Seriously, how mad would you be if I didn’t address this topic? But it’s really giving me a headache, and I kind of want to crawl into a cave rather than face the Internet right now. I live in Massachusetts (in all of its insurance mandate glory), and, as a self-employed individual, I was pleased that a component of our health insurance mandate was that coverage would be made available to everyone. As someone who had tried to get individual health coverage in the past and not even received as much as a call back, I was willing to put up with being told what to do in order to have access to the same type of coverage that my car has been entitled to for many years now. (Full disclosure: I did pay the tax penalty for a while before I sucked it up and got insurance. Sorry Mom. That said, I do think that having health insurance is the right answer since it takes away the monetary incentive to avoid going to the doctor and whatnot, and going to the doctor is probably best in the long run. Moral hazard be damned…on that note, I do think that the annoyance and discomfort of going to the doctor goes a long way in combating moral hazard.)
I used to work for an insurance company, and at this job I learned that, in Massachusetts at least, no driver, no matter how risky, could be denied automobile insurance. If a driver is rejected from insurers via the traditional channels, he can get insurance via a secondary pool that all of the insurers have to contribute to. These premiums are higher than in most other cases, but at least there is an insurance option for people who want to operate a car. This seems to work pretty well, so why not have the same for health insurance?
In a way, that’s pretty much what we are ending up with. (For the record, it costs about twice as much to insure me as it costs to insure my car. This ratio is lower than it probably should be because I am a bad driver.) Insurance exchanges are being set up to serve customers who cannot get insurance from private companies directly. People are even being treated better than my car since they are getting subsidized if they have an income such that regular health insurance is “unaffordable.” (I hate that word, since it really has no good meaning, but you get my point.) And yes, this works in some fashion as a transfer from the more wealthy to the less wealthy, since it has to be paid for somehow and we have a progressive income tax. (See below for more on this point and deficit neutrality.)
What else is in the health care bill? The short answer is “I wish I knew.” I’m more than a little frustrated that I don’t have a better answer to this question, but I a. am not going to read 1000+ pages of legislation, and b. don’t really trust most news outlets to report accurately an objectively in this scenario. So I will resort to a picture, courtesy of ImageThink:
If you really want to know, which you should, I think Reuters does a decent job of summarizing the provisions of the latest version of the bill:
The legislation would require substantial insurance market reforms that would bar insurers from excluding people for pre-existing conditions and prevent them from arbitrarily dropping policy holders.
Insurance exchanges would be created where small businesses and individuals without employer-sponsored coverage would be able to shop for coverage. Plans offered on the exchange would have to meet minimum benefit requirements.
The proposed changes would allow dependent children to remain on their parents’ health policies until age 26.
The Senate bill requires insurers to spend at least 85 cents of every premium dollar on medical care in small group markets and 80 cents in large group markets. The proposed changes also would require Medicare Advantage insurers to spend at least 85 percent of revenues on medical care.
COVERAGE MANDATES, SUBSIDIES AND MEDICAID
Individuals would be required to obtain health insurance. Those who fail to purchase coverage would face fines of up to 2.5 percent of income by 2016.
Firms with more than 50 workers who do not offer medical coverage could face fines of $2,000 per full-time employee.
Federal subsidies would be provided to help people with incomes up to 400 percent of the poverty level purchase coverage on the exchange. Proposed changes would sweeten those subsidies for lower income people.
Medicaid, the government healthcare program for the poor, would be available to everyone with incomes up to 133 percent of the poverty level, which stood at $10,830 for an individual and $22,050, for a family of four. Many states have eligibility requirements below those levels.
The proposed changes would get rid of a special deal to help Nebraska pay for the expanded coverage and boost aid to all states.
The final proposal makes some adjustments to the revenue measures in the Senate-passed bill.
The Senate bill included a 40 percent excise tax on high-cost health insurance plans. The proposed changes would delay implementation of the tax until 2018 instead of 2013. The tax would kick in on plans costing $10,200 for individuals and $27,500 for family coverage. A higher threshold is allowed for plans covering mostly women, older workers and retirees as well as those in high-risk professions.
The bill calls for raising the payroll taxes for Medicare, the government health insurance plan for the elderly, to 2.35 percent from the current 1.45 percent for individuals earning $200,000 or more and for couples earning $250,000 or more. The proposed changes would apply the tax to some investment income as well for those high-income groups.
