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Months from now, a federal appeals court or the United States Supreme Court might reverse Monday’s ruling by federal district court judge Henry Hudson that struck down the health care law’s requirement that individuals buy insurance (also known as the “individual mandate” in health care jargon).
For the moment, Hudson’s ruling has refocused attention on one of the crucial ingredients in insurance reform: improving insurance risk pools.
The health care law hinges on the millions of young and healthy people – good insurance risks -- who have decided they’d rather do without insurance.
Under the new law, 24 million people will be buying insurance through new purchasing “exchanges” regulated by the federal government. The more healthy people that the federal government can nudge into insurance risk pools, the lower will be the average cost in each risk pool. (As the Congressional Budget Office reported last June, “in the absence of a mandate, those who enroll would be less healthy, on average, than those enrolled with a mandate.”)
If the new people entering an insurance risk pool are less healthy, then the premiums will at some point become too costly for most members – or too costly for the taxpayers if the government is paying to cover the uninsured.
According to the Kaiser Commission, nearly one-third of the uninsured in 2007 were between ages 19 and 29. Paul Fronstin at the Employment Benefit Research Institute, a nonpartisan research group in Washington, said last year that bringing in the young and healthy uninsured would reduce the average cost of care “because you’ve brought in more people in paying (premiums), but not necessarily more people using health care.”
That’s why there was so much focus during the congressional debate last year on the so-called “young invincibles” – healthy people who go uninsured.
Sen. John Kerry, D- Mass explained it this way during the Senate Finance Committee debate last year: “It is critical to have what we call the young invincibles purchase coverage and come into the marketplace, because without them premiums are going to go up for everyone. If the insurers anticipate that they won't have a risk pool that is balanced between the older sicker and the younger healthier, then they will charge a (higher) premium that reflects the fact that they anticipate getting a sicker risk pool.”
The crucial money isn’t the revenue brought in by the penalties for being uninsured --$4 billion per year starting in 2017, according to the CBO -- but the flow of premium payments from those who were previously uninsured.
Obama knew that mandatory purchase of insurance would be a difficult idea to sell politically. In fact, he’d campaigned against the individual mandate in the Democratic primaries in 2008.
And, in selling his plan in 2009, he repeatedly emphasized its non-coercive aspect: “If you like what you're getting, keep it. Nobody is forcing you to shift,” he said.
Nonetheless he came around to the idea that forcing people to buy insurance was necessary. As he explained at a July 2009 press conference, “Unless you have a what's called a single-payer system in which everybody is automatically covered, then you're probably not going to reach every single individual, because there's always going to be somebody out there who thinks they're indestructible and doesn't want to get health care….. And then unfortunately when they get hit by a bus, they end up in the emergency room and the rest of us have to pay for it.”
Equally as important are those who don’t get hit by a bus: their premium payments help make the risk pools work.
Hudson’s ruling raised the possibility the overhaul would be unraveled if those young invincibles get the chance to opt out.
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That gets us closer to the ugly truth about our insurance system--the whole thing is in a death spiral and has been for years. Wall Street and the general business culture demands that there is no upper limit on profits, so rates go up. When rates go up people start to believe think taking a risk on going without insurance is worth it. When some of those people get sick the cost is mostly picked up by people who still have insurance, forcing rates up further. Rates go up even more because profits must never go down or your stock price will take a beating. More people drop their insurance. After a certain number of repititions the system is no longer sustainable.
All of which is why the insistence of Conservatives to treat this as President Obama's "Waterloo" was bad for the United States. We needed a real bipartisan solution, and instead ended up with Republicans continuing to try to kill something that was only a partial solution in the first place.
A possible fix for this is an open enrollment period where you can get insurance no questions asked. Do this once in 2014 and for young adults after that. The insurance companies are going to be asking for something like this to avoid people waiting until they get sick to get insurance.
Another way to encourage people to have insurance (in addition to subsidising it), would be to make medical bills not dismissable in bankruptcy. If you choose not to have insurance and need medical care, that bill will follow you around forever.
That's an interesting idea, it might be worthy of consideration.
Rich S-1900127
Another way to encourage people to have insurance (in addition to subsidising it), would be to make medical bills not dismissable in bankruptcy. If you choose not to have insurance and need medical care, that bill will follow you around forever.
