Thursday, September 17, 2009

Health Tax

Forcing an insurance company to provide coverage for those with pre-existing health conditions is like forcing a poker player to bet when his opponent turns over a straight flush.

At that point, insurance companies are no longer in the insurance business. They are in the income redistribution business. They will raise the rates on the healthy to pay the health expenses of the sick. How long before the healthy realize that they are being stolen from? Hence the need for the mandate. It's just another tax that will be called mandatory health insurance.


BradK said...

Why is health care reform always a debate about the cost of health insurance, not the health care itself?

Does a radical shift (anybody's plan, lefty or righty or saney or crazy) in any direction address the how the care is paid for, or the cost / quality of the care itself?

Call me naive but you don't fix the US Auto Industry by reforming the banks that loan you the money to buy a car, do you? You fix the cost and quality of the car... right?

Nah, I must not know what I'm talking about... ;)

Denis Navratil said...

I have a response BradK but my computer is acting up. Testing...

Denis Navratil said...

All right, lets try again. This is about income redistribution, not health care costs or quality.

The auto problem you site can help me make my point. Why not treat the auto problem like we are treating the health care problem. We can start by counting the number of carless Americans. The we demonize the car makers. Then we declare car ownership a universal right. So what to do. We force Americans to buy car ownership insurance at such a high rate that the leftover money can be used to treat those with a preexisting poverty condition to a brand new car. We haven't addressed the quality of the car. Rather, we have taken money from the carfull and redistributed it to the carless. That is all Obamas plan does, only it redistributes from the healthy and wealthy to the poor and sick.

BradK said...

I guess to your point to my point, have we really looked at the inherent problem of the car makers (cost and quality), or the car loan providers (or health insurance industry - in our analogy).

Philosophically I am pretty sure you and I are going to agree that the current "reform plan" being touted doesn't fix the problem. But is anyone's plan looking at the root cause (health care itself), or the next layer up that the consumer sees directly (health care insurance)?

Denis Navratil said...

BradK, I am not aware of any plan that can solve the unsolveable. The unsolveable is the "problem" that aggregate demand for stuff (whether cars or health care or insurance) exceeds the supply.

I think there are some plans out there that try to end the artificially imposed restrictions on buying health care plans accross state lines. Other plans address the problem of defensive medicine and outrageous lawsuits etc... These kinds of reforms could help somewhat in lowering costs.

BradK said...


You suggest that the cost and quality issue with health care (not health insurance) comes from the simplest economic laws of supply and demand. The demand for health care is so disproportionately higher than the available supply that the health care industry can charge what they want and provide whatever quality they want because in the simplest way of putting it... "Where else are you going to go?"

Hmmm... That's worth pondering, I don't know if I had ever looked at it like that. Maybe it just always seems ... at least 'round these parts ... that if I need a Doctor, Hospital, treatment, or procedure, I have a lot of options nearby. That having been said, wouldn't there be a geographical difference in the cost of health care based on the density and availability of health care services in a given area. Would remote rural doctors necessarily need to cost more based on the economic laws state there's less around per person per geographic area than urban / metro doctors and services?

Denis Navratil said...

Yes BradK, if the free market in health care is interfered with, say by preventing Wisconsin residents from buying fron an Iowa health insurance company, then the remaining WI health insurance companies can charge more as there is a government imposed restriction on competition. Likewise, if a judicial system doles out multimillion $ fines for small infractions (not saying that is the case) such that doctors have to pay huge amounts for malpractice insurance while practicing expensive defensive medicine, yes, this will drive up costs significantly. It will also drive down the number of people willing to become doctors.

I haven't had a problem getting a doctor either. That could change if we fundamentally change the industry. And yes, I think rural health care might cost more. Hey, maybe people will have free market incentives to live nearer to others. What a boon for the environment!

Downtown Brown said...

