Tuesday, December 10, 2013

Catch of the Day

Jonathan Chait:
The problem here is that their definition of who would “benefit” is exceedingly narrow. You “benefit,” by his way of thinking, only if your actuarial costs exceed your financial contributions. But that isn’t how most people think about insurance. Insurance isn’t a kind of gamble where you bet you can beat the house by consuming more in medical care than you pay in premiums and deductibles. It’s protection from risk. People like that protection. They will pay to acquire it.
Yeah. I really do think that one thing that's happened in the continuing reaction to the ACA is that a lot of conservatives have convinced themselves that people don't really want health insurance after all -- that health insurance per se is some sort of liberal hoodwinking of an otherwise sensible popular. As far as I can tell, that's just simply not true. People do want insurance: old people, sick people, young people, healthy people. And, also as far as I can tell, they don't just want catastrophic protection; they want comprehensive, "good," insurance.

Now, it's true that if it's too expensive, people won't buy it -- so questions about young healthies and death spirals are perfectly legitimate.

But that legitimate question, as I read a lot of conservatives, seems to have transmogrified into skepticism of the entire idea of health insurance -- a refusal to believe the very obvious point that, as Chait says, people will pay to avoid risk.

Example? I see it in several of Ross Douthat's recent items, including today's (generally smart) comparison of Medicare Part D and the ACA. I basically agree with him about the rollout comparisons, but when it comes to ACA customers he just doesn't seem to see that the peace of mind insurance gives people is really a massive benefit, and therefore of course one should expect people to want (within reason) to pay for it.

Or at least that's how I read Douthat and other smart conservatives.

Also: nice catch!


  1. This stuff has quickly turned into the Theater of the Absurd. So Chait's money point is that Ted Cruz's speechwriter doesn't want to be uninsured (his italics)?

    From her twitter picture she looks reasonably young.

    Is she a healthy?

    Truth is we can't know anyone's reservation price beyond which Obamacare seems like a bad deal, everyone's - including Cruz's speechwriter's - story and calculation will be different.

    The fact remains, though, that the viability of Obamacare is largely predicated on young healthy participation, people paying in for whom the Obamacare deal is not particularly good. Without imposing much penalty if they don't.

    Maybe that will work?

    Cruz' speechwriter's twitter photo gives us absolutely no information toward answering that question.

  2. A major problem is that the term "insurance" has become vague. If "insurance" means protection from financial disaster in the event of a serious disease or accident, like typical car insurance, then I think you can sell it. Or you should be able to. But recently it was the Administration and the left insisting that it cover more day to day expenses like contraception. Which many people don't need, and some don't want. That is a context in which a rational person, factoring in expenses, might not want "insurance".

    1. Employer-provided insurance covers contraception, at least all the policies my wife and I have ever had covered it. I don't know how much it costs the insurer to cover contraception, but it's not much. Of course, our employer-provided insurance also covers maternity care, even though we have never used it (thanks to the contraceptives!).

    2. It's become vague as a means to obstruct what health insurance is and covers. Do you honestly think most families can afford to see the doctor for routine check-ups and simple office visits? How about to cover the full cost of prescription drugs? The cost of healthcare is ridiculously expensive and health insurance is the only means to responsibly mitigate that cost.

      And the whole issue about contraception was manufactured as a means for the far right to agitate their base.

    3. @Geoff We have also avoided maternity care, thanks to contraceptive coverage. For a lot of people (and insurers!) it is a smart choice. Pills or snips are cheaper than Maternity care. But one could argue whether this care should be required.

      @searunner, while routine checkups and simple office visits can be expensive, they are not, IMO, "insurance". That is "health care".

      Changing the oil and tires and brakes in your car, and vacuuming your floors at home and repainting it are important for the long term health of your car and home (and indirectly yourself). But I don't expect GEICO or State Farm insurance to pay for them.

      Returning to health-care, maybe government should cover these check-ups and visits. There is a greater good there. But it confounds the debate to call it "insurance" which has a far different meaning.