Oh well, Rich S,
An estimated 1.5 million Americans will declare bankruptcy. Many people may chalk up that misfortune to overspending or a lavish lifestyle, but a new study suggests that more than 60 percent of people who go bankrupt are actually capsized by medical bills.
http://articles.cnn.com/2009-06-05/health/bankruptcy.medical.bills_1_medical-bills-bankruptcies-health-insurance?_s=PM:HEALTH
Also, when the poor visit the ER it's billed to the tax payers.
It's better to give the insurance companies customers, which btw, the insurance company wants rather than keep the economy sick.
The bill will cost $940 billion over the first 10 years and reduce the deficit by $130 billion during that period. In the second 10 years -- so, 2020 to 2029 -- it will reduce the deficit by $1.2 trillion. The legislation will cover 32 million Americans, or 95 percent of the legal population.
http://voices.washingtonpost.com/ezra-klein/2010/03/cbo_health-care_reform_bill_cu.html
Why wouldn't insurance companies want 32 million customers? Why would anyone want to create a sicker economy?
I only advocated the change in bankruptcy if there was a system where everyone could afford coverage.
John, you are equating Health Care Insurance with Health Care. In an innovative market people would move to catastrophic coverage, or maintenance deals directly with hospitals.
You need to convince people that Universal Coverage, at a lower standard than the current coverage (because of supply and demand). However, this would mean budgets paid for through taxation, something that the last attempt at reform did not want to touch. I never understood why the democrats tried to fix a broken system that they didn't support in the first place. Leadership involves leading and persuading, instead they cobbled together a ramshackle set of reforms that pleased nobody.
The system worked fine for 85% of the people. Rather than put something in place for the other 15%, Obama and his crew of misfits had to redo the entire system, behind closed doors, and with the open purchasing of votes from House members and Senators, and a funding scheme that looks more and more like an unconstitutional penalty for the people that elect to opt out.
And now what we will have is yet another bloated bureaucracy, one that takes billions away from the economy to feed it's massive costs, one that lowers the standard of care to the patient, one that causes more and more unemployment because businesses will be made to pay those costs and not expand their companies staff. There is your true "death-spiral". Higher costs to businesses equals more unemployment and more jobs shipped off-shore. Higher costs to the system mean less available patient care and nearly no research and development. Again, that is the true "death-spiral".
Alan is right on point.
The reason more people do not carry what was once called "major medical" insurance is that the government stepped into healthcare and created HMO's.
They were supposed to REDUCE healthcare costs. Obviously, that was an epic fail.
Then the states got into the act. They mandated coverages that run from the sublime to the ridiculous. I have to carry well baby care- despite the fact that my baby is 28 years old. For that matter, I have to carry maternity coverage - and, if that happens, call the National Enquirer. I also have to carry fertility treatment coverage- I suppose I could need it, since the hysterectomy I had ten years ago would make it pretty difficult to get pregnant. One of the things that Corzine did on his way out the door was to declare that educational programs for autistic children were actually medical treatments, so I have to have coverage for that, too.
It is against state law to offer policies not containing the above and other coverages. Then you wonder why it is so expensive to carry insurance?
In states with no mandates, costs are lower for all coverages when compared with states that do mandate coverages, so the necessity for state mandates goes out that window, too.
Kindly spare me the argument that people are too stupid to choose the coverages they need without some bureaucrat instructing them.
In Idaho, a policy that covers catastrophic illnesses for a young, healthy single person runs about $40 a month. In New Jersey, a GROUP policy for that same young, healthy adult runs $200 a month.
I know. I carried my son on my policy for four months after he got out of college, but before law school. I was insuring against appendicitis, broken bones, or other catastrophic incidents, which, thankfully, never occurred. If I had the choice to cover him only for those "what if's", it would have been far less expensive. Unfortunately, I had to cover him for fertility treatments, the ensuing maternity care, well baby care, and any educational "treatment" required by said mythical child.
Your government intervention is a real hoot.
NJ, would you be in favor of repealing the Motor Cycle Helment laws?
Since I do not ride a motorcycle, I confess to never having thought about it one way or another.
