As of January 23 2010 there are 25 reasons why the new laws do more harm than good. We expect that eventually there will be at least 40 reasons. As of January 23 2010 this outline of and brief discussion of reasons contains about 4,300 words. We expect that by the time this cruicial report is considered completely done that there will be about 7,000 to 8,000 words. This project is expected to be completed by May 1, 2010. It will be completed regardless of whether or not the proposed law is passed in early 2010.
This date of this post will be changed so as to make sure that it is always the first post that is seen when someone visits Unity Progress. However, since the root post will not be deleted, bookmarks to this particular post will continue to work regardless of how many times the date of the post changes. Eventually, sometime after it is completed in 2010, this post will probably be placed on it's own separate page, and there will be impossible to miss links to it from the main page.
Until this all important post is given it's own page, visitors can scroll down below it to see much shorter new Unity Progress posts that have been made since their last visit. Or they can use the Google blog archive in the right sidebar. Remember, health care is just one of three main topics we like to cover here. The other two are jobs and how the non-right wing people should organize and unify themselves.
The following are reasons why the Democrats' health legislation of 2009-10 will do more harm than good if passed and implemented. There is a basic explanation of each reason, but time and space limitations prevent an exhaustive explanation of most of them. From time to time, we will be adding links to exhaustive explanations of reasons, whether those explanations are by Unity-Progress or by other respected sources such as Physicians for a National Health Program.
The reasons are categorized into the following seven categories:
BAD LEGAL FOUNDATION
BAD POLITICAL FOUNDATION
BAD ECONOMIC FOUNDATION
EXCESSIVE COSTS CONTINUE--INADEQUATE CONTROL OF COSTS
LOOPHOLES THAT INCREASE INSURANCE COMPANY PROFITS AND DENY PEOPLE HEALTH CARE
LACK OF UNIVERSAL AND ADEQUATE ACTUAL HEALTH CARE
UNNECESSARY RESTRICTIONS OF FREEDOM
BAD LEGAL FOUNDATION
---Even if a shot is never fired over this, it is obvious that existing non-compliance with tax laws will be vastly increased over this. Specifically, the motivation for criminals to not report income and/or to not file at all will more than double overnight. The IRS will become much “more hated” than they already are among anti-tax type people.
---The mandate is unconstitutional regardless of whether it is ruled thus or not. At a rock bottom minimum, it violates the spirit of the Constitution and, indeed, it violates the whole purpose of the US revolution and the Constitution that emerged out of it, which was to put an end to taxation and other burdens without representation and without freedom of action and thought. This law creates taxation where regardless of how incompetent they are you can’t vote those who get the tax funds (the insurance executives and employees) out of office.
And obviously, the whole idea behind the Constitution and the Revolution was to expand freedom to the maximum extent possible, whereas this law limits freedom for no compelling or truly valid reason. The reason might be valid if this were the only way to get more people access to health care, but (a)It is obviously not the only way and (b)This bill is inferior to other ways and (c)This bill fails to pass basic cost-benefit hurdles.
BAD POLITICAL FOUNDATION
---People will be legally slaves to health insurance executives or to the penalty division of the IRS, their choice. This is a very fascist oriented bill in many respects. It is also distinctly feudal, with the health insurance executives similar to powerful feudal lords and the people forced to pay them the serfs and the weaker feudal lords who “need protection”.
---The Congress has no excuse for why all the “good things” such as no pre-existing conditions, no lifetime caps, no recessions, and so forth, were not already law years and years and years ago. Moreover, obviously, the Democrats could easily pass “the good things” now (right now, this month) without the slavery mandate and you would have no major complaints (and Obama might even be able to win re-election, so if he does lose in 2012, which seems increasingly likely, it will be 100% his fault.)
---You can not trust much of anything that proponents are saying about this; they are out to in their mind save their political futures by ramming through anything they can possibly ram through. Obama and his cronies have lied about literally everything important. He said there would be no mandates when he was campaigning. He claimed that there would be no new taxes on those earning less than $200,000. He claimed he wanted “the public option”. He claimed the process would be deliberative and transparent. He has claimed that the country would go bankrupt if this particular law is not passed by the end of 2009. Obama has been a chronic liar during this entire sordid process.
