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02/19/2007

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Haris

The post excellently describes the increased desirability of social insurance in cases of increased scientific certainty and less risk pooling. As to the question who should provide such insurance, I think the answer is obvious. As much as I dislike entitlement programs [or, as they should be known, welfare] I feel like "social" insurance should be paid for by "society," or in this case the taxpayers. Such insurance would essentially be mandatory risk pooling, which I'd much rather impose on those mandating the pooling rather than unwilling insurers or employers. I do think such steps are increasingly necessary, especially when it comes to genetic defects and hereditary conditions, because I find it difficult to make people responsible for things they did not cause in the least. [I know that's been the case for all of human history. I'd like to see some progress made.]

Mark V Wilson

I think so many Americans support this not out of economic illiteracy so much as political realism -- during this transition phase as genetic testing becomes better at predicting health outcomes, it will be decades before the political system can effectively socialize the cost of medical care.

Nick Chia

I like the argument for genetic testing because of the reasoning that more people would be able to detect illnesses earlier and thus receive cheaper treatment. It could sound like an idealistic statement where utility is maximised.

In Australia, we either pay Medicare levy or we receive a rebate from the government if we take up health insurance therefore everyone that pays taxes is contributing in some form. As mentioned by Haris, due to the fact that men have no control over genetic it is only fair that the government steps in to help out. I don’t necessarily think that if one tests negative for defects then one would not want insurance. I have little scientific background bar my high school science classes but what if people are insuring against illnesses that have a low probability of occurring, perhaps some kind of dormant disease that could be triggered by our decadent lifestyle. If this assumption is invalid then my following suggestion shall end here. Otherwise the following is what I think could happen.

Insurance is built upon people's averseness to the small probability of something disastrous happening, so I don't see why the above would be too farfetched. Private insurance can fluorish alongside social insurance if genetic testing is made compulsory for purchasing health insurance. What could possibly happen is that the private insurer would consist of customers who have non-genetic defects only and social insurance consisting of those with genetic defects. Based on this hypothesis, private insurance would make a higher profit margin. Yes, we can argue that premiums paid by those with non-genetic defects would be drastically lower however I would say not by too much because people are paying for the service and efficiency of a private insurer. A portion of the higher profits resulting from this effect would then be taxed by the government and allocated specifically to the social insurer to help those test positive on genetic defect. The premiums paid by those who test positive will then be lowered from this subsidy.
The effect of this will be that illnesses will be detected earlier as people are more willing to be tested and cured at a cheaper rate. This also eliminates unnecessary spending of resources by those test positive to cheat their insurer. Perhaps one unfairness is that those who test positive with genetic defects will have to be patient and bear with the bureaucracy of a social insurer.
Life’s unfairness, I’ll leave that to God …

Pyrodeus

If we as a nation were taxed in order to provide health insurance to those rendered uninsurable by the presence of genetic defects, does anyone really believe those tax dollars would be spent efficiently?

The Washington post article from earlier today suggests that we aren't even providing acceptable care to our soldiers at the Walter Reed Army Medical Center let alone to Joe Schmo from Peoria when it turns out he might have ALS.

The notion that the government is going (VROOM!) spring into action and put together a decent and efficient public health care system for the uninsurable is beyond the level of a pipe dream. I doubt politicians would even agree to the tax increase needed to fund such a system, let alone that it would be well run.

Haris

Pyrodeus
No one thinks it'd be efficient. But it may be the only option left.

N.E.Hatfield

This issue clearly shows that the Congress still believes in the concept of private insurance supplied by employers. It's just an attempt to minimize cost cutting and maximizing margins by these two groups by using genetic testing. Which they will do if not stopped by legislation. It's quite rational, given the system that is now in place in this country. Otherwise, radical and revolutionary changes would have to take place within the health care industry and society as a whole. Which I don't think is one bridge Congress is quite ready to cross. And as such, functions as a band-aid on an already worn out and antiquated system (health insurance that is).

I won't even get into the issues of potential "wrongful death" and other related tort issues that might come up if an individual dies because of lack of medical care or the necessities of life due to denial of health insurance or employment due to genetic testing.

Pyrodeus

Haris:

I think there is a question of government efficiency that needs to be asked. I accept that forcing private insurers to provide coverage is inefficient, but I am not sure if it is any more inefficient than government coverage.

You say that government coverage may be the only option left, but I ask whether it's really any better than the option against which Posner argues.