    4. @Morgan I never said health insurance was health care. I said health insurance was the means to cover the high costs of health care. And I believe I was very clear on this point, So, I'm not sure how I am confounding the two.

      Health insurance is what makes accessing our health care system affordable. Now, if you want to discuss the government covering the cost of routine care, there are many on the left who would be happy to have that conversation. I'm guessing those on the right aren't so eager.

      The confounding of what is health insurance and health care has been done by those opposed to the law - the great "death panels" farce and the line that government was going to get between patients and their doctors being two examples.

    5. Regular costs are still costs. Insurance defrays costs - not just catastrophic ones.

      Even moreso, the ability to bulk purchase a good makes it cheaper. An ability to negotiate lower costs. An ability to save up when costs aren't being incurred, to pay when able (like how I put in a portion of my mortgage payment at each check, not just out of the ones that land on the first). And an ability to encourage and manage prevention, which would defray and find catastrophic problems before they have catastrophic costs.

  3. "The fact remains, though, that the viability of Obamacare is largely predicated on young healthy participation, people paying in for whom the Obamacare deal is not particularly good."

    I think the whole point is trying to tackle the idea that when you look for health insurance, you're thinking about getting "a deal" the same way you are when you're looking for a car or something.

    Look - young people have less money and higher appetites for risk, plus they can be stupid until life slaps them upside the chin. I know - I am one. Therefore, ceteris paribus they're just less likely to want health insurance and less likely to want to pay any given amount for it.

    But saying "it's a bad deal" doesn't really make sense when you're talking about insurance. Obviously at some point it's a bad deal - I wouldn't pay $10K/yr to insure my 2005 Honda Civic. But when it comes to your own body, health, and life, people are generally willing to pay a substantial amount of money over whatever their projected/expected/actuarial health costs are to acquire the sense of security that if they get cancer or have a stroke or a heart attack or the bubonic fracking plague or whatever that they can seek conventional, adequate medical care without digging a financial hole for their family from which recover is nigh impossible.

    I mean, medical bankruptcy is a bad, bad thing. It should never happen. Ever.

  4. Morgan, in truth, has a good point about this entire situation. Similar to most political topics, 'insurance' is being used as a cover for other concepts. In this case, it's being used because "healthcare" has been used as a cover to mark negative images.

    Myself, I've left the concept be because any term we try to use to talk about the medical situation we have ends up being a poor term.

    For example, "health insurance" in the same concept as "means protection from financial disaster in the event of a serious disease or accident" can be used, but it suggests that medical costs are isolated to the individual. "If I'm willing to take the risk of financial disaster then I should be allowed to." That mentality is why I don't have some types of insurance, like pet insurance.

    However, medical costs don't quite work the same way. An individual without insurance and a major accident CAN sit in the corner and suffer themselves. However, if they don't, hospitals end up with major medical bills that go unpaid and, thus, written off at the public's expense. Then there's the good old item to bring up: The requirement for emergency facilities to serve despite the person's financial situation.

    For people who are young, it makes a very tempting solution of not paying for insurance and, if the rare situation occurs, getting treated then not paying the bill, relying more on either the hospital's payment assistance or bankruptcy depending on the circumstances.

    It's similar to the concept of getting into an accident due to poor driving resulting in damaging someone else's car then walking away since you "have no way to pay for it". The difference is that states have been less willing to let the non-fault individual pay up for someone else's actions than they are of letting the hospital and tax payer pay for someone else's risk taking.

    It's the old 'privatized gains, socialized losses' trick and really needs to be addressed.

    It doesn't even get to other factors, such as the large number of people who would rather have the insurance than take that risk, the factor of high cost, covered medical expenses that could've been solved by cheaper but affordable earlier treatments, and who currently take the insurance route only to face economic hardship.