BAD ECONOMIC FOUNDATION
---Insurance is actually a bad way to do health care, period. Insurance was created to protect people from events that are not supposed to happen at all. Health care is most definitely not something that is not supposed to happen at all, not only because preventive care should be ongoing, but also because unless they die young, people need health care sooner or later, even if it’s just some minor treatments here and there. By contrast, when you buy house insurance, you nevertheless hope and expect that your house will not be burning down or blowing down (and your hope and expectation is often what actually happens: your house never burns down or blows down).
---Although there are some progressive aspects, most notably the expansion of Medicaid, The majority of the taxes, and certainly the mandate itself, which is heavy taxation in disguise, are very, very regressive. Such taxes are a very bad idea in any economy of course, but in a depressed economy, new regressive taxes must be about the worst thing you could possibly do. The financial provisions in this legislation could easily cause another million or more people to lose their jobs. At a minimum, the clock will keep ticking on the 10 years plus and running during which there has been no increase in jobs. It almost goes without saying that the US government would be far, far better off spending money on job creation right now than on subsidizing grossly overpriced and dysfunctional insurance policies.
Additionally, the new taxes will indisputably make the US a high tax country, even though US citizens enjoy only a small fraction of the benefits that other high tax countries get. Obviously, if the threatened laws are implemented, and to the extent they have income and don’t cheat on their taxes, US citizens will going forward be treated worse by their taxation system than people of any other country.
---US companies will continue to be at a major competitive disadvantage versus companies in most other countries if and when this health insurance deform passes. Obviously, you have to lower the actual costs of health care if you want the US companies to be on a level playing field.
---States are being treated harshly by being, along with individuals, given an unfunded mandate for Medicaid expansion. Medicaid is being expanded from being a program limited to poor people in various specific designations to being a program that all very low income people including "generic very low income people" are eligible for. However, following two years of total federal government funding, the states will have to pay various percentages of the cost of the expansion.
As you might expect if you are familiar with the byzantine ways that states interact with federal legislation, states will be treated very unequally based on several characteristics including their pre-existing relative Medicaid eligibility. States that have been most restrictive until now with offering Medicaid to poor residents will get the most federal assistance after all very low income people are eligible, whereas states that have been far more humane will face much lower federal reimbursement. States such as New York, California, and even Arizona will get financially penalized for having expanded Medicaid eligibility years ago, whereas far right, harsh states such as Alabama and Tennessee will receive far more federal assistance over the next decade.
But wait, it gets even worse. The ultimate state fiscal inequality is that Nebraska will pay nothing! To secure the crucial 60th vote from Senator Ben Nelson, Democrat of Nebraska, Senate leaders permanently exempted his state from paying to expand Medicaid!
EXCESSIVE COSTS CONTINUE--INADEQUATE CONTROL OF COSTS
---The administrative overhang for health care will be even worse than it is already. There will be no reduction in health insurance company overhead, but now there will be many new government bureaucracies creating many new overheads. The sheer number of bureaucratic components involved in the new laws will inevitably lead to confusion between different bureaucracies as they interact with each other, which will lead to additional waste.
---Health care will remain unaffordable for millions and millions of ordinary families. Anyone who claims this law will be affordable for ordinary families is, whether they know it or not, being a moron, because no one and nothing is talking about the following items which determine whether a very large expense is affordable or not.
In other words, the following are the reasons why there is no way that a scheme like this will ever be affordable for a good percentage of the peasants, public option or not.
1. The federal subsidies are determined only by adjusted gross income (AGI) and without regard to expenses that can not be deducted when AGI is calculated. Some families simply can not afford 20% or more(10% for premiums and 10% or more for deductibles, co-pays, medications, and uncovered items) of income for health care; there are too many other important items on the expense list. Families living in high cost of living areas are especially hurt by the false assumption that 20%-25% of income on health care is reasonable.
2. The subsidies are determined without regard to net worth, liabilities (debts) and debt repayment. A family paying $1,000 or $1,500 a month on student loan and/or credit card debts gets no more subsidy than one paying nothing on student loan and credit card debt. Since the majority of but not all families have debts, and since debt servicing varies radically from one family to another, this issue alone makes the scheme unworkable.
