When we last heard from Ezra Klein, he was explaining that it’s hard to understand the constitution because it’s over a hundred years old. Now, Jen Rubin takes the juice boxer to school on the nature of the judicial branch.
[Update a while later]
Losing a battle but winning the war against ObamaCare:
House Speaker John Boehner (R-Ohio) issued a statement stressing that Republicans had kept “their promise to seek repeal of the job-destroying health care law.” The House and Senate Republicans’ unanimity on ObamaCare repeal is an important message to the base and to independents who fret that politicians don’t keep campaign promises. Moreover, we now have a clear demarcation between the two parties on a central issue. If elections are about choices, voters will have a clear one in 2012. Republicans seem very happy about that. The Democrats? Not so much.
Well, they weren’t so unhappy as to not vote in lockstep with a political loser. People like Joe Manchin will have a tough reelection fight. That vote may have been suicidal, particularly after his campaign rhetoric.
And Obama kept his promise made in 2008 to pass health care reform.
The Democrats are glad to have this debate. The Democrats think that, when the American public sees that the only “death panels” are those imposed by the Republican governor of Arizona, and learns that Republicans really do want to allow insurers to take their money and deny them care, we will win the argument.
These factors may not win arguments on libertarian comment boards. We shall see if they win arguments come election time.
Frame that.
You read Ezra? I don’t know, but Kagan’s testimony would suggest that apparatchik is exactly the right word although I wouldn’t go so far as to say she is purely one. The court is structured so that should not be the case. Being a wise latina, the same may be said of Sotomayor. Judges need to be human, but not of any specific gender or race. But what are the chances that once a woman retires a man will not be considered for their spot?
To assert the courts are just putting on a show to disguise the whims of the judges is pure projectional fantasy of what they would do if they sat on the court.
Republicans really do want to allow insurers to take their money and deny them care
Chris, do you have any conceptual idea of what a contract or business is? Do you know what insurance is? I know, you think it’s a prize given out by the government, dontcha?
We shall see if they win arguments come election time.
I think we just did, Chris. November of 2010. +63 Republican seats in the House, +5 Republican seats in the Senate.
The Democrats are glad to have this debate.
Indeed. As they say, denial ain’t just a river in Egypt. Besides, the Democrats who are left (except in the Senate) are those from districts in which Obamacare is a winning message. It’s their moderate (and now mostly departed) colleagues who wish they’d STFU.
“Republicans really do want to allow insurers to take their money and deny them care
Chris, do you have any conceptual idea of what a contract or business is?”
I’d like to know just how often it happened that a person had paid up private health insurance, got sick, and got kicked off the policy? And for what reasons.
This is a major talking point of the left. Some hard data would be useful.
I would be unhappy with private insurance companies breeching the contract. I have heard that some number of people were kicked off because of lying on the application. Would be interesting to know the breakdown.
Gregg – every time I say anything about dropping coverage, AKA “rescission.” somebody says “I’ve never heard of that.”
So, I google “health care rescission” and every time get stuff like this.
Researching these issues is why Congress had a year of hearings on health care reform.
Gregg, you might as well ask how often folks have their cars repossessed or homes foreclosed while current on their payments, or how many people pay Sears for a new washer and have Sears refuse to deliver it. Each and every one of these things is a tort, and entitles the victim to recover substantial damages, costs, et cetera. If you were sitting on the jury, what kind of punitive damages would you award someone current on the premiums for whom Aetna refused to pay for medical care? Probably at least 7 figures in that number, no?
So there’s nothing to be done about this. It’s already grossly illegal, and it’s already the case that the legal system has excellent methods for dealing with it. You don’t even have to have any money: any competent civil lawyer would happily take a case like that against an unattractive defendant with deep pockets for zero money down, just a cut of the eventual winnings. You can’t pass any more laws to help. All you can do is get into Dept of Precrime stuff where you try to set up a system that, by guessing what people might do, restricts what they can do in the interests of preventing them from doing bad things.