Since you bring it up, however, I do have a problem with nanny state regulations. If someone chooses to ride a motorcycle, I assume their insurance costs are astronomical to begin with, so certifying that they wear helmets would probably discount the rate somewhat.
It is called enlightened self interest. By the same token, I never needed the state to force me to wear a seat belt while in a car. I had a Dad who did that on his own. He had a friend who died after being thrown through a windshield before I was born.
Your question makes me wonder if you are a lawmaker in the New Jersey legislature. You seem like one of those people who need to tell others what is good for them, then mandate that someone else provide it. Of course, it is all "free", is it not?
> If someone chooses to ride a motorcycle, I assume their insurance costs are astronomical to begin with, so certifying that they wear helmets would probably discount the rate somewhat.
Nope, motorcycle insurance is cheap and health insurance doesn't ask. Helmet laws are to save money for the state for medical costs and continuing care for the brain damaged.
No Jo- how do you feel about abortion?
NJ, I do not live in NJ so I have no knowledge of the state laws, but from what I hear and what business dealings I have had with the state I know they have strange laws.
Thanks for an honest answer. My opion is different after living in states with and with out helment laws. I use to think along your lines until I moved to a state with no helment laws.
Why does NJ have laws against drivers pumping their own gasoline?
Single payer insurance is, and always was the best way to go. Too bad the GOP thinks it's socialism, when in reality it's the only way to avoid people dying in the streets in large numbers. That's not the country I want to live in, but apparently Repubs don't see it as their problem... until they're the one without a job and insurance, and sick or injured. It's the ME GENERATION gone wild.
I wasn't aware of "people dying in the streets in large numbers". Could you elaborate?
Umm, this inquiring mind would also like to be enlightened about the "large numbers" of people dying in the streets.
Maybe she meant 'in the desserts of Arizona". Might have been a typo. A huge one, but you know....
It's because of over-the-top ridiculous rhetoric like this that makes it impossible to debate a point intelligently with liberals on here.
If this law stands, then state laws requiring car insurance would also go by the wayside. All the same arguments for medical insurance also apply to car insurance.
FR: "Hudson's ruling raised the possibility the overhaul would be unraveled if those young invincibles get the chance to opt out."
Duhh, that's the whole idea.
So it's better to have lots of people with no insurance, some of whom get sick and skip on the bill (leaving the cost to the rest of us), than to have everyone covered?
We don't have a health care system now. It is just chaos with too much of the money spent not going to actual care. The bill passed is trying to get a handle on it. Market forces alone cannot fix this.
No Rich S, it's better to have large numbers of people paying premiums to the companies, then getting turned down for payment of claims when becoming ill.
See, that way, CEO's can continue to make more for themselves, and create all those jobs you have been hearing so much about lately.
RIght, Bill?
Why don't we start by getting rid of the 30 + million illegals who are mooching the system right now. That should help bring costs of health care down for those of us who purchase insurance and pay taxes...
Equalplayingfield
Why don't we start by getting rid of the 30 + million illegals who are mooching the system right now. That should help bring costs of health care down for those of us who purchase insurance and pay taxes...
Hey, unrepentant, intolerant, xenophobe spewer of right wing sinister talking points,
The Patient Protection and Affordable Care Act does not allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States; unless you go for emergency care.
Would you like it you were in a foreign country and were turned away in an emergency situation, especially if you had no insurance, xenophobe?
http://www.factcheck.org/2009/07/misleading-gop-health-care-claims/
if its unconstitutional to force the citizens to buy health care it must also be unconstitutional for medicare part d insurance and even medicare if a judge strikes down the health care law he would have to strike down the laws governing auto insurance medicare medicare part d etc etc etc
Shh. Don't confuse the issue with facts.
I am sick of that argument. There is NO state that requires you to buy auto insurance! For the people that CHOOSE to do an activity that has a high risk of causing injury to someone else (drive), some states do require you to provide proof that you have the financial ability to cover the injuries that your activity may cause OTHER people. No state requires you to cover injuries to yourself or to your own property. No state requires you to buy insurance as proof, you are more than welcome to put up a cash bond yourself. The law is to protect OTHER people from you CHOOSING to do a high risk activity. What does that have to do with me, for simply being an American citizen, I am required to pay an insurance company to cover MY medical bills that I could pay myself.
