the costs to the taxpayer) is catastrophic insurance, not comprehensive insurance.

They're slaying a gnat with a sledgehammer.

Posted by: Schrodinger's Cat at March 28, 2012 06:12 PM

The premium is based on the idea that some people will "win" the medical lottery and need the payout.

When it's true insurance, though, the risk pool is homogeneous, and the premium charged is predicated on the actual risk of payout.

When a low risk population is mixed with a high risk population, the pool ceases to be homogeneous. And when that low risk population is Dragooned into joining the high risk population for the explicit purpose of subsidizing the costs of that high risk, the program ceases to be insurance and becomes privately funded, Government mandated welfare.

Eric Hines

Posted by: E Hines at March 28, 2012 09:31 PM

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