In my experience the major way people find themselves without health insurance is being unrealistic, ignorance, and being dependent on someone who is unrealistic or ignorant, or a goofball, or actually evil.
For example, you lose your job. You have the option of paying the health-insurance premium yourself, under COBRA, until you’re covered again — but you are horrified at the cost, figure you’ll get a new job in a few weeks anyway, and what can happen in a few weeks? You feel great, aside from a bit of shortness of breath climbing stairs, no doubt due to stress and overweight. But then the weeks turn into months, and the shortness of breath turns out to be rapidly accelerating congestive heart failure, and then you have a real problem. Diagnosis: unrealism. Should have stopped the cable subscription and cell phone service and paid the COBRA premium instead.
Another problem: you lost your job because you have cancer. You’re spending everything you’ve got just to keep afloat. You learn that HIPAA provides a pool for high-risk patients, with subsidized premiums, and you just need to wait for eligibility a few months. So you skip the COBRA and wait a few months — only to find that the complex law requires you to have used the COBRA or wait much longer, an entire year. Problem: ignorance, compounded by the fact that the law is absurdly complex.
A problem caused by dependence: you’re covered under your husband’s job insurance when you get cancer. Or so you think! Turns out your husband came to work drunk one day and was demoted from a full-time job with benefits to a part-time job without, and was too embarassed to tell you. You’ve been without actual insurance for months, and your eligibility is screwed now.
The Democrats call every one of these cases the problem of “pre-existing conditions,” meaning you’re trying to get health insurance after you’re already sick when, of course, the costs are by definition out of reach. (If they weren’t out of reach, you could just pay the medical bills yourself. Trying to “buy health insurance” when you’re already sick is simply a way to try to get someone else to pay your existing medical bills in exchange for you paying them 10% of what that’ll cost. Obviously, no one with a brain will accept your proposition.)
But a better way to characterize the problem is one of the lack of or disruption of prior planning. You’re supposed to buy insurance before the risk is incurred, so that the insurance company has a fair chance of not paying off — i.e. of the risk not materializing. The key word there is “before.” As long as you buy your health insurance before you get sick, and keep current on the payment, you should not have problems. The problems are occuring in our system because (1) people don’t, in fact, buy the insurance before they get sick, or (2) they have problems keeping current on the payments, or decide not to. (1) may be insoluble, but there are ways to help (2) quite a bit, none of which are being tried as long as Democrats demagogue the problem so it looks like something else entirely. Voting Democrat will, in 2011, possibly kill you.
Chris,
I followed the link and read the stories. If they are accurate (a big if) then those people can sue for breach of contract. The fact that they have not contracted with a lawyer and sued the insurance company tells me that the article is not the whole story.
I have a friend who feels he got screwed by his insurance company. He had an emergency treatment in a foreign country due to an accident. His insurance company initially declined to cover it but finally covered a portion. When we read his policy (which he had never done) it clearly stated that treatments for any reason done outside the US or its territories IS NOT COVERED. The fact that they covered anything was because the insurance company was trying to do good customer service.
Chris, the cases cited in your linked article fall under the heading of “ignorance,” when you’re not actual fraud. (And since you have only one side of the story, the possibility of fraud cannot be ruled out.)
It’s definitely a real problem — insurance contracts can be fiendishy complex. Very few people have even seen the Master Agreement that spells out exactly the terms of their contract with a health-care insurer, and it would take a smart person with some feel for the legal system to understand all the implications.
But this is not a new type of problem, calling for bizarre new solutions. We have had the same problem, histocially, in installment credit applications, mortgage agreements, car purchase agreements, life insurance, et cetera. They have generally been addressed by truth-in-lending laws that compel plain-English disclosure, or “good faith bargaining” laws that disallow minor inconsequential defects from constituting a breach of contract, “due diligence” laws that say you cannot be held responsible for defects the other party negligently allowed to continue, and so on.