If nothing else, the present option has the benefit of taking effect immediately. No one has to lose their coverage waiting for Congress to act to set up a national insurance program. If you or Posner believe that a federal system would be better, then why not view the present laws as a "stop gap" and urge your congressmen to set up such a taxpayer funded program? Once established, the existing burden can be lifted from insurers. (One possible answer to the previous question, of course, is that Congress is so inefficient that you do not believe it could set up a national insurance program unless "forced" to do so by a massive healthcare crisis. Then the question becomes whether it's better to suffer through such a crisis or through the the insurer-burdened system.)

In my view, the system of oversight of insurance companies by each of the States individually is already so inefficient that (if you really want to save the insurance companies from the scourge of economic illiteracy) redesigning that system into a single federal program, rather than 50 different State Insurance Commissioners, is probably a better target.

Jack

Well this one's simple as both Posner and Becker demonstrate they've "bought" the whole corporate packet. Posner's dismissal of the "80% of Americans" as being economically illiterate has me wondering about his own "literacy".

For openers, where is the "economic efficiency" of being required to reveal "known" genetic "flaws" or pre-existing conditions" while those remaining, by choice, ignorant of their "flaws" by opting not to take the test they might desire to take until they are safely "in the pool?"

Second, doesn't this bring up the question of just what "insurance" and "risk pools" are about in the first place? For example with an apparently healthy set of kids, why would we pay out a pricey premium to an "insurer" and kick in our share of the CEO's multi-million buck salary? Of course THE answer is that of the RISK that one of the kids does develop leukemia or some other crushingly expensive disease.

Obviously, there is the "adverse selection" problem, but how long are we going to prop up this massively expensive and cumbersome system that is not serving us well and LET "Them" cherry pick their most profitable sets of clients? Or play "gotcha" games with the middle aged who change jobs or otherwise get caught outside "the pool" with uninsurable "pre-existing" conditions?? And why do "conservative economists" gloss over the market distortion effects of trapped at a company due to a pre-existing and now uninsurable, "condition" or even denying their talents to small business start-ups because they have families and can not work where there are not "health care benefits?"

There is really ONLY one way around this mess, and that is a system where all are in the pool. You can design the rest of the medical payments system around the pool in a number of ways, but I see no alternative to all being in the pool where the small costs of the young and healthy do contribute to those unfortunate to have a costly illness in their youth. That is what a risk pool is all about and were the costs not as horrendous as our system creates, why would anyone NOT want to be in a shared risk pool?

In regard to the predictably higher costs of older folk our current system of, some are in, some are out, some are "Medicare" "VA" or "Medicaid" patients does not save any money nor does it apply any "free market" cost lower effect. Instead, it simple adds on the very substantial insurance company overhead, the clerical costs of sorting out "coverage" as well as the costs of forgoing rational preventative care and finally the costs of litigation as to "who's bill" and with medical costs being our Number One cause of bankruptcy a substantial part of our court administration costs.

If the above is not enough, what system do you suggest as we know we'll change jobs frequently in the "new economy" and that jobs with "benefits" are becoming less common? If you suggest some silly "health savings account" or "shopping for a good deal" would you please include some figures showing how those living in households below the $45,000 median income can play your game or cope with a major illness? Or, if leaving the sick to show up half-dead for the priciest care on the planet and clogging up or ER's would you so state?

Jack

Pyro sez"

"In my view, the system of oversight of insurance companies by each of the States individually is already so inefficient that (if you really want to save the insurance companies from the scourge of economic illiteracy) redesigning that system into a single federal program, rather than 50 different State Insurance Commissioners, is probably a better target."

......... As I see the amount of added value contributed by "insurance" companies to be a very small fraction of what they add in overhead, I'd go a step further and have the government collect the funds. They've been very efficient in this role in SS and Medicare. Today's "insurance" companies? They COULD go to work for a living, say using their claims expertise and huge pools of capital to form competing HMO's, PPO's and other forms of service providers, instead of continuing to be the parasites that have grown so large they're killing their host.

How to connect the dots? I end up with corporations pitching in an amount similar to their current participation and filling the gap with taxes. Then all citizens would have a coupon, or better, a "smart card" with which to shop the various alternatives.

Cherry picking? Uh-uh, the PEOPLE would be a the table to design the coverage contract and as we'd ALL be in the pool they'd not be allowed to exclude "genetic flaws" or pre-existing conditions, but could provide some small incentives for non-smokers etc.

