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.]

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.

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 …

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.

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

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.

"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'm not sure if it economic illiteracy as much as what these 80% of American's value, regardless of the level of knowledge they possess of economics. This comment suggests these 80% are economically illiterate.

This leads me to a few questions:

Does everyone who has knowledge in the subject of economics fall within the 20% that feel health insurers should be allowed to deny coverage or charge higher premiums to people with genetic defects?

Would the Paul Krugman/Robert Kuttner types fall within the remaining 20%, or do they fall within the 80% that apparently are economically illiterate?

Have you folks ever seen the movie Gattaca? Although it does not get into the specific issue of insurance, I think it is related.

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.

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?

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

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.

"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.

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

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?

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?

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.

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.

"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.

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.

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

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.

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.

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.

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].

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.

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.

As someone who spent quite a few years without health insurance, I can say with conviction that lack of health insurance does not doom one to poor health, or even poorly administered health care. It just means that at the end of the day, you are stuck with the bill. Certainly it means that you are less likely to use the doctor for minor issues, but it does not prohibit you from doing so.



But to revisit Posner's closing line, charging 80% of Americans with economic illiteracy, he is of course referring to the most basic and most common flaw in typical non-economic thinking: the belief in a free lunch.



Laws cannot change underlying reality, despite earnest hopes and good intentions. Scarcity exists, so we either ration by price or by other means. Insurance companies may be amoral, but they aren't stupid. They will get their money, and those of us stuck paying artificially high premiums thanks to government-imposed mandates will be screwed big-time. Thanks Democrats!

Judge Posner,

miffed at being compared to a tobacco lobbyist ;^), I prepared a 9 paragraph summary of Evidence for Anthropogenic Global Warming.

I respectfully suggest that both the data and theoretical developments of the last five years have been damaging to confidence in AGW.

Christina, There's a flaw in your rational in blaming the Democrats. :) They've been out of power in the Congress for the last twelve years, over which the health care and insurance issues developed and came to the forefront. Talk about the "kettle" calling the "pot" black. The reason we have this and many other problems confronting the Nation, is that the Republicans, instead of dealing with and solving them as they have come up, they have resorted to name calling and blaming someone else in order to maintain their tenous hold on power and obscrue the real issues. Especially, when their "free market" model and paradigm fails in the real world.

Perhaps Keynes was right and Smith wrong in some cases.

Posner: In the limit, if everyone's health prospects were known with certainty, there would be no market for health insurance at all.

This is not true. The plausible limit case is one in which science will know very well an individual's probability of getting sick in the future. There will still be uncertainty about whether and when the individual gets sick. As long as there is individual uncertainty that is greater than the aggreagte uncertainty, there is room for insurance. In fact, better knowledge about probabilities will make the insurance market more efficient (as Posner also points out).

Posner's "if all WERE known" comment is just a wild hypothetical for trying to sell a theory.

It's wild in that no genetic testing will ever be able to say "this individual WILL get this or that disease" except for some rare cases. Further, even for those so certainly diagnosed, that diagnosis does not insulate them from other more random diseases, epidemics or injuries from autos, guns, the workplace or at home.

And even further? Should we learn with perfection that in our town of 100 most will enjoy perfect health and few medical bills, but 15 of our neighbors will be victims of very expensive "genetic flaws" (gaawd!) cancers or birth defects, would we then circle the wagons such that the 85% would bear no undue burden? and leave the 15% "out there" to bear their own medical care expenses? Or die?

Christina: Congratulations for managing to cover your health care costs, this time, however, I'd remind you that when playing roulette for high stakes that having won a few rounds is not indicative of future success.

Also, I would urge you to delve more deeply into the obvious flaws of our medical delivery system which makes it half again more costly than it is in ANY other nation and nigh onto TWICE as costly as most other advanced nations.

As for hurling stones at political parties, due to the nature of funding political campaigns and the crank insurance companies, providers and a host of others far more interested in maintaining their own profitable roles in the game, I'd think you could divide your stones into two piles. Perhaps those dedicated for "Demos" would be smaller as, at least they've had Nader out there telling the truth, and the Clinton Admin at least made an attempt at a rational reform.

Then? IF you can cite ANY Republican proposal that adds ANY market based mechanism that would lower costs overall, I would be fine with me to transfer some stones to the Demo pile. But as Hat indicates, IF Repubs HAD any rational reforms in hand, should they not be stoned VERY heavily for not taking advantage of holding absolute power for the past six years to introduce some reforms?