I would fully support “health care” reform (really, legal reform) that required health insurance contracts to be (1) simple and understandable and thoroughly explained, a sort of “informed consent” kind of deal, that (2) equalized the level of responsibility for disclosure between insured and insurer, closer to the way it is in real estate, i.e. if you wouldn’t have signed the deal if you’d known X, you better damn well have asked about X or hired someone to inspect for X beforehand; and (3) if the contract goes on long enough, put the burden of proof of fraud that justifies rescission on the insurer, e.g. if you’ve paid the premiums for 3 years and are current, the company must prove fraud directly related to substantial damages — if the “damages” are payment for cancer, proving you concealed a bum knee won’t work — to claim the contract was executed in bad faith and therefore cancel it without incurring liability for breach of contract.
But giving up on the idea of writing contracts entirely — replacing the whole shebang with the still awfuller and less workable “contract” between taxpayer and government — is throwing out the baby with the bath water.
Carl Pham – your first 756 word post was completely non-responsive, in that none of the hypotheticals you offered had more than a passing familiarity with the real cases I cited.
Your second response is somewhat more responsive, but completely ignores the fact that the ACA is trying to do exactly what you propose – make the health insurance contract more standardized and understandable.
George – the 4th paragraph says, (Blue Cross says it does not comment on individual incidents in litigation.) It sounds to me like they are suing for breach of contract.
Corporations have the option of “running out the clock” – keeping the case in litigation until the plantiffs run out of money. Which, even if the lawyer is working on contingency, will happen. Actually, especially if the lawyer is working on contingency – he has actual costs that need to be covered now.
My first post was not a response to you, Chris. I just hit the Submit button after you did. Don’t be a narcissist.
but completely ignores the fact that the ACA is trying to do exactly what you propose – make the health insurance contract more standardized and understandable.
Chris, if that’s all the ACA did, then it might have my support. But as you well know, that is not the case. If there is a teaspoon of ice cream mixed in with a quart of dogshit, it’s perfectly reasonable of me to refuse to drink.
Corporations have the option of “running out the clock” – keeping the case in litigation until the plantiffs run out of money.
No they don’t. At least, not arbitrary such ability. Have you overlooked the fact that there’s a judge overseeing any such case? And he must give approval to any delay or delaying tactic one side or the other proposes? It’s the judge’s responsibilty to make sure no one wins a lawsuit by “running out the clock,” and my experience is that most of them take that responsibility pretty damn seriously. If they don’t — you have a problem with judicial officers, not with the law per se, which explicitly forbids the tactic you describe.
The fundamental question is do you have a right to health care?
If you do have such a right whom do you get to enslave to provide it to you?
If you don’t have such a fundamental right then you are on the hook to provide for your health care, this can and probably should include some kind of insurance purchase.
A Simple test: If the average benefits for some one in your situation is more than the average premium its not insurance.
Addressing some of the cost divers that make health care so expensive would be good, hint its not the insurance CO.
Start with Lawyers, and Government requirements on health care providers.
Carl – your response was also non-responsive to Gregg’s question “I’d like to know just how often it happened that a person had paid up private health insurance, got sick, and got kicked off the policy?” Since it didn’t (non) respond to Gregg, I assumed it (non) responded to me.
I have no idea what your background is, but my understanding of the law for civil cases is that discovery and motions to supress same can take up large amounts of time. Since, while this is going on, the plantiff is lying in a hospital trying not to die, what seems speedy to a judge really isn’t.
The ACA is attempting to do many things, including something you’ve explicitly rejected, namely provide health care coverage to those to poor and/or sick to afford it. We’ve had the discussion on the moral implications of that, so I see no reason to re-hash them here.
Paul Breed – nobody has a fundamental right to health care. Nor do they have a fundamental right to police protection. This does not mean we shouldn’t provide these protections to our citizens.
It was responsive, Chris. By pointing out this was quite illegal and set one up for massive damages — even your article points that out — it suggests it’s unusual (and you have cited nothing but anecdotal, i.e. worthless, evidence to the contrary). And, furthermore, my point implies it would not become any rarer with additional laws, putting the practitioners on double secret probation or whatever.
my understanding of the law for civil cases is that discovery and motions to supress same can take up large amounts of time.
