TW: We posted on this in July here, but it bears repetition and supplement. When folks speak of free market solutions, I listen as free markets are crucial to our economy. But when discussing free markets and individuals relative to health care, one must understand the individual has very poor negotiating leverage unless of course they happen to have great genes. That leverage will become even less as genomics permit folks to further reduce the variability of their projected health.
Folks tend to get edgy about "mandates". Either mandates to force employers or insurers to provide coverage or mandates for individuals to purchase coverage. Without mandates though in a world with decreasing variability in health care risks due to genomics testing, the mandates become crucial.
I keep coming back to health care IS different. Unless one is comfortable creating huge disparities in cost and health outcomes depending upon factors many of which are utterly uncontrollable by the individual.
From Jim Kwak at Baseline Scenario:
"...If insurers know what your projected long-term health care costs are, because they can read your genetic code, then they are going to price accordingly – and that’s exactly what insurers should do in an unregulated market. This produces the dystopian world where not only are some people unlucky because their genes make them more likely to suffer in various ways, but on top of that they can’t get health insurance and therefore health care.
The first-order solution is obvious, and it’s a part of every health care reform proposal: prohibit insurers from engaging in medical underwriting. As is also generally understood, this means that insurers will have to overcharge healthy people, which creates an adverse selection slippery slope – especially when healthy people have scientific evidence that they are, in fact, healthy – that ends when insurance is very expensive, and only rich sick people have it – that is, today’s individual market. So it has to be accompanied by a mandate, to force healthy people to buy insurance and thereby subsidize the sick.
Wheelan points out that there’s a second-order problem, which is that if insurers have to charge everyone the same price, they will compete by marketing to the healthy and trying to hide from the sick. The insurance exchange(s) should limit this problem, but may not be able to eliminate it, since people will have choice on the exchange, and are free to choose the plan that successfully markets itself as the plan for healthy people. Eventually you get to a point where insurers cannot compete on price, and they cannot compete on risk selection, and they start to look a lot like regulated utilities. That’s not terrible – they can still compete on cost – but it’s what happens when you harness the private sector to do something that is essentially redistribution.
In any case, the other lesson is that widespread genetic testing will only make the unfairness of unrestrained competition in the health insurance sector even more glaringly obvious, since it will increase the divergence between rates for sick people and healthy people. And no one will be able to blame the difference in rates on anyone’s “lifestyle.” Which is another reason why we need to reform our health care system, and establish the principle that everyone deserves a basic minimum of care regardless of their genes, before things get much worse."
http://baselinescenario.com/2009/09/01/the-march-of-science-and-health-care-reform/
8 comments:
It seems like such mandates would be unconstitutional:
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/21/AR2009082103033.html
Yep some conservatives argue the mandates would not be constitutional. We will see, maybe, maybe not.
Without mandates most private insurance reform starts to fall apart and we will head right back to "government" provided policies.
How do u address adverse selection? Especially in an environment where the consumers through genomics or whatever have increasing amounts of information about their own potential risks.
Libertarians might say let the consumers opt out of some or all insurance which obviously leaves a big pool of consumers with health issues (due to age, bad genes, bad life styles or bad luck) facing even more expensive care.
A young well behaved 25 yr old with good genes might just be interested in some bad luck insurance with some sort of savings for older age. I could go to employers with a distinct advantage. I could provide for my children more easily than others. Darwinian evolution at work.
Conservatives love to treat all ills with tax incentives. Perhaps we can just give folks with bad genes tax credits...
Yep, that's the trick of insurance: getting participation from healthy people who think they don't and won't need it.
But again, if the whole system shifted to catastrophic care only, and all the smaller stuff were paid out of our own pockets, then the pool of healthy participants would grow. Not because these healthy people are expecting to develop diabetes at some point, but because everyone is susceptible to accidents. And recovery from those is catastrophic, as it turns out.
(One small fractured ankle, for instance, cost $23,000, and that was without paying the surgeon, who was military.)
The idea overall, on both sides, is to make health care more affordable to all, and closely related, if this is the route we go, to make whatever insurance people buy for health care more affordable.
Let's not underestimate what more affordable rates would do to attract people who might otherwise forgo. . .
And if it is the case that mandates are unconsitutional (I've yet to see an article that successfully argues against the one I linked to) it won't be because conservatives want it that way, or because conservatives find it to be a helpful opposition point.