Something like that? Jack

David

Posner writes:

"Eighty percent of Americans tell pollsters that they do not think that health insurers should be allowed to deny coverage or charge higher premiums to people with genetic defects. This is an example of Americans' economic illiteracy."

I disagree that these poll numbers are the result of "economic illiteracy." I think the explanation is simpler: people do not believe that it is "just" to deny health insurance based on a genetic defect. They realize that, since the U.S. does not have universal health care, denial of private insurance effectively means denial of care. I would wager that the same 80% would agree with Posner that there is no problem in denying life insurance (as opposed to health insurance) to a terminally ill patient.

In short, Americans are beginning to view basic health care as a "right" and not as a "good" to be rationed by the free market. Eventually, politics will catch up with public attitudes. Regulating "private" insurance company behavior is the first step in that process.

Haris

"I end up with corporations pitching in an amount similar to their current participation and filling the gap with taxes."

I love statements like that. "It's time for corporations to pay," usually followed by "their fair share." Except corporations are legal entities to whom fairness doesn't apply. Corporations essentially belong to their shareholders, who, as far as I know, are people, too. Sometimes this happens through mutual funds and pension funds, but ultimately, these are all people. Corporate taxes are just passed down to customers, who are also people. Taxing them also reduces their ability to hire people. If we want to tax the rich, let's tax the rich. But let's not cloak it by saying we're taxing "corporations." They don't care. People will always end up paying.

Pephi Sondamase

Generic testing can be helpfull. I don't think it should be forbidden. I read about it here: http://www.webbudd.co.za/volt/forum.php?f=5

Jack

Haris. perhaps a bit of clarification is indicated"

"I end up with corporations pitching in an amount similar to their current participation and filling the gap with taxes."

........ In our current patchwork of health care mess, many of our oldest and most established corporations ARE saddled with the cost of their employee's health care. Though! as you point out in your "protect them from taxation" line........ likewise the employee is, in essence, paying for his own health care via it being a cost of employment.

...... You likely know that the weird anomaly of health care being a part of SOME folk's employment package came from getting around a WWII wage/price freeze and that no rational policy wonk would have ever considered putting it in the hands of the corporations. As you also know? the "system" is broken and not only costs US twice what the civilized nations pay, but is taking down a number of our corporations with it. (The former "Big Three" come quickly to mind.)

So......... to get the funding out of the corporate employer model and TO a more individual basis, how would you go about funding a more rational system for an age when A. people do not stick with a single corp for life and B. the corps can not be trusted with such a responsibility?

Here's what I would propose (and I think the current health care bagholders would be happy as clams on a sunny beach about) Say those who DO pay healthcare ARE pitching in some number like $250 billion or so. Let us fairly spread, roughly that amount in taxes over ALL employers such that for the most part Ford is no longer paying the health care costs of family members who work for Taco Bell or a small company that "can not afford" to provide health care.

The revenue from this source would not pay for the whole program just as it does not today. So? how to fill the rest of the void? Sadly, because the wage pyramid is SO utterly out of whack, low income earners have zipnada to pitch in, thus there is no rational alternative but to have the rest come from individual taxes.

Now before rejecting the raising of healthcare funding by these means, keep in mind that the goal is that of paying a LOWER percentage of our GDP for healthcare. (You'll note we spend 16% or more while most other nations spend less than 10% of a smaller GDP for BETTER results.)

So far...... I've put forth the means of raising the funds, now let's move on to using "the market" effectively to give us the best value for our buck of expenditure.

BTW........ do YOU find any value added aspects of our "insurance" industry worthy of even a small fraction of what that monstrous parasite costs?

Jack

David sez:

"In short, Americans are beginning to view basic health care as a "right" and not as a "good" to be rationed by the free market. Eventually, politics will catch up with public attitudes. Regulating "private" insurance company behavior is the first step in that process."

David? Do you disagree with "basic health care being a right?" in this richest of countries?

Given that ALL government workers and teachers are "covered" along with all active and retired military, those working at all levels for our major corporations, along with Medicare, Medicaid and welfare recipients, is there a reason you'd favor NOT providing "basic health care" to, primarily those working very hard every day for small businesses that "can not afford" healthcare?

Would you just let them pile up outside the ER? Other? Perhaps list who you'd deny? And if the number is near zero, why we spend a major fraction of our health care dollar sorting out "coverage" et al?

n.e.hat

I'll spare you the gruesome health insurance details of the self employed. Needless too say, most of the private health insurance coverage out there is abysmal at best and the industry is dominated by shysters.