Incorrect. http://www.your-car-insurance.biz/Automobile_Insurance_by_U.S._State_or_Territory.html
I love how the figure that 85% are satisfied with their health care coverage is put forth as Gospel. The reality is that most people have come to believe with health care coverage that their choices are a kick in the head vs. a kick in the butt. They have grown accustomed to insurance companies raising premiums for no other reason than they feel like it. They've grown accustomed to employers demanding larger co-pays or cutting drug plans. Most fear that whatever government attempts will be bungled and worse. And for many who are not really paying their fair share for health care coverage, because they are in large favored employee risk pools, of course they don't want to share the risk of higher costs. Insurance is a cooperative effort. What would be more fair is if rates were set on a regional basis. Just like auto or homeowner's insurance, your rates are based part on the claims you make, and part on the claims made in your area. You can have the best house, but if you live in a high crime, high claims area, you pay a little more. You can be the best driver, but you pay a little for the other idiots on the road.
if you get hit by a bus the liability insurance pays for your hospital bills not everybody else i thought obama was a lawyer this argument does not hold water. also comparing car insurance to health insurance is another bad argument because driving is a privelage not a right.
"The more healthy people that the federal government can nudge into insurance risk pools, the lower will be the average cost in each risk pool."
In simple words "The government forcing people to buy a product that they do not need or want makes that product less expensive for the people that do need or want said product"
Now if only the government would require everyone in the United States to buy a new television every year. My business would be great and televisions would be cheaper for everyone.
While we are at it may be we could set it up so that a week AFTER the television brakes you could then buy the extended warranty that you had turned down earlier and it would have to cover the pre existing damage.
Or maybe people should just be responsible for their own actions
I agree with you that people should be responsible for their own actions, but I have discovered that a great many people believe otherwise.
I also appreciate your translation of the governmental gobbledygook, which of course is a lie since the insurance companies are in bed with our so-called elected offiicials. In fact, the Crooks and Liars blog (http://crooksandliars.com/) reported that the health insurance cartel has been shelling out tens of millions of dollars in a "fight to the death to stop meaningful health care reform".
One example is a report from Crooks and Liars that "One giant of the industry, United Health Group, is going so far as to actually encourage their own employees to educate themselves in anti-reform talking points, and attend tea parties held by a religious extremist."
The last 25 years or so has shown me that when it comes to the price of obtaining and keeping anything mandated by law, government officials put greater effort into trying to convince the electorate that the price of that thing will decrease. I have never seen a single instance in which this is true.
When I moved to Arizona more than 30 years ago, there was no mandatory auto insurance law on the books. It wasn't until 1981 that the state passed its first law requiring motorists to carry certain types of automobile insurance coverage. Forcing drivers here to buy a product that we didn't want or need, our politicians promised, would ensure a decrease in insurance rates. The law did nothing of the sort, and auto insurance rates since that time have skyrocketed.
Today, Arizona requires that every motor vehicle operated on its roadways be covered by one of the statutory forms of financial responsibility, more commonly called liability insurance, through a company authorized to do business in the state. This includes golf carts, motorcycles and mopeds. Minimum levels of financial responsibility are $15,000 bodily injury liability for one person and $30,000 for two or more persons, along with $10,000 property damage liability.
Auto insurance covering liability for injuries and property damage done to others is compulsory in most states, according to Wikipedia, though different states enforce the requirement differently.
I see no difference between mandatory health insurance and mandatory auto insurance, for example. Thus, if mandatory health insurance is unconstitutional, then mandatory auto insurance and other types of mandatory insurance would also be unconstitutional. This would also include homeowners' insurance which is not mandatory unless a buyer is financing a home through the services of a mortgage lender.
budget numbers from this bill is so flawed. they think that healthy people that pay into this system wont use the care. my experience knowing people that didn't have insurance after getting insurance they ran to the hospital over every little thing, that before they were covered wouldn't worry about it.
If mandatory health insurance is deemed unconstitutional, then wouldn't it be true that mandatory auto insurance and every other type of insurance is unconstitutional as well? Drivers in my state of Arizona would be celebrating the end of mandatory auto insurance.
How will expanding dependent coverage affect health plans? More at http://www.healthcaretownhall.com/?p=2795