They can, yes, if the judge allows it. He can certainly not allow it by, for example, deciding someone’s dragging his feet and is in contempt and fining him $500 a day until he complies. There is also a thing called an injunction, which a judge can use to order various remedies to prevent irreparable harm to one party that might result from the time it takes to come to a judgment. For example, a judge could order an insurance company to pay someone’s doctor bills during the litigation, while reserving the right to change his mind, find for the insurance company, and make the patient pay it all back later.
Since, while this is going on, the plantiff is lying in a hospital trying not to die,
Oh don’t be dramatic. In the first place, none of the cases you cite are of that type. It’s people who got medical care, and are now struggling to pay for it later without the insurance company’s help. It’s about money — not saving lives.
And in any event, I have a hard time seeing that happen, except in your fearful imagination. If you’re in a hospital in danger of death the hospital is not going to refuse to treat you under any circumstances, even if your insurance company sends them a big notice printed in red ink: we aren’t going to pay a darned cent for this freeloading bugger. The ICU nurse is not going to get a credit-card imprint from you before drawing another vial of blood.
And even if the hospital were inclined not to treat you, for fear of your running up a huge tab you don’t pay — ha ha, like that doesn’t happen to a hospital every day of the week — the judge in this case — bceause you have cleverly had the foresight to retain a lawyer and file suit before checking into the ICU, although apparently you neglected to keep up your premium payments or read the fine print on the application — can certainly issue a preliminary order preventing any such thing.
what seems speedy to a judge really isn’t.
Often true. I’m no great fan of judges. But in fairness it should be pointed out that what seems slow to a plaintiff often isn’t, either. Courts have enormous caseloads, and a certain amount of triage is necessary. We all tend to think we ourselves are overworked and should have more time, but everybody else is a timewasting slacker, particularly when he’s working on something of urgent interest to ourselves.
The ACA is attempting to do many things, including something you’ve explicitly rejected, namely provide health care coverage to those to poor and/or sick to afford it
That’s false, Chris. Providing health care coverage for those too poor to afford it is what Medicaid does. While the ACA expands Medicaid a bit (to cover wealthier people), that is not its primary purpose.
Paul Breed – nobody has a fundamental right to health care. Nor do they have a fundamental right to police protection. This does not mean we shouldn’t provide these protections to our citizens.
Nor does it mean that we should. Police protection has an obvious public safety angle that makes it reasonable to be provided by government. Personal health care beyond emergency room care does not.
As to your rescission examples, the patients in question merely needed to sue the companies in question. If it really were as cut and dried as presented in the story, then the insurance company is liable for not just obligations that they’re refusing to cover, but also additional penalties.
Carl Pham – you cite no evidence whatsoever, nor any experience in the legal system, and blast me for providing anecdotal evidence? “Pot, kettle on line 2…”
Here’s the thing – we could:
1) Clog up the courts with even more cases, some of which will be decided wrongly (unless you think O. J. is innocent)
2) Make everybody wait for their money, increasing overall costs due to the need for financing
3) Add additional costs to the system for legal fees
Or we could ban recissions. What makes more sense.
Regarding Medicaid – so you’re okay with using your tax dollars to pay for health care for the poor? I mean, if you’re okay with that, why not have a public option / Medicare for All?
Oh, and Carl – here’s a report with more facts and figures for you. Click the “view sources” for more reading.
Chris, you have the burden of proof because you are making the claim that folks denied medical care for which they have paid — the illegal breach of contract — is a serious problem. The deal in rational discussion is not that you get to advance any loony proposition you want and then wait for me to prove you wrong. You’re like that anti-vaccine fellow, who would advance one wild hypothesis after another (Maybe pasteurized milk causes autism, huh — didja ever think of THAT?) and then claim cruel indifference when the rest of us decline to patiently disprove every new one.
I don’t necessarily argue that the case for rescission should be re-examined. See my comments above.