3. In the real world, incomes can fall from whatever they were in year x to next to nothing in year y. Since the subsidies are based on last year's income, some families will face an impossible cash flow problem and will not be able to actually pay the premiums in year y when unemployment or other fiascos strike. So they end up uninsured even though they paid handsomely for some years prior and even though the federal government paid the subsidy to the insurance company.
In the real world, families have sometimes been paying premiums (full or employee share) and sometimes not, depending on whether they are employed or not and what their pay rate is in different years. When you deny that reality and declare that families should every year pay for grossly overpriced health insurance policies, you have completely moved to la la land where money grows on trees, and you have totally messed up the household finances of tens of millions of people.
Yes, it's true, this cumbersome system will result in the US government, using your income tax receipts and money borrowed from China, paying subsidies to insurance companies, but then the people for whom the companies were paid are uninsured because they can't pay their share when they get invoiced. Will the federal government get a refund? I highly, highly doubt it. That money will be down the rat hole.
Not to mention that even if and when the policy is fully paid for, if the family can not afford the deductibles, co-pays, medications, and uncovered items, they are not going to get the actual health care or else they are going to get it and file for bankruptcy! And that means more of your tax money and more of China's money down the rat hole, too.
4. The subsidies are also without regard to number of children, and without regard to whether those children are in college or not. Families with the same adjusted gross income obviously have radically different expenses depending on those and related factors. Some of those expenses incurred for children of all ages are deductible when AGI is calculated but many of them are not.
5. The rest of the world has decided that middle income families should pay no more than about 10% of their income for health care and low income people should pay nothing, while the right wing Americans are saying 20-25% of income for middle and 10% of income for low income families is good.
No, that is not at all good. Sorry, but the days when the rest of the world is wrong and only the Americans are right are over.
---The percentage of income that Americans are induced to pay for health care remains excessive and economically damaging. The percentage of income that Americans will pay for health care under the deform remains in excess of 10% for those who don’t use health care either because they are not sick or because they are sick but can not afford the deductibles, co pays, medications, and/or the non-covered items. So that's 10% for nothing, actually.
For those who are sick, 20-30% of income in total health related payments will be the norm, roughly triple what sick people would pay in Canada, almost all of Europe, and much of Asia for that matter. That is nothing short of extortion of Americans even without a mandate, let alone with one. And again, this means that there will be very little reduction of medical bankruptcy.
Note that this reason is the cousin of the one just above it. The one above gets at real budgets and real cash flows of real people, up to and including people not being able to pay their health insurance invoices they get in the mail. That reason is, in economics jargon, a microeconomics reason why the new laws will fail.
Whereas the reason you just read evokes macroeconomic theory and especially the concept of opportunity cost. This concept actually simultaneously operates at the family and at the national levels. Every dollar spent on health insurance is a dollar that can not be spent on other needed goods and services or on investing in growing the productive capacity of the country. Each dollar can only go to one place, and it is supposed to go to the place that is optimal for the family or the economy as a whole.
Families who are “forced” to overspend on health insurance and health care will be left without enough money for other badly needed things, some of which will in the long run be even more important than certain health expenditures they were induced to make.
At the national level, health insurance and health care in the US are soaking up trillions of dollars that would be much better spent elsewhere. Thus, an economist would say that there is an excessive and sub-optimal opportunity cost being incurred as a result of the dysfunctional US system.
---At least $300 (probably $325-$350) of every $1,000 you pay to the insurance company will continue to not go for yours or anyone else’s health care. It will go for $20 million or more a year insurance executives, it will go to the claims denial departments of the insurance companies, it will go to dividends for shareholders, it will go for that nice big insurance company building with the nice artificial plants in the lobby, it will go for advertising of health insurance, and it will go for other corporate perks and pork. The $625 to $667 remainder of each $1,000 you pay the insurance company will go for health care, but only for the health care that the insurance company, not your doctor, decides should be paid for. Whether you get covered for what your doctor recommends depends on the insurance company, not your doctor and certainly not little old you. If you and your doctor think something should be covered but the insurance company doesn’t, well, you’ll have to start your own insurance company, buddy.