Lastly, Please set aside quite a number of potato sized stones for the "midnite" arm twisting passage of the most socialistic GIFT to Big Pharma in the entire history of the world under the name Medicare's Prescription Drug "benefit" which benefits NO one BUT the pharma industry which it has insulated from price competition (once a central tenet of principled conservative) and even stiffened the laws prohibiting the rubes from buying BACK our own drugs from our less greed ridden neighboring countries.

BTW this one causes me a fair amount of pain as each time our "decider" pitches the benefits of "global competition" after pumping and signing this socialistic and isolationist POS I go into fits of side-splitting guffaws while trying to change the channel over his blatant hypocrisy and selectivity of "global competition" (and "old boyism?")

"Posner: In the limit, if everyone's health prospects were known with certainty, there would be no market for health insurance at all.

This is not true. The plausible limit case is one in which science will know very well an individual's probability of getting sick in the future."

The limit is obviously theoretical. It's clearly not plausible that science will ever be so certain as to eliminate the market. The basic point is that without uncertainty there is no market.

I'm a little suprised that (unless my reading has been careless) nobody has mentioned the problem of overinsurance here.

Current problems with the healthcare system result in significant part to the excess incentive provided on the insuring of individuals through their employers. The ban on the use of genetic information by health insurers provides a subsidy to people with genetic predispositions to bad, expensive diseases -- but *only* if they buy health insurance. These are the people for whom moral hazard is likely to be worst; allowing costs to appropriately encourage them to adapt to the fact that they have such a predisposition or choose a cheaper but less complete treatment if the value to them of the more expensive treatment is not worth its added expense is in fact at its most valuable for exactly these high-expense individuals.

In fact, the classic classical-economist improvement on the proposal is "give each person with a genetic defect a lump-sum that would exactly compensate them for the added cost of insuring themselves, and keep their marginal prices the same". There are, no doubt, problems with this -- wealth effects come to mind first -- but they aren't, in fact, as bad as what this law would do. Ideally, you want carriers of genetic flaws to face an incentive to procreate that differs from that faced by noncarriers by the cost that is being externalized here, but that starts to make things ever more complicated, so I'll drop that here.

A couple other points, though, that I'll make with reference to some of the comments: 1) While current problems result in significant part from over-insurance, there may be even more contribution from this "healthcare is a right" -- or, more to the point, "healthcare is not an economic good, but is immune to things like differing consumer preferences (both within this catch-all "healthcare" and between it and everything else) and real trade-offs involved". If more people were more sober about buying healthcare the way they buy shaving cream a lot of problems would be quite reduced. 2) The comment about "if healthcare prospects were known with certainty" is, in fact, a useful pedagogical tool; it helps distinguish between what part of the discussion is actually "healthcare" and what part is "insurance". Disentangling these issues at first is clarifying, so you can see how they interact. He's not suggesting it's realistic; it is, however, a useful analytical device. 80% of Americans, though, are too thick to handle abstraction. It's a scientific fact.

DWI I guess your "over-insurance" vs "buying" helps to point up that those who get in the risk pool via employment have no problem while those shopping around on their own or as part of a very small pool of small biz folk are likely to be screwed and pay a premium, IF they can get "insurance" at all?

"discussion is actually "healthcare" and what part is "insurance". Disentangling these issues at first is clarifying, so you can see how they interact."

....... hmmm, perhaps you're the guy to help me disentangle the two? Now I DO have the abstract reasoning powers to understand the claimed "overuse" by those going to a doc for every little cold. But having noted how much expense is due to the poor and mostly under-insured not getting pre-natal care, proper diabetic care, missing cancer diagnosis until it's "too late" and other preventative care that adds considerably to major medical costs that would be insured.

....... BTW for the "overuse" part WERE we able to crack into the AMA Union a bit, I'd propose more use of para-medics as seems to work quite well for our military and the VA. It doesn't need to be a budget busting event to take a sick kid to see someone and perhaps ease his symptoms, screen for more serious issues, as well as console a young mom who's been up all nite, is unsure, and very likely having to leave for her day job.

...... You're aware that in many areas of medicine and health we're lagging most of the developed world and barely make the top twenty on a number of indices?