But, first, this is a legal reform, and we don’t need a monster like the ACA to do it, as well as 55 other malignant things. We just need a sober and conservative examination of why contracts in the healthcare business fail — and when one party is dissatisfied with the outcome, the contract has failed, and nobody benefits in the long run. Contrary to the fevered paranoia of some folks, health insurance companies do not like to be sued for breach. When it happens, you can be sure some Vice President makes an angry call to Sales & Marketing, after being briefed by Legal on how much this is going to cost, and says WTF were you fools doing? HOW did you get us into this mess? Who do I need to fire? Insurance companies would be happy to have a reliable contract, where they can be 100% sure they know all the relevant facts, and they know the customer is 100% certain of what he gets, and doesn’t get, and is satisfied with the deal and not going to try to welsh on it later, particularly in a way that journalists and a jury are going to find worthy of sympathy.
But of course your preferred solution, which is to flatly ban rescission, is characteristic mad overkill. What are you going to do about fraud, eh? Some fellow has sky-high blood pressure and a family history of diabetes, but doesn’t say so because he knows even if the insurance company finds out, there’s nothing they can do about it. What kind of reward structure are you setting up there, Chris? Is anybody going to tell the truth on an insurance application? What will that do to premiums? Are you going to be happy subsidizing with higher premiums the cost to treat an overweight smoker who lies about that stuff on his application?
By ancient tradition, if you deceive about material facts when forming a contract, there is no contract. This is the basis on which you can annul your marriage to a bigamist, or you can cancel your purchase of a house that turns out to have termites the owner knew about, or your small print shop can cancel its purchase agreement with a paper supplier when it misrepresents the quality of its product, or its ability to deliver it. Do you want to give up that principle for yourself? Or do you propose that only people you don’t like give it up?
so you’re okay with using your tax dollars to pay for health care for the poor?
More or less. I’m a charitable soul. Not equivalent healthcare, mind you. Only squalid miserable dehumanizing DMV-style barely-sufficient healthcare, the kind that seriously motivates you to get a job and do better in life. I believe in incentives.
why not have a public option / Medicare for All?
Because we’re not talking about the poor any more, of course. Is this a trick question? One of these things is not like the other, Chris.
I should add, Chris, that your linked article doesn’t give me much confidence that this is a major problem worthy of a massive interference in my affairs.
A recent Congressional investigation into this practice found nearly 20,000 rescissions from three large insurers over five years
So, with perhaps 50 million policies — assuming here are about 200 million policies out there among the 300 million of us, and the big three in question represent perhaps 1/4 of the entire market — we have maybe 4,000 a year being canceled because the insurance company claims fraud. That’s a big 0.008%, Chris.
Now, do you expect me to believe that the rate of health insurance fraud is far below 0.008%? Nearly all of those 4,000 cases are tricksy insurance corporations trying to screw the honest yeomanry? Barely one case of a dishonest Joe Sixpack? Ha ha. I believe in the honesty of my fellow man as much as the next guy, maybe a bit more, but — seriously?
The report says 11 million Americans get cancer every year. That’s of order 11 million policies in which the insurance company is going to pay out way more money that it ever collected in premiums, cancer being the very expensive death it is. And yet there are only 4,000 rescissions? If rescission was the easy-peasy way an insurance company could wiggle out of paying for cancer treatment, why isn’t it widespread? Are they stupid as well as evil?
I see also that Chris continues to spout nonsense.
And Obama kept his promise made in 2008 to pass health care reform.
Let’s note for the record that Obama hasn’t reformed anything. The number one problem is that health care is expensive and continuing to grow at a rate faster than the rate of GDP growth. Obamacare just makes that worse by subsidizing health insurance and increasing coverage and payouts. It increases demand for health care without changing the supply side one bit.
Thus, because health care is made more expensive, then there’s good reason to expect that Obamacare won’t decrease the number of uninsured.
Third, the unconstitutional aspects of Obamacare preclude it from being a reform of anything.