---The cost control (more precisely, the protection from premium increases in excess of general inflation) in this bill is literally trivial. All of the things that would have led to some cost control were stripped, leaving only trivial cost control (that you won’t even notice) and a few window dressing “studies” or “pilot programs” that look to the future. Whereas, the US has already gone off the deep end of the cost curve, and should be slashing and burning health costs, rather than just studying things that might slow the rate of increase in the future. To say the cost control is inadequate in this law is a ridiculous understatement. It’s like your house is burning down and all that you have decided to do is to plan to call your buddy down the street some time next month about borrowing a hose.
LOOPHOLES THAT INCREASE INSURANCE COMPANY PROFITS AND DENY PEOPLE HEATH CARE
---The biggest loophole of all would be that, as is often the case when the US government is giving the store away to private corporations, there will be very little effective regulation of health insurance contracts, including the charges made and paid for those policies. First, since insurance companies are still completely free (and encouraged!) to offer many different policies with complicated differences between them, the difficulty factor for enforcing the few federal level regulations that exist is so high that even if the federal government was doing the enforcement, the regulation would still fail.
The second reason that regulation will fail and the private insurance companies will continue to cheat their customers is that none of the detailed policy provision regulations will be regulated at the federal level. The regulations will be poorly and unevenly enforced on a state by state basis. No state including California has the resources to actually monitor and enforce the limited regulations that do exist, due to the complex differences between policies and due to sheer lack of resources.
The insurance companies will have to regulate themselves (good luck with that).
Adding insult to injury, the insurance company behemoths have been authorized to avoid state regulators that they don't like by changing domicile of their policies; they can choose to be regulated by the state that has the easiest state regulations and/or the most lax enforcement. When and if you buy a policy, it will be regulated by a state’s insurance regulators, but it won’t necessarily be the regulations and regulators of your state! It may be a state with extremely loose regulation as opposed to simply loose regulation. All states have loose regulation, but some have looser regulation than others.
---The insurance companies are still allowed to cap annual payouts, although now they can do so only if the payouts above whatever they think the annual limit should be are considered "non-essential"– non essential to them! The new 80% of premiums must go for health care will rule will reduce the motivation for insurance companies to cap annual payouts, but will hardly eliminate the heavy motivation to do so.
---There is a loophole in the no pre-existing conditions prohibition. If the insurance companies declare fraud, and obviously they will still have wide latitude to do so, someone with a pre-existing condition can still be retroactively denied coverage, regardless of any premiums they have paid.
---Insurance companies will still be able to deny coverage as they wish, so whether you actually get anything back from your premium payments if you get sick remains completely up to the insurance companies, who obviously have ulterior motives to deny your claim. There will be a small reduction in the motivation of insurance companies to deny your claim due to new minimum percentages of premium revenue that they must pay for health care (80-85%), but there will still be a lot of motivation for them to deny your claim.
This is another reason why medical bankruptcies will be going down by a very, very small amount, certainly no more than 20% when everything is factored in.
This reason could be alternatively classified in the “Lack of Actual Universal Care” section, since some people in some situations will decide not to get the care if they know in advance that the insurance company will not pay the claim.
LACK OF UNIVERSAL AND ADEQUATE ACTUAL HEALTH CARE
---The “30 million are going to get health insurance” claim that is being bandied about by the Democrats is very, very misleading. It sounds kind of impressive when looking at the current total number of uninsured, which is roughly 50 million. But it is very unimpressive when you look about six years into the future, which is when the 30 million increase is supposed to take place. The big problem for the Democrats is that they are chasing a swiftly moving target when they try to reduce the total number of uninsured in the inefficient and expensive way they are trying to do it.
This bill does not by any stretch of the imagination constitute a national health program, or even a national health insurance program, for that matter.
For a complete, detailed explanation of this very important reason, see this article.
---These will be millions of people who have insurance policies as mantle piece novelties only, never to be used. Why? Because they can and do pay premiums, but then they can not afford deductibles, co pays, medications, or uncovered items. This problem is often called underinsurance, a problem that will be much, much worse if this is passed. The entire notion of deductibles is poisonous with respect to people seeking necessary screening and treatment early when it does the most good. Deductibles and co pays encourage people instead to put things off until the situation becomes intolerable, by which time it’s often too late.