Judge Posner,

an amusing legal case. Some greenies were suing a mining company in australia to prevent it opening a mine on grounds of anthropogenic global warming, thus causing a judge to examine evidence for same (instead of merely making pronouncements based on hearsay :^). He was unimpressed. A relevant portion of the case:

[17] Finally, the Fourth Assessment Report of the Intergovernmental Panel on
Climate Change’s Summary for Policymakers was released on 2
February 2007.[6] It relevantly
concluded that is very likely that human-induced GHGs are causing global
warming, and that most of the observed increases
in globally averaged
temperatures since the mid-20th century are very likely due to the
observed increase in anthropogenic (human-caused) GHG concentrations. However,
a close examination
of the global mean temperature chart (Fig SPM-3), which was
said to support that view, reveals that the last 106 years had 3 periods
of
cooling (1900-1910, 1944-1976, 1998-2006) and 2 periods of warming (1910-1944,
1976-1998) and that temperatures rose only 0.5°C
from 1900 to 2006. The
largest temperature change in the 20th century was a 0.75°C rise
between 1976 and 1998, But the fact that very similar rises have previously
occurred (1852-1878,
0.65°C and 1910-1944, 0.65°C) was not
specifically mentioned or causally explained in the Summary. Also not mentioned
or causally explained is the fact that temperatures have actually fallen
0.05°C over the last 8 years.

[18] If a comparison is made of temperatures over the last 55 years (1951-2006), as the IPCC presumably did in reaching its conclusion, the chart shows that average temperatures increased from 13.85°C (1951) to 14.45°C (2006)—an increase of 0.6°C. As “most” of that increase is said by the IPCC to be due to increases in GHGs, it follows that the temperature increase of concern is about 0.45°C (0.45°C being 75% of or “most” of 0.6°C ). With all respect, a temperature increase of only about 0.45°C over 55 years seems a surprisingly low figure upon which to base the IPCC’s concerns about its inducing many serious changes in the global climate system during the 21st

century.[7]

http://www.austlii.edu.au/au/cases/qld/QLRT/2007/33.html

Posner writes,

So even if the new law led to more genetic testing--which probably it would not do, for the reasons stated at the outset--its social costs, from the standpoint of economic efficiency, would probably be negative.

Aside from my other objections to Posner's post, I would call attention to his two uses of the word "probably" in this sentence. I see nothing in his arguments that justifies the use of that word.

In the first case he identifies factors that suggest there would be lots of genetic testing without the proposed law. But where is the support - logical or empirical - for the proposition that these factors are likely to lead to more testing than the proposal would?

In the second he mentions a possible problem created by the new law. Insurance rates will be higher, hence some individuals will not buy insurance, hence some individuals, who would be tested if insured, would not be tested under the new law. Now this is pretty tenuous, but even granting that some individuals will be affected this way, there is nothing in the argument to show that this effect outweighs the social benefits of increased testing induced by the law.

In short, I think Posner's objections, to the degree they are based on his assessment of the relative probabilities he mentions, are unsupported by his arguments.

Not every decision about law needs to be filtered on the basis of economic utility theory. With a foundation precept of everyone being created equal, a political decision to implement blinders on the results of a health test, is both wise and just.

"Not every decision about law needs to be filtered on the basis of economic utility theory. With a foundation precept of everyone being created equal, a political decision to implement blinders on the results of a health test, is both wise and just."

Aye, another all too common misconception. A political decision that results in such a law would result in higher premiums for all of us. What if paying those extra premiums means that people who would have otherwise been able to take better care of their children can no longer do so? What if for every life saved, many more are lost because we choose to redistribute the health care burden? How is that "wise and just"? How is it fair that children whose parents, forced to pay higher premiums, can no longer afford to pay for the health and safety they wish to, and as a result these innocent children die? Think about this when you say that the proposed law is wise and just. Simply passing the law doesn't change the underlying realities. The law would simply pass the costs to someone else. Think about if it is wise and just to pass these costs to someone who did nothing to warrant bearing these costs.

Hmmmm, What are your general feelings on individual privacy?

And what are your thoughts on corporate privacy? Perhaps if you favor our lives and all about us being open to them that we should know a lot more about them too? Margins? Actual costs of covering those of higher risk? Could the most costly of "genetic flaws" be that of CEO's who won't come to work unless they're paid more than the combined salary of 100 US Presidents?