Finally, so many things associated with this legislation have been at best clueless and counterproductive, at worst, malicious and harmful to the US’s future (eg, rules that provide large disincentives to hire people in a time of recession, massive bribes to encourage politicians to vote for the act, completely bogus and unserious accounting from the CBO, and a complete failure to address the many real problems of US health care).
Labeling this mess a “reform” is to abandon one’s mental faculties. The word, “reform” implies that something has been improved. That simply hasn’t been true with Obamacare.
These factors may not win arguments on libertarian comment boards. We shall see if they win arguments come election time.
We already saw last November how this line of reasoning “wins arguments” during an election. The only considerable improvement in the past two years in Obama’s poll numbers happened when Obama briefly cooperated with the Republicans of the last Congress. That has almost completely evaporated now, just a little over a week after his State of the Union address.
Also, why should I be impressed when Obama “keeps promises” for a few things that harm the US, but not promises that help the US?
Insurance is gambling, one that should be voluntary, not coerced through some “individual mandate.” Worse, people on the Progressive Left like Chris seem to think that every bet has to pay off, that every lottery ticket has to be a winner. If you don”t win, then something nefarious is going on, and every loss is part of a massive conspiracy by Big Insurance, from which only Massive Government can save us.
so many things associated with this legislation have been at best clueless and counterproductive
Only people wholly disconnected from business at any level would have thought that that 1099 requirement was useful and would actually work.
Labeling this mess a “reform” is to abandon one’s mental faculties.
Welcome to the modern cargo cult, located in a magical place where labeling anything the gov’t does “reform” automatically makes it good and sure solution, no matter what the problem might be. The only way to increase that magic is to claim to be doing it “for the children” or some other pet group.
Carl Pham Says:
“Gregg, you might as well ask how often folks have their cars repossessed or homes foreclosed while current on their payments, or how many people pay Sears for a new washer and have Sears refuse to deliver it. Each and every one of these things is a tort, and entitles the victim to recover substantial damages, costs, et cetera.”
Well that US Gov link that Chris pointed us to is good enough. Just what I wanted.
I expect the writers of that page would tend to err on the anti-insurance company side. So when debating these things I can refer to that page which Pro-ACA people would be inclined to accept.
I think we all knew that it’s a tort. In addition, I would think that if rescission reached..ah..epidemic proportions, there would be a lot more hue and cry from entities other than 1/2 of the the US government.
For the record I think Obamacare/ACA is a grievous, obscene, monstrosity whose purpose had nothing to do with lowering costs, bettering health care, and most certainly was designed to put the insurance companies out of business and get us to a single payer, government run, system – why even Bernie Sanders said exactly that today.
The difficulty in trying to reach members of even the lightly Left is that their starting position is that the insurance companies are rapacious wolves who care only about screwing the insured. From there they jump to: rescission victims have little recourse – very few are lucky enough to stumble across an Alan Shore. Usually, you are told, they get some green lawyer who will fold like an old kite when faced with the awesome power of the insurance company legal department. You vil be krushed!
They do not believe the insurance companies are concerned about suits (other than Armani) leveled by the peons – mere flies to be brushed away. Even settling out of court is hardly worth noticing.
If one is to get through to them, one has to effectively combat these initial prejudices.
‘Course they have to be willing to listen.
Chris Gerrib wrote:
These factors may not win arguments on libertarian comment boards. We shall see if they win arguments come election time.
We’ve already seen that, Chris.
Here in Missouri we voted 70-30 directly against ObamaCare. Massachussetts voted in a Republican to Ted Kennedy’s seat specifically to be the 41st vote against ObamaCare. Virginia and New Jersey elected Republican governors to, in part, fight ObamaCare.
This past November a record number of Congressional seats changed parties from Democrat to Republican. 26 state legislative bodies also changed from Democrat to Republican to, in part, fight ObamaCare. 28 states are suing the federal government specifically to stop ObamaCare.
What more do We the People have to do to get it through your thick skulls that we don’t want ObamaCare?
Mike
How about some positive discussion?