The bill would impose fees on medical device manufacturers, insurance providers and brand name pharmaceuticals. The proposed changes would delay implementation of those fees.
The legislation would freeze payments to insurers that provide coverage to Medicare patients in 2011 and begin reducing the subsidy in 2012.
It would also gradually close the gap in drug coverage for Medicare beneficiaries by 2020. Those who enter the coverage gap, the so-called doughnut hole, in 2010 will get a $250 rebate. In 2011 they would get a 50 percent discount on brand-name drugs.
There. Be for it, be against it, both of those options are fine by me. But at least know what you are for or against. I’ve written before about how a lot of disagreement regarding health care comes down to differing views on what members of our society are entitled to. This is fine. There are what are called “positive” questions, such as “Will health care reform increase the budget deficit?”, which can be answered by facts and figures. (People may disagree on the facts and figures used, of course.) “Normative” questions, on the other hand, are value judgments/opinions…for example, the question of “Should health insurance be made affordable for all Americans?” is a normative issue, and there really isn’t one right answer. It’s important to understand the distinction, if for no other reason than then you can distinguish between when economists are (relatively) objectively reporting facts and when they are trying to advance their own ideologies (yeah, I’m talking to you, Paul Krugman…and Brad DeLong…and Don Boudreaux and Russ Roberts…and…oh, the list is so long it’s not even worth it. 🙂 ) After, all, opinions are like assholes- everybody’s got one and everyone thinks everyone else’s stinks. But it’s helpful to be able to distinguish between an asshole and…well, anything else. It’s also helpful to answer the positive questions as best as possible and then use those answers to inform normative viewpoint rather than just talking out of your…well, ass.
I purposely left Greg Mankiw off of the list above, since he seems to be better than most about setting his personal ideologies aside (at least this time) when analyzing the issues:
As a weak-willed eclectic, I can see arguments on both sides. Life is full of tradeoffs, and so most issues strike me as involving shades of grey rather than being black and white. As a result, I find it hard to envision the people I disagree with as demons.
Arthur Okun said the big tradeoff in economics is between equality and efficiency. The health reform bill offers more equality (expanded insurance, more redistribution) and less efficiency (higher marginal tax rates). Whether you think this is a good or bad choice to make, it should not be hard to see the other point of view.
I like to think of the big tradeoff as being between community and liberty. From this perspective, the health reform bill offers more community (all Americans get health insurance, regulated by a centralized authority) and less liberty (insurance mandates, higher taxes). Once again, regardless of whether you are more communitarian or libertarian, a reasonable person should be able to understand the opposite vantagepoint.
He goes on to say that he is against the bill, both because he is more of a libertarian than a communitarian (is that a nicer word for Socialist?) and he doesn’t believe that the costs of the bill will be as favorable as stated. I wish everyone in the conversation could be that reasonable.
It’s not shocking that providing extra services costs money. Also, it’s not shocking that medical care is expensive- if nothing else, doctors need to get paid a lot of money to make it worth their while to go through four years of medical school, however many years or residency, etc. Personally, I am fine with this, since I really want the best people possible taking care of me when I am sick. (This is not to say that there aren’t other opportunities for savings in the health care system so much as it is to say that we should be careful about what exactly gets cut.) In order to make the health care bill “deficit neutral” or whatever term is being thrown around that means “doesn’t put the US more in debt than it would be otherwise”, it provides for cuts and cost savings in other areas. This is why the health care bill talks about student loans, for example. This complementarity makes the bill more palatable both financially and politically, and the spending cuts in the bill might even be in areas that would never have been addressed otherwise. However, we should be at least a little wary of seeing the spending cuts as a panacea for the deficit problem. Again, Greg Mankiw has a good take on this, where he provides an analogy of a person cutting back on Starbucks in order to take a vacation. His conclusion:
Even if you believe that the spending cuts and tax increases in the bill make it deficit-neutral, the legislation will still make solving the problem of the fiscal imbalance harder, because it will use up some of the easier ways to close the shortfall. The remaining options will be less attractive, making the eventual fiscal adjustment more painful.
(Man, I am totally kissing up today, but I can’t help but give credit where credit is due.) Basically, Greg is saying that we took the low-hanging fruit and now are going to find it harder to reduce spending in the future. I tend to agree. I don’t think this is a reason in itself to be against health care reform, but it’s important to understand the pros and cons.
I’m at 1900 words, so I think I am going to stop now. Back to your regularly scheduled ranting…