Haris, As someone once said, "Are we not our brother's keeper?" In a purely theoretical realm, it's easy to apply a given model to a set of circumstances. In fact, I can even use it too justify the extermination of race or a socio-economic class in the interest of the "greater good", you included. Things are much more complex and sticky in the real world. Even Adam Smith, recognized that fact and included a theory of "Moral Sentiments" in his economic works. Once again, I ask, "Are we not our brother's keeper?" ;)

NE
Not really sure what you're getting at. I'm not advocating not taking care of others. I'm just saying that for everyone we help now, we could be hurting others who are equally deserving of our help. Just because an action helps a certain group doesn't make it wise or just or fair by default. I'm just trying to people to acknowledge that there is a cost to every nice thing we do, and sometimes the choice is between keeping one brother over another.

PS: I know you were only trying to make a point, but I, for one, could never justify the extermination of a class for the greater good. That's the one benefit of being called a libertarian - at least the world knows we're nonviolent.

Think about if it is wise and just to pass these costs to someone who did nothing to warrant bearing these costs.

Well. OK. It's worth thinking about. But let's also think about the fact that the person with the genetic defect "did nothing to warrant bearing these costs." So if the basis of your logic is personal responsibility for the consequences of one's behavior, it really doesn't apply here.

Haris, In Ethics and Morality, the sin is the same, whether due to an act of commision or omission. According to your logic, we may be harming someone else (like the insurance co. and employers and and other individuals by having to make them pay a little more) so let's do nothing and let the "invisible hand" take the blame. Yet, we are still too blame. The same also applies to the use of violence and force.

"So if the basis of your logic is personal responsibility for the consequences of one's behavior, it really doesn't apply here."

I agree, it'd be pretty hard to blame a genetic defect on "personal responsibility." But the larger point, which you correctly noted, is that someone who did nothing to warrant bearing certain costs will end up bearing them. My instinct is to do less rather than more, especially when it comes to genetic endowment: we all have to deal with our height, skin color, hair color, and other genetic predispositions, so the 'natural' position is to not interfere.
That said, I certainly don't think people with genetic defects or certain predisposition should be left to their own devices because their condition is "not our fault." But to be truly fair, we have to remember the impact our help to one group is having on another.

NE: I'm getting more confused. Omission doesn't happen without a duty to act. So, for a sin of omission, someone must assume [or, more often, be assigned] a duty to act. Are you justifying hurting the few for the benefit of the many?

I don't understand. We agree that the cost of a genetic defect will inevitably be borne by someone who is not responsible for it. The question is who.

Now you say that those with such defects should not be left to their own devices. Good. But that doesn't seem to square with your previous position. As for the "natural" predisposition not to interfere with say, hair color, that hardly seems to apply to matters of physical wellbeing.

"But that doesn't seem to square with your previous position."

Not leaving people to their own devices is perfectly compatible with being aware that costs are born by people who bear no responsibility. I'm siding with those who favor some sort of social insurance. I'm just saying that the costs of social insurance must be balanced against the benefits. The particular law that is under consideration, which would prohibit a sort of genetic discrimination by private insurers, seems to be quite possibly the worst way address the situation.

Speaking as a casual observer of this very useful blog, why is it that Judge Posner's posts seem to draw many more comments than Dr. Becker's posts?

Are Judge Posner's comments more controversial?

Are Dr. Becker's comments more irrefutable?

Do Judge Posner's comments appeal more to outspoken people?

Jake
Is it really Posner? I always thought that whoever has the top post of the two gets all the comments.

I think one of the best aids to considering any public policy is to consider the proposal as if you did not know your own position in that society might be. Often that's the case anyway as those who might have favored legislation favorable to the well-off may lose that status.

Perhaps this perspective is useful in the area of genetic testing (which is largely positive) and allowing "insurance" companies to use the data to cherry pick the members of their "risk" pool. The exercise is simple. Before you have yourself or other family members tested THAT is the time to decide whether there are any societal benefits to casting those who "fail" out of the pool.

From there we might move on to consider the utility of insurance companies or other forms of risk pooling who are using the testing data to go through the deck looking for the cards that will make up their most profitable hand.

Then, since "insurance" companies have costly overhead and profit margins why would those who are healthy, have been tested and have a brighter than average outlook, bother to pay them? Next? of course some of them will be wrong and have costly medical emergency and have little choice but to file bankruptcy. Meanwhile, down the street those who've been excluded from the pool are also having their, predictable, expensive emergency. All but a few of them soon join the healthy set in bankruptcy court.

Perhaps those who voiced an opinion not "doing something nice" for the sick or lame will finish there thought and tell us what they would do with them?