---Due in part to the fact that insurance is not appropriate for health care, and obviously due to the profit motive, the insurance companies deny claims whenever possible. This constant possibility of claim denial creates a fear factor in the public, where people become afraid to actually seek treatment unless it is obviously an emergency. People not seeking care when they should to be on the safe side defeats the whole purpose of the health care system! Doctors might as well not have gotten all the training and education they got if their patients are going to be extremely reluctant to see them despite having insurance. The bottom line is that the very concept of insurance is bad for health care, so the last thing a country should be doing is subsidizing the purchase of health insurance.
---The number of people dying due to lack of health insurance and due to underinsurance will decline by a small percentage, perhaps by a greater percentage than bankruptcies will, but by less than 33%, I would project (someone’s got to do it). Underinsurance, again, is where the insured can not afford deductibles, co-pays, medications, and/or uncovered items and so he or she decides to not get care. Gambles like that sometimes lead to early, preventable death.
---The percentage of small and medium sized businesses that do not offer their employees a health plan will increase after this is passed, because some companies who have been providing limited policies will not be able to afford to provide their employees the government-mandated package of benefits, because some will decide to wash their hands of the whole mess for ideological and/or anti-bureaucracy reasons, and because some will be cutting this benefit as a result of the lack of true, real economic growth. The Congressional Budget Office estimates that some 10 million workers who currently have employer-provided health care will lose it, but other experts predict that the number could be much higher.
---There are no provisions for increase of supply of health care goods and services. This means that all programs and plans new enrollees come into will be stressed and strained. People will have to in many instances wait longer for care now. There will in fact be some new rationing across the board, and this will be a very serious thing in Medicaid, where already about 40% of physicians refuse to participate. Whereas, many other countries subsidize the training of doctors and nurses to a far greater extent than does the US. For example, huge student loans are still considered bad things in most other countries. Those countries have the capability of rapidly increasing the supply of doctors, hospital beds, and so on, whereas the US does not realistically have this capability.
(This could alternatively be classified in the Bad Economic Foundation section.)
UNNECESSARY RESTRICTIONS OF FREEDOM
---Roughly 2/3 of the public is opposed to the mandates, substantially more than I would have predicted. Internet comments are running at least 90% against the mandate. I have myself been perusing hundreds of such comments at sites of all types and ideological persuasions. The right wing sites feature comments from “patriots” who claim that violence or even revolution is a possibility if this law is passed.
Although I think the right wingers need to be educated on the huge advantages of well run government programs, I do agree with them that more freedom is always preferable to less freedom, and I agree with them that this bill takes freedom away for bad, invalid reasons. I also agree with them that there should be no taxation unless there are extremely good reasons for it, and paying for health insurance is not even close to being an extremely good reason, due to the other ways that health care can (and is around the world) being paid for.
Friday, January 22, 2010
Tuesday, December 22, 2009
Democrats' new Health Insurance Laws: Big Trouble and big Expense for Small Gain
The “30 million are going to get health insurance” claim that is being bandied about by the Democrats is very, very misleading. It sounds kind of impressive when looking at the current total number of uninsured, which is roughly 50 million. But it is very unimpressive when you look about six years into the future, which is when the 30 million increase is supposed to take place. The big problem for the Democrats is that they are chasing a swiftly moving target when they try to reduce the total number of uninsured in the inefficient and expensive way they are trying to do it.
With no legislation at all and given the nightmarish economic conditions, we can, based on a few known facts and trends, make a rough but useful baseline estimate of how many uninsured there would be if nothing changed:
2009 50 million / 35 million not counting illegal aliens
2010 54 million / 39 million not counting illegal aliens
2011 57 million / 41 million not counting illegal aliens
2012 60 million / 44 million not counting illegal aliens
2013 63 million / 47 million not counting illegal aliens
2014 66 million / 50 million not counting illegal aliens
2015 69 million / 52 million not counting illegal aliens
NUMBER OF UNINSURED BY YEAR PROJECTIONS AND ANALYSIS
As of 2015, there would probably be about 70 million residents with no health insurance if nothing changed. Of this number, first subtract 15 million for newly Medicaid eligible, yielding about 55 million. Second, subtract another 17 million as a rough but reasonably good estimate of the number of illegal aliens there will be as of 2015. Illegal aliens are left out of the new requirement to buy grossly overpriced and dysfunctional health insurance, which may ironically give them an advantage in economic life over US citizens. So at the moment we are down to about 38 million uninsured legal residents as of 2015.