If the private entrepenuer is the salvation of the National Economy, why can't they afford even basic health coverage for themselves. I and others I know are actually thinking of emigrating to either Canada or Australia and taking our skills, knowledge and entrepenural spirit with us. One question, how does that help the National Economy? Just a little something too think about.

Bernard Yomtov

The statement about economic illiteracy is insulting, offensive, and, may I say, idiotic.

Why assume that people are unaware of the consequences of certain policies? Isn't it just possible that the public is willing to pay higher insurance costs, or higher taxes, to see to it that those with genetic health problems do not face ruinous costs?

Further, where does Posner come off accusing others of "economic illiteracy?" His own understanding seems to me to be limited, and highly biased by his libertarian ideology. Look to the beam in your own eye, Judge Posner.

Haris

"Isn't it just possible that the public is willing to pay higher insurance costs, or higher taxes, to see to it that those with genetic health problems do not face ruinous costs?"

That isn't really a response to the statement. Of course it's possible that Americans want what you said. That doesn't mean they're economically illiterate. But if they think that insurers shouldn't be permitted to raise premiums or deny coverage in this situation, that's a pretty clear indication that they are. The economic reality is that genetic defects pose greater risks and thus merit higher premiums [under the current system]. If anything, the poll shows that Americans are willing to make someone else pay [as opposed to themselves, the taxpayers]. Since doing this will merely push the costs on them in some other way, it really does show that there is less than necessary consideration of economic realities in America.

Haris

Jack
I understand what you're getting at, but my point is that a tax on corporations or as you say "employers" is merely a tax on individuals that is more politically popular. Taxing an employer raises that employer's cost of business. That means that the prices of its product are higher and either wages are lower or fewer people are hired. In either case, individuals bear the cost, and often these individuals are poor or middle class. If we really want to have a progressive tax code, corporate taxes should be zero and taxes on individuals should reflect whatever we consider "fair." Taxing corporations is simply hiding who is actually paying the tax.

Jack

Haris........ I surely understand the concept, having had it drilled into my ears every time I get near a right wing corporate loyalist! But! truth is corporate taxes are at their lowest rates in the post war era and STILL many of them resort to "abusive transfer" tax avoidance and related games under the Carribean sun.

Naturally what you say about the corporate tax bite "trickling down" to its consumers is true, but, the same must be said for ALL tax bites. I'm probably outnumbered by "libertarians" here in strongly favoring progressivity in taxation, and especially so as the wage/wealth gap grows to democracy killing levels. I favor a similar tax schedule for corporations as some industries have a very hard time making any profit, while others such as our price fixing oil companies, oligopolists such as MSFT and ethanol scammer ADM, along with "cost plus" war profiteers, can and should do their part.

BTW........ I really don't buy the "passed on" theory whole cloth as I still believe that at least SOME corporations ARE engaged in competition and that Walmart? might rather take the tax bite out of their enormous levels of retained earnings (or? see it they COULD chisel a bit more from their already underpaid employees) than lose their competitive edge. You'll recall the very high rates during WWII that served both to help pay the enormous costs of that war as well as to curb the incentive to engage in war profiteering, and today, I'd be happy to see Haliburton end up with it's normal corporate profit, but not to benefit as greatly as they have from multi-billion buck, sole source, cost plus, "old boy" contracts. Instead in exchange for such a portion of the gleanings they should have been treated as something of a regulated utility. After all, US taxpayers are NOT getting rich from this little adventure and have been pretty good sports (so far) on being ripped off and further inD E B T E D.

Lastly? if after the above you STILL want to let the corps dump their health care programs on us; are you willing to shoulder your share of the extra burden? Jack

Viscus

Posner's article is interesting. I must quibble with one tiny part of it, however.


Eighty percent of Americans tell pollsters that they do not think that health insurers should be allowed to deny coverage or charge higher premiums to people with genetic defects. This is an example of Americans' economic illiteracy.


This is not necessarily an example of economic illiteracy. I am economically illiterate, but I agree that genetic defects should not be revealed to employers or health insurance companies. There are Ph.D. economists who think likewise. Clearly, such economists are not economically illiterate.

There is a reason for not allowing employers and insurers to consider this information. Because one values social insurance and realizes that this a politically feasible way of obtaining that goal. Clearly, there will always be some level of tradeoff between providing social insurance on one hand and maximizing economic wealth on the other. So, an economically literate person who values social insurance more than Posner could rationally come to the opposite conlcusion.