Haris, You're getting confused? Good! Things are not so black and white when moral sentiments come into play, the confusion is the beginnings of revelation and enlightenment. ;)

I'm siding with those who favor some sort of social insurance. I'm just saying that the costs of social insurance must be balanced against the benefits. The particular law that is under consideration, which would prohibit a sort of genetic discrimination by private insurers, seems to be quite possibly the worst way address the situation.

I see. You endorse the objective, but think this specific mechanism is undesirable. Sorry. I misunderstood your position.

Still, as you point out, there will be costs and someone will have to pay them. That will mean either higher taxes or higher insurance premiums, either of which may have the consequences you describe.

What sort of system would you prefer to deal with this problem?

Bernard
I'm afraid I can't answer your question intelligently at this point. The theory depends on costs and benefits, and I don't even have a ballpark idea of costs and benefits of any program. How many people have genetic defects, how many of them will get sick, what percentage of the population do they constitute, what is the average cost of early treatment vs. late treatment, what is the alternate use of the social insurance funds, what are the distortionary effects on cost of a third-party payer? I'm sure we can get at least some rough numbers on this before we have to make a decision. If pressed, I'd favor a social insurance paid for by a very broad tax, like the income tax; it'd be something akin to extending Medicare to everyone. The reason I favor that is that it places an explicit figure into the federal budget that lets everyone know who's paying for this insurance and how much, rather than hiding it by passing it to private insurers and insurance buyers. Since I don't know the details of the genetic tests or the associated diseases, I'd be hard-pressed to define what the social insurance would cover and how to contain costs. It's obviously not an easy problem, else someone on this blog would have solved it by now. What bothers me is that I don't see a sustainable middle ground between universal insurance [with all its inefficiencies] and pure private markets [efficient, but 'unfair' in a very specific sense].
I apologize for the long and probably incoherent post. The overarching point is that without some numbers, I can't really make an intelligent policy decision. But the framework for the analysis is in place.

Haris... Well, I think you tacked your way to a viable conclusion. Perhaps get rid of your concern as to the cost of caring for those with "genetic defects". (I like to put that term in quotes, you know, so as to hint that most of us share some of those, be it a predilection for early heart trouble, sickle cell, diabetes, serious allergies and the rest of a very long list.) Or, if you think policy should pivot on "cost" please indicate how the very costly individual cases SHOULD be handled?

BTW I find it interesting that Posner "the Libertarian" ends up favoring taxation as the means of burden sharing. I join with him, but while he hangs his hat on the marginal case of higher health care premiums adding yet a few more to the 45 million who can not, or will not pay for health insurance; I hang mine on the fact that low income groups can NOT afford medical insurance and that spreading the risk via taxation is the only viable means of paying the costs.

Thirty other countries have adopted some version of "all IN the risk pool", how long are we to pretend what we have offers any "market based" advantages, and waste our resources fiddling with "covered" "pre-existing" and increasingly playing more cat and mouse with the results of genetic testing?

BTW....... how many "libertarians" here note and oppose the clearly market distortive effects of health care benefits operating as leverage to enslave those who might otherwise benefit themselves and our society by applying their talents elsewhere?

Jack
Catastrophic health care claims belong in the biggest pool available, something similar to what Kerry proposed during one of the most mis-managed campaigns ever. But The problem is how to define "very costly." To use Kerry's example, let's say claims of over $50,000 shift to the government. That creates great incentives for every incident costing upwards of $30,000 to be made more expensive so that the government, rather than individuals or private insurers pay. [I won't even try to define "incident."] That's what drives me even more towards universal coverage. But I keep bringing up that single payer systems have many pitfalls [what's the average wait for an MRI in Canada?] and someone smarter than I should figure out how to avoid them.
Also, I do favor a cost v. benefit analysis. Remember that every resource spent on someone's health could be used for someone else's health. If we want to extend and improve lives, shouldn't we improve as many as we can for the same price?

Also, the tying of employment to insurance and the problems with that have been amply documented. I'm with you there, especially on the mobility effects.

Jack
Catastrophic health care claims belong in the biggest pool available, something similar to what Kerry proposed during one of the most mis-managed campaigns ever. But The problem is how to define "very costly." To use Kerry's example, let's say claims of over $50,000 shift to the government. That creates great incentives for every incident costing upwards of $30,000 to be made more expensive so that the government, rather than individuals or private insurers pay. [I won't even try to define "incident."] That's what drives me even more towards universal coverage.