    As far as what the left want, much of the center-left, like myself, didn't want to try to warp the private insurance industry into a form of public health care. Instead, healthcare assistance would be the proper term, if you can avoid jumping into "SOCIALISM!" kneejerks. Help pay for the easier to handle procedures to try to avoid the big problems later on. Making it income based makes sense to me as a risk softener: I pay for it now that I have a little income to work with, yet I know it'll be there if I lose that income.

    If you want to call it "catastrophic-avoidance insurance" or "public healthcare" (in a mirror to "public transportation") or "welfare" or "Socialist Evil" then be my guest. It just makes more sense to have my taxes go to a splint to relieve wrist sprain rather than 'catastrophic' surgery to repair severe carpal tunnel.

    As far as the person who does want to go without. I believe that a person should be allowed to bow out of everything, with the benefit of maintaining what they have as their own. However, I believe in removing the benefits of that choice as well: If you can, but choose not to mitigate your risk and the dice roll poorly, then at that point, I don't want to pay for your medical bill, and the hospital shouldn't have to rack up debt due to your personal choices.

    But I don't like the idea of forcing people into that choice because they ended up being a janitor instead of a CEO.

    1. Good post. I'd call myself "center-right" but I'd be happy to reach across the aisle to you anyday. Let's run for Congress and fix that mess. :-)

    2. We would lose the ability to treat people appropriately if hospitals and first responders had to swipe your card before rendering aid.

      That's a world I refuse to live in.

  5. Larger context here is that on a whole host of issues a yawning gap is opening up between what many Republicans and conservatives tacitly and practically accept in the status quo (from subsidized employer-offered health insurance to the fundamental structure of social security and medicare), indeed affirming it rather than questioning it, and what they quite flippantly spout in theoretical terms -- the fundamental illegitimacy of the very concept of insurance and risk-distribution, the illegitimacy of any Democrat or liberal wielding governmental authority (though in practice they're quite willing to accept many aspects of this, which indicates they don't 'truly' believe this). It's a continuing conundrum that has metastized. Does one dismiss it as venting? Does one see it as sincere desires for a totally atomized existence? Is it merely canny strategy in a time of perceived besiegement?

    1. Also, as venting, is it merely a proffered compromise that they're willing to maintain parts of the mixed-economy system (just as Reagan did) so long as they're granted free reign to symbolically crap all over any group they feel contempt for?

  6. But this cuts two ways as well, since among those who pretty much understand that the a lot of the benefit they get from insurance is psychic relief from the stress of risk a not-small proportion can gain that relief by acquiring a policy that amounts to little more than a whispered reassurance from an incorporated insurer - not a product with much actuarial value for the consumer. And this is where "rate shock" comes in. There are those who had low-value insurance that was still valuable enough to get the psychic job done. Under the minimum coverage requirements, many plans whose main benefit was psychic are no loner legal. These people experience Obamacare as a large mandated increase in insurance prices (for which they receive better coverage that they hadn't been in the market for). I'm not sure the law has yet survived the full impact of that effect. I think it has, but I'm not sure.

    1. It will, though I wish that part was amended. The idea of setting the 'full coverage' requirement for the exchanges makes sense. However, it doesn't make sense to do it this way to non exchange insurance. Instead, we could just allow those with 'minimum coverage' plans access to the subsidies. Then those that want to have just that 'relief' can stay that way, while those, like myself, which see those plans as just scam jobs to take your money can dump them for a better plan.

      (ok, to be blunt, I'd allow EVERYONE to get in there and be able to compare their current plan to the subsidized exchange. Again, goal is more choice, not forced choice)

      However, I doubt anything will change. When you want to open your door to let out a stink, yet every attempt to open the door risks a zombie hoard that tries to break into the home, you keep the door locked and live with the smell.

      Which is why zero-tolerance tends to result in backfiring against you.

      (better analogy: fight with a man, but let them have a way to escape. If you wish for a complete win by cornering them, they will fight with all of their heart to win since they no longer can accept defeat)


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