Of course, some economists might argue that all wealth transfers should occur through the tax system. But, that fails to take into account political feasibility on one hand and it is not really an argument that the disincentives of higher income taxes are in fact less severe than other sorts of disincentives on the other.

Phil

In the public health area people are often asked to pay higher prices to obtain
a greater good for society as a whole. House builders in the US are required
to provide indoor plumbing and an electric system that is up to code. It is not
considered a problem that poor people thereby cannot afford a new house. They
are also priced out of the car market by government requirements for safety.
In these areas there is a trickle down effect where the "health" systems get
passed along when the items are sold used. As we move into a service economy
we are pulling out these existing mechanisms for ensuring universal health and
safety and applying them to services for which there is no secondary market.
It would be nice if I could obtain health insurance from one company, strip or
add benefits, and resell it to someone else but that is not permitted.
p/
The only way the public has to negotiate with the corporation on an even basis
is through the legislative process. I have no chance to get a clause in my
company's health insurance policy protecting me from price rises due to the
results of a genetic test. I can only turn to the government if that is what I
want.

Bernard Yomtov

haris,

Here is Posner's final paragraph:

Eighty percent of Americans tell pollsters that they do not think that health insurers should be allowed to deny coverage or charge higher premiums to people with genetic defects. This is an example of Americans' economic illiteracy.

I think you misinterpret the survey. What 80% of the respondents object to is charging higher premiums specifically to those with genetic defects.

That does not mean they object to premiums being higher overall, in order to cover these individuals, just that they think the added cost should not be borne solely by those who have the genetic problems.

Haris

This thread is way off topic and I apologize, and I hope this will put it to rest.

"Lastly? if after the above you STILL want to let the corps dump their health care programs on us; are you willing to shoulder your share of the extra burden? Jack"

I won't even ask how corporations, lifeless entities who don't get sick, have health care burdens, other than whatever we choose to give them. Anyway, I am already shouldering whatever share of the burden is mine. It's just not on my tax bill. Instead, it's in form of higher prices & lower wages, and lower investment returns. The average worker's pension fund that invests in corporate stocks suffers when corporate profits are lowered due to taxes - the worker, ultimately, bears the cost of the corporate tax.
You may not believe in the passing on of prices, but you can't deny that if the price of something rises, you buy less of it. Making labor more expensive through corporate taxes or mandatory employer-provided health care will unquestionably result in fewer people being hired, or at lower wages. The inability to get jobs that would otherwise exist, or the lower wages resulting from such taxes, are ultimately where the corporate taxes manifest themselves. If you want to read the conclusive article on this issue read
http://www.taxfoundation.org/news/show/2216.html

And we return you to your regularly scheduled bickering about genetic tests and whether Americans are economically illiterate [yes].

David

Jack:

Perhaps the tone of my comment was not sufficiently clear. I support universal health insurance (though I am as yet undecided on the method through which it should be achieved). In fact, I believe that universal coverage is not only "just" and "good," but that it will make Americans healthier as a whole and thus lower health care costs overall. In particular, it will lower the costs associated with treating the large number of chronically unhealthy Americans (note the current epidemic of type II diabetes), by keeping them healthier in the first instance. It will also save greatly on administrative costs.

I meant it as a good thing that Americans are beginning to view basic health care as a "right." Posner's analysis is flawed, because he insists on treating health care the same as any luxury good. Almost every other industrialized country has universal health care. I merely noted that our politicians are behind the public on this issue (still indebted to the status quo), but they are beginning to catch up.

Jack

David....... Thanks, and sorry, it IS so easy to misunderstand in a forum such as this. I guess taking small snapshots at a very large elephant etc.

Well, we're in about the same space and so far I'm sure of only the fund raising side; all have to be in the pool. Then, were our incomes not SO screwed up, all should chip in to pay for it. But! wealth and high wages are being decoupled from "going to work and following the rules" and zipnada is "trickling down" from overall increases in productivity, so we're again stuck with tax those with the gilt to pay for the care and maintenance of the slaves and serfs.

The delivery and cost controlling side is the toughie, so instead of the rationing by waiting in line of some universal systems, I guess I'd hope to harness some market based efficiencies by allowing the consumer to enter system via a coupon he can use at competing providers.

Perhaps along the lines of the provider getting a certain amount for each young person they enroll and more for older patients. I'd the provider would be squeezed to hold down costs and to attract his customers by offering good service or amenities beyond that of some basic contract.

It's not going to be easy! and especially not with "terrorist" from the entrenched interests ambushing the reformers all along the trail.

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