....... Right On!! Finance writer Andrew Tobias wrote and lobbied for a "pay at the pump" means of paying for auto insurance. The plan has a host of advantages, including NO uninsured motorists, that you'd have a choice of having any number of vehicles and pay insurance only when you gas up and hit the road. You can see advantages that because the variable cost of driving would rise while the fixed cost would drop of driving the most efficient car of your fleet, and extra incentives to leave it home. Naturally this would require a "no-fault" approach which in itself saves money. But, as you mention, so far no state has a true no-fault with MI having the closest, but it's no-fault up to $4,000 or so which gives exactly the incentive you mention to push up the amount of the claim. (It takes a small book to consider the whole scheme but it would be VERY beneficial to nearly all Americans other than those selling insurance on commission and the Bar Assn.)

Because there seems no way around the adverse selection problem I conclude the pool must be universal. Once that bridge has been crossed, the next may be that of the contractual agreement and there's bound to be a tug of war of some sort.

But I keep bringing up that single payer systems have many pitfalls [what's the average wait for an MRI in Canada?] and someone smarter than I should figure out how to avoid them.

......... There I think we can learn from them and do something uniquely American. What occurs to me is "single payer --- multi-supplier"....... with a number of HMO's PPO's or other groups vying for customers by competing on service and providing more than what might be specified in a basic coverage contract. (There's a flaw in my approach as there will be in any approach, in that the amount the single payer voucher would have to be set by a political process...... but I think the savings of NOT paying insurance cos, lawyers and all the related drags on our existing mess would mean we could cover all of our people for less than the current 16-18% of GDP (plus court costs??) and approach the 8-10% of GDP spent by nations with universal care.... in short there's plenty of money to fix people up bet we're wasting 50% arguing about who pays.

Also, I do favor a cost v. benefit analysis. Remember that every resource spent on someone's health could be used for someone else's health.

......... yes... and a sticky problem it is too. We know that in some venues they do a LOT of invasive and very costly heart surgeries while others do many less and appear to have similar outcomes. (Tough to measure though, eh? as one might live as long without open heart surgery, but have to live with angina? and fear to go five miles from the hospital?)

If we want to extend and improve lives, shouldn't we improve as many as we can for the same price?

......... Yup! And I think the VA may save money on caring for their patients by insisting on regular check-ups and freely encouraging those "at risk" to take flu shots etc. With computers I think we could find out even more than we do, for example a mammogram might have no copay at all or even, if one woman will coax her friend to go too perhaps they'd both get a coupon for lunch or some such small incentive.

Also, the tying of employment to insurance and the problems with that have been amply documented. I'm with you there, especially on the mobility effects.

......... Yes! and all the "futurists" predict a speeding up of job changes during one's career. It just ain't WWII anymore!

........ as I consider a voucher system, in essence creating something of a fixed price competition by the various providers (though in a more detailed look, the voucher for a 25 year old would be less than that of a 50 year old) I'm reminded of the pre-dereg competition among airlines. While it (apparently) didn't do all that well at driving down costs they did compete on service. In fact, I guess there are other similarities, as even in today's cut throat airline competition they aren't allowed to "compete" down to the point of not maintaining safety standards (I hope!) and still make quite an attempt to maintain their on-time record. Then while its most profitable for them to fly full, they have to weigh giving up market share by being too booked up.

Anyway, from what we agree upon, if we COULD tie our insurance hors to the mast and apply several layers of duct tape to mouths of our barristers I think we could design a system FAR better than the mess we've inherited and most likely better than that of the 30 other countries offering universal health care and where "medical bankruptcy" is not often heard.

Other than the stab at lawyers, I think we got something here.

Haris... "Whoops!" Sorry! Brings up an interesting point; I know hard working and decent folk in law, oil, medicine and most other occupations. But! Once they band together as "Big Oil", Big Medicine or Big Pharma, and Big Law they pose tremendous roadblocks to adopting rational policy by democratic means.

Perhaps we'll talk about watering down the effect of them and BIG, BIG Money and restoring some power to the people here.

Jack
You'll notice you listed industries that are characterized by extensive government intervention. Licensing requirements, patents, and the nature of resource exploitation etc all open up opportunities for cartels, which lead to the ills of monopoly/oligopoly. I'm still not sure why people are allowed to trade price for quality in everything, except god forbid they chose to go to a nurse rather than a full-fledge doctor, or a paralegal rather than a member of the bar. Loosening the barriers to entry would probably go a long way to breaking up the government-enabled cartels.