Brad there are proposals to reduce the cost of Health Care, and thus Health Care insurance. The reason "cost" comes it's not free, and you will not force people to become Dr's, Nurses etc. and then make them "serve" the country's sick for Free. Thus Money is a factor.

Since we must agree to the above, (as Slavery is illegal), we must look at things that will work.

Tell Congress and the Prez to REDUCE the mandates for employer based coverage; Allow for Insurance companies to compete across state lines; look at Caps in TORT, and perhaps reform; Urge expansion of HSA's and Flex spending accounts. Give tax breaks to people for the cost of their self insuring. Lot's of things can be done without growing the power of Govt. Unfortunately neither Prez Obama, nor the Dem's in the House or Senate are NOT proposing any of those Solutions.

Thus the "Crisis" will not be fixed with any of their plans. (I suspect the really want the "Crisis" to continue indefinitely anyway.), but some people think I'm a cynic:^)

BradK said...

DB -

Darn you for dropping the trailing "K" from my pseudonym and thus exposing my quasi-anonymity! :)

Seriously, I agree with you that slavery is, and should be, illegal. Doctors and Nurses and all the aspects of the medical profession (and supporting professions)have commendable jobs that they should be properly compensated for. Bur, I also think that in a free-market economy the consumer has a factor in setting price by determining what they are willing to pay. However, by incorporating an insurance plan in the middle, are we now actually taking that control from the consumer by having that "middle-man"...

Actually, that's not even a good example because health care services are more like a utility-monopoly because there will be times when despite everything, you need it.

But I can't "shop" for it, can I? I can only "shop" for insurance by either taking what an employer might give or buy my own at likely a higher cost. Then the provider will tell me where to go for the actual service I need. Unless I fore-go insurance completely and pay full price only at the times I use the service.

Maybe one of the issues here is that we are predisposed to the principles of a free-market economy, but in some cases, the system doesn't work as effectively as in others.

For example, "demand" doesn't react to the economy... just whether or not you contract Swine Flu or break your leg playing softball. So the cost factor doesn't adjust along with the external economic factors because honestly, there's nothing in the system that says it has to.

And don't worry about being labeled a cynic... It takes all kinds of diversity of thought and disposition to come to a reasonable answer sometimes. I have the proud label of "cautious optimist" and "defender of my theatre" (if you happened to follow any RacinePost novels I've written).

Caledonia Unplugged said...

Guys - the only solution to health care/insurance is to ramp it back 50 years.

HSAs only work for the young and healthy. Denis, are you really suggesting someone with a pre-existing condition should not be allowed to have insurance, or are you only opposed to a mandate?

All you young guys forget some of us have been paying into insurance for 4 or 5 decades without really using it - now that we need it, we should be denied?

You're still able to buy homeowners insurance/auto insurance even if you've had a fire or an accident. Your rates are simply higher.

And speaking of auto/home insurance - health insurance needs to follow suit. You don't call on your homeowner's policy to paint your house or your auto policy to change the oil.

Preventative medicine is great, but should not be funded by health insurance unless you want to pay extra. NO amount of preventative medicine will prevent the inevitable - you're going to get sick and die and use up tons of money in health care. Since the onset of a third party paying for preventative care, costs have skyrocketed because the system has been grossly abused.

Denis Navratil said...

Calunp, I am not saying that someone with a pre-existing condition should not be allowed health insurance. What I am saying is that if insurance comanies are forced to insure said folks, they will no longer be insurance companies. They will be engaged in forced charity.

Now if companies drop their clients when they get sick, or raise their rates unfairly, that is something that should be regulated.

Denis Navratil said...

The Wall Street Journal has picked up un my idea that a health insurance mandate is just a disguised tax. I can't link to it as I have an actual newspaper in front of me. It can be found in todays WSJ and is entitled Obama's Nontax Tax. And for those with a pre-existing condition of humorlessness, I don't actually think the WSJ editors read Free Racine.

BradK said...

CalUn -

I unfortunately don't have the miles on me to know what was working so well 50 years ago... can you elaborate?