It'll because mandates are unconstitutional. Doesn't matter if this fact is inconvenient to the current proposed reform measures. Doesn't matter if it advantages a certain pool of people at the cost of the Great Society.
A right is a right is a right. And if a healthy woman with no genetic risk towards illness and no personal history of illness who measures up to all the medical standards of "healthy lifestyle" (note: I used to be this woman, so healthy people be warned) wants to say, "Forget it, sick people of the country--I don't want my dollars to pay for your health care and I'm willing to gamble that I won't need much of that care myself," it's her right.
Back to the drawing board. Let's figure out a different solution.
We had discussed the splitting of health insurance types (catastrophic etc.) earlier. So would stick with my comments there, which are skeptical of what you say in your answer above.
Re the individual mandate
1) folks are aware of the issue so I do not think this is a "gotcha" moment. Commerce clause etc. type stuff tends to be more malleable than one would think but I am not even close to knowledgable enough to debate it further. Folks know about it (in particular the insurance firms) and are moving forward with it as a key compenent that says something.
2) you seem almost gleeful that a "right" could stop reform. And the elimination of the individual mandate would be a huge impediment to anything on the table. I would just say be careful what you ask for. The economics are real, moral hazard, adverse selection etc. Given the choice between leaving the adversely selected dangle America might just opt for an even less "private" approach. Because insurance falls apart quickly.
"right is right is a right" so simple and so not true
libertarians/constructionists seek simplicity (kind of like fundamentalists in other realms but I digress) by blind adherence to "rights" but of course life is more complicated which is why we have judges and legislators and executives etc. (yet another digression two in one comment)
Not gleeful.
But realistic. And not willing to toss out a right just because we're stuck on one solution and unwilling to imagine through to a different one.
"So simple and so not true" isn't an argument. It's a dismissal that you allow yourself to employ only because your ideology allows it, perhaps even requires it.
"Blind adherence"--not even sure what "blind" here means. "Adherence," yes.
But "blind"? As in, what? As in, "Uh oh, X, while being true, is very inconvenient to the position I want to hold. But, instead of pretending that X is not true, or re-defining the bedrock that makes it true, I will continue to maintain that X is true, and let my thinking follow from it"?
Nothing blind in that.
As I said I digressed and will leave it at that (which as I have said before in now way should be construed as acceptance of your argument yada yada)
But back to solutions. You want to get rid of individual mandates, which leaves door wide for adverse selection (healthy folks opting out) which magnifies moral hazard
("unhealthy" i.e. older, bad dna, unlucky folks wanting in). So recission gets worse not better.
Now what? I want to hear the free market solution.
Quickly here,
Do we have any hard data that shows adverse selection being a definite problem?
No, I'm serious. What's the stat? Are we really sure that a big number of healthy people would choose to go without health insurance? I wouldn't. My genes have even been screened for breast cancer and come up negative! If I knew that AND if I happened to be healthy right now, I would still be certain I'd be covered.
So would a lot of people. Because shit happens. Accidents. Diseases you can't predict.
What would a well-run public announcement campaign do to encourage maximum enrollment in insurance? PA commercials that show the guy who got into a car accident lying in a bed, surrounded by massive pieces of medical equipment and bags of drugs hanging by his side--he's come out of his coma! He wants to say something to his friend standing there! The friend leans in closely and the patient whispers, "Glad I have insurance."
Is there any evidence that adverse selection would be a de-railing problem, or is it a helpful specter the left needs to keep raising right now?
So your answer is a question about a predicate, with an implication that the "left" is crying wolf...nice. Do YOU have any evidence that your implication is true?
Ask a private insurance exec. whether they will support broad health care reform with new cost containment measures, recission restrictions etc. without adverse selection mitigation.
I have and they will not.
Btw your example might "work" for "accident" insurance in other words if one can pick and choose which insurance by type of occurance to buy then yes they might be interested in certain types, the ones to which they are susceptible. That is what choosing in a morally hazardous and adversely selected way looks like. The ones who are vulnerable opt in (especially folks who like climbing rocks etc.) and those not opt out. Your example would not avoid a problem. The point is not that folks would not want any insurance for risk only insurance for risks they do not know or feel they have.
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