Now let's break down the Congressional Budget Office's (CBO) estimate of the 30 million increase in the number owning insurance policies by 2015 or 2016, which is composed of the 15 million new Medicaid enrollees and 15 million with higher than poverty incomes who buy insurance instead of paying the penalty.
Incidentally, Medicaid is considered an insurance policy by the CBO and the Democrats when they discuss their new laws, but it is clearly not really an insurance policy but rather a Government health care program for destitute people.
And as another “incidentally”, as a very rough estimate, about 30% of the 15 million buying insurance will get partial subsidies and the other 70% with the higher incomes not eligible for Medicaid will buy policies with no subsidy assistance from the Government.
Judging from polling and other evidence, I expect CBO’s 15 million estimate is a little high. I would predict that the number who will buy policies will be more like 13 million than 15 million. But give CBO a lot of credit, because their estimate is in fact conservative (just not as conservative as my estimate). CBO's estimate is close to what will actually happen.
However, for the record, the unexpected confluence between the CBO estimate and the Unity-Progress estimate is probably due to differing assumptions about the economy and the resulting different baseline number of insured (the number of uninsured there would be with no change in the law) instead of differing compliance estimates. CBO very likely has substantially lower baseline uninsured numbers and substantially higher compliance rate estimations than I do.
Using my baseline uninsured number, the estimate from CBO of the percentage of those who are supposed to buy health insurance who will actually buy it is about 40%. But CBO is probably underestimating the baseline number who would lose insurance between 2009 and 2015 because they are probably overestimating the strength of recovery in the real economy and especially in the job market. CBO's true compliance estimate (percentage that buy insurance out of the total who are supposed to) is probably at least 45% and may be close to 50%. My compliance estimate is 13.5/38 = 35.5%.
In any event, the CBO and the Unity-Progress estimates of the actual number of newly purchased insurance policies are very close, and I will use theirs in a sign of respect for the quality work they are known for.
Recall that after we subtracted out the Medicaid enrollees and the illegal aliens we were left with an estimated 38 million uninsured in 2015. From this we subtract the 15 million who will buy insurance due to the mandate. So we finally have a pretty good estimate of how many uninsured legal residents there will still be in 2015: 23 million. So obviously, there will still be a huge number of peoplw with no health insurance.
Now if you add back the illegal aliens, the estimate of the total number of uninsured in the country for 2015 is 40 million, which indeed is 30 million less than the baseline.
So the proponents of the law may not be materially lying when they say that 30 million more will be insured as of 2015; but they are not telling you that the underlying problem will grow substantially between 2009 and 2015, so that the actual number who are still not insured in 2015 after the new laws are imposed will be only about 12 million fewer than it is in 2009! Yes, this monstrous legislation, the Constitutional challenges, all the new bureaucracy, people becoming homeless after they buy health insurance and then lose their jobs, etc. etc. all of the trouble, dislocation and misery produces just a 12 million reduction in the number of uninsured in a country of about 315 million people when you compare 2009 and 2015!.
But wait, it gets even worse. The number of uninsured will still be going up even after this law is in effect, because the population will be increasing and also because, as everyone knows, there is very little real health cost control in this law, so when deductibles, co-pays, uncovered items, and the cost of medications go up by more than overall inflation as they inevitably will, and when most likely inflation adjusted subsidies go down, and when the economy keeps throwing skilled employees into unemployment, and when small businesses keep having to discontinue offering health insurance as a benefit, the number and the percentage for who can not or will not buy the health insurance will be going up.
So that 12 million advantage will shrink and, by roughly 2025 at the latest, there will be just as many uninsured as there were in 2009.
So the bottom line is that the new monstrous law “buys” at the most 16 years of no increase in the total number of uninsured. Then after roughly 2025, the number of uninsured residents will be greater than the number in 2009.
NUMBER OF UNINSURED LEGAL CITIZENS BY YEAR
We can do the same estimates but this time let’s treat the illegal aliens as if they don’t exist:
2009 Number of legal citizens uninsured: 35 million
2015 Number of legal citizens uninsured: 22 million (52 baseline minus 15 million Medicaid minus 15 million who buy private insurance)
Assuming the 22 million in 2015 increases at 5% a year, which would be roughly half the rate of increase of 2007-2009, we have:
2020: Number of legal citizens uninsured: 28.3 million
2025: Number of legal citizens uninsured: 36.2 million
With these assumptions, the number of legal citizens uninsured will reach the 2009 number by 2025, so in effect the new law will have “bought” 16 years of no increase in the number.
I hope you can not see that overall, this new law not only does not solve the problem, but does not really come close to doing so. This new law is not even remotely a true national health program, or even merely a national health insurance policy. A good analogy is that this is like a football team that can not make a first down has decided to punt the ball downfield.
A FEW OBSERVATIONS ABOUT THOSE WHO WILL NOT COMPLY
You know the old saying: you can lead a horse to water, but you can’t make him drink? With 2/3 of the population overall against the mandate, this means that it is likely that at least 85% of the non-insured are against the mandate. The Republicans in particular are very fiercely against this and there will be resistance in bulk from them. Many of these people will find a way to not comply.
Moreover, consider also that there will be a reverse effect. There will apparently be at least close to two million people in total who indefinitely drop, or whose employers indefinitely drop, health insurance after this passes, some because their premiums will go up when they are forced to buy a plan in compliance, some for ideological reasons, and some due to the one-two punch of the new taxes and the depressed economy. These people and businesses will either gladly pay the penalty or in some cases will try to dodge even the penalty.
The above was in response to this articleat Common Dreams.
With no legislation at all and given the nightmarish economic conditions, we can, based on a few known facts and trends, make a rough but useful baseline estimate of how many uninsured there would be if nothing changed:
2009 50 million / 35 million not counting illegal aliens
2010 54 million / 39 million not counting illegal aliens
2011 57 million / 41 million not counting illegal aliens
2012 60 million / 44 million not counting illegal aliens
2013 63 million / 47 million not counting illegal aliens
2014 66 million / 50 million not counting illegal aliens
2015 69 million / 52 million not counting illegal aliens
NUMBER OF UNINSURED BY YEAR PROJECTIONS AND ANALYSIS
As of 2015, there would probably be about 70 million residents with no health insurance if nothing changed. Of this number, first subtract 15 million for newly Medicaid eligible, yielding about 55 million. Second, subtract another 17 million as a rough but reasonably good estimate of the number of illegal aliens there will be as of 2015. Illegal aliens are left out of the new requirement to buy grossly overpriced and dysfunctional health insurance, which may ironically give them an advantage in economic life over US citizens. So at the moment we are down to about 38 million uninsured legal residents as of 2015.
Now let's break down the Congressional Budget Office's (CBO) estimate of the 30 million increase in the number owning insurance policies by 2015 or 2016, which is composed of the 15 million new Medicaid enrollees and 15 million with higher than poverty incomes who buy insurance instead of paying the penalty.
Incidentally, Medicaid is considered an insurance policy by the CBO and the Democrats when they discuss their new laws, but it is clearly not really an insurance policy but rather a Government health care program for destitute people.
And as another “incidentally”, as a very rough estimate, about 30% of the 15 million buying insurance will get partial subsidies and the other 70% with the higher incomes not eligible for Medicaid will buy policies with no subsidy assistance from the Government.
Judging from polling and other evidence, I expect CBO’s 15 million estimate is a little high. I would predict that the number who will buy policies will be more like 13 million than 15 million. But give CBO a lot of credit, because their estimate is in fact conservative (just not as conservative as my estimate). CBO's estimate is close to what will actually happen.
However, for the record, the unexpected confluence between the CBO estimate and the Unity-Progress estimate is probably due to differing assumptions about the economy and the resulting different baseline number of insured (the number of uninsured there would be with no change in the law) instead of differing compliance estimates. CBO very likely has substantially lower baseline uninsured numbers and substantially higher compliance rate estimations than I do.
Using my baseline uninsured number, the estimate from CBO of the percentage of those who are supposed to buy health insurance who will actually buy it is about 40%. But CBO is probably underestimating the baseline number who would lose insurance between 2009 and 2015 because they are probably overestimating the strength of recovery in the real economy and especially in the job market. CBO's true compliance estimate (percentage that buy insurance out of the total who are supposed to) is probably at least 45% and may be close to 50%. My compliance estimate is 13.5/38 = 35.5%.
In any event, the CBO and the Unity-Progress estimates of the actual number of newly purchased insurance policies are very close, and I will use theirs in a sign of respect for the quality work they are known for.
Recall that after we subtracted out the Medicaid enrollees and the illegal aliens we were left with an estimated 38 million uninsured in 2015. From this we subtract the 15 million who will buy insurance due to the mandate. So we finally have a pretty good estimate of how many uninsured legal residents there will still be in 2015: 23 million. So obviously, there will still be a huge number of peoplw with no health insurance.
Now if you add back the illegal aliens, the estimate of the total number of uninsured in the country for 2015 is 40 million, which indeed is 30 million less than the baseline.
So the proponents of the law may not be materially lying when they say that 30 million more will be insured as of 2015; but they are not telling you that the underlying problem will grow substantially between 2009 and 2015, so that the actual number who are still not insured in 2015 after the new laws are imposed will be only about 12 million fewer than it is in 2009! Yes, this monstrous legislation, the Constitutional challenges, all the new bureaucracy, people becoming homeless after they buy health insurance and then lose their jobs, etc. etc. all of the trouble, dislocation and misery produces just a 12 million reduction in the number of uninsured in a country of about 315 million people when you compare 2009 and 2015!.
But wait, it gets even worse. The number of uninsured will still be going up even after this law is in effect, because the population will be increasing and also because, as everyone knows, there is very little real health cost control in this law, so when deductibles, co-pays, uncovered items, and the cost of medications go up by more than overall inflation as they inevitably will, and when most likely inflation adjusted subsidies go down, and when the economy keeps throwing skilled employees into unemployment, and when small businesses keep having to discontinue offering health insurance as a benefit, the number and the percentage for who can not or will not buy the health insurance will be going up.
So that 12 million advantage will shrink and, by roughly 2025 at the latest, there will be just as many uninsured as there were in 2009.
So the bottom line is that the new monstrous law “buys” at the most 16 years of no increase in the total number of uninsured. Then after roughly 2025, the number of uninsured residents will be greater than the number in 2009.
NUMBER OF UNINSURED LEGAL CITIZENS BY YEAR
We can do the same estimates but this time let’s treat the illegal aliens as if they don’t exist:
2009 Number of legal citizens uninsured: 35 million
2015 Number of legal citizens uninsured: 22 million (52 baseline minus 15 million Medicaid minus 15 million who buy private insurance)
Assuming the 22 million in 2015 increases at 5% a year, which would be roughly half the rate of increase of 2007-2009, we have:
2020: Number of legal citizens uninsured: 28.3 million
2025: Number of legal citizens uninsured: 36.2 million
With these assumptions, the number of legal citizens uninsured will reach the 2009 number by 2025, so in effect the new law will have “bought” 16 years of no increase in the number.
I hope you can not see that overall, this new law not only does not solve the problem, but does not really come close to doing so. This new law is not even remotely a true national health program, or even merely a national health insurance policy. A good analogy is that this is like a football team that can not make a first down has decided to punt the ball downfield.
A FEW OBSERVATIONS ABOUT THOSE WHO WILL NOT COMPLY
You know the old saying: you can lead a horse to water, but you can’t make him drink? With 2/3 of the population overall against the mandate, this means that it is likely that at least 85% of the non-insured are against the mandate. The Republicans in particular are very fiercely against this and there will be resistance in bulk from them. Many of these people will find a way to not comply.
Moreover, consider also that there will be a reverse effect. There will apparently be at least close to two million people in total who indefinitely drop, or whose employers indefinitely drop, health insurance after this passes, some because their premiums will go up when they are forced to buy a plan in compliance, some for ideological reasons, and some due to the one-two punch of the new taxes and the depressed economy. These people and businesses will either gladly pay the penalty or in some cases will try to dodge even the penalty.
The above was in response to this articleat Common Dreams.
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