Like for example:
I have read that one fault of the pre-ACA system is that many people’s insurance is obtained through their employer. Lots of conservatives say this was a basic mistake. For one thing it tends to hide the cost of insurance from the insured. The insured pays a small fraction of the total cost of the insurance. The pricing signals are disconnected, preventing the market from working. For another, I have read, the company would be able to give that money in raises and bonuses if they didn’t have to pay the insurance costs.
If we stipulate, just for the sake of discussion, that we want to get away from employer-provided health insurance, how do you engineer that? What do you do to alleviate the pretty sizeable slam on the employee’s wallet and still keep them insured? Do you worry about keeping them insured? Do you tell the employee, well get rid of the cell phone..set your priorities.
Is it practical to require the company to pay the presently employed, the money they now have to give the insurance companies in premiums, for some number of years?
It will take time for market forces to do their thing; for people to come up with new products, prices to adjust, for the company to start giving more raises, etc.
If we stipulate, just for the sake of discussion, that we want to get away from employer-provided health insurance, how do you engineer that?
Well you could have voted for John McCain in 2008, for one thing. Because he talked about exactly that problem and suggested some reasonable starting points, e.g. you remove the present tax deduction your employer can take for your health insurance premiums and give it to you, the individual.
The natural result is employers stop offering health care plans and you buy them yourself instead. The same amount of money changes hands between you and the insurance company, except that your employer no longer functions as a middle man, and the tax consequences for the government are unchanged. Plus your insurance is now portable — since you own it, it goes with you from job to job, and continues to function even if you go part time or start a business or have a 6-month gap after a child is born — and you get to pick the policy you want and need, e.g. men need not pay for a policy that covers costs of childbirth and women need not pay for prostrate cancer coverage. In short, it works like every other insurance product out there in the world.
If you are worried about people not being able to buy insurance because they don’t have enough earnings, you can make it one of these newfangled “refundable” tax credits, so if your income is low enough the government ends up paying for your insurance. But all the other advantages — choice, portability — remain. And there’s essentially no government overhead involved, since the IRS already copes with refundable tax credits. They already know your income, so they know if you’re eligible by running a computer program, and they can check for scams (you didn’t really buy the insurance) either by running the occasional audit or if you really insist requiring insurance companies to allow the government to verify policy numbers with some online app, the way Microsoft verifies product keys.
Oops, forgot this:
What do you do to alleviate the pretty sizeable slam on the employee’s wallet and still keep them insured?
The reasonable expectation is that almost every employer would simply take the money they presently pay for your health care premium and dump it into your salary. Why? Because, first, they have already allocated that money for employee compensation. An employer never looks at your take-home salary in computing your compensation — it’s the whole package, salary plus benefits plus retirement plus perks and whatever. That’s how much you cost.
Secondly, right now that expense is tax-deductible as a health care premium. The company pays it in before tax earnings. If you changed the law, it becomes taxable — it gets paid with after tax earnings, so the company has to have considerably more sales to afford to pay the same health care premiums. Naturally, the company will think this is a terrible idea and stop paying the health care pemiums. But then what to do with the extra cash? If they keep it, it’s taxable income. But if they simply give it to you as a raise, it becomes tax-deductable again, since wages are a tax-deductable business expense for the government.
The rational thing to do, since, as I said, they’ve already allocated it for employee compensation, is just to roll it over into salary. The net cost to the company is zero. (In fact, there’s a serious side-benefit, in that they get out of the whole benefits management game, which is ugly and sucks up plenty of HR time.) Plus they get to look like a great place to work — hey, we just gave our employees a monster raise! — without any real cost to the bottom line.
Carl makes a lot of sense, although I may have a little nit to pick: am I correct in thinking that when a company rolls their cost of insurance over to the employee as that monster raise that there may be some additional taxes due by both the employer and the employee in the form of increased FICA and Medicare withholding?
Again, I think the plan he describes could be a great way to start fixing all of this, even if my nit turns out to be true.
Gregg, while I can’t completely answer your questions, as to employer insurance, I see two moves that would help. First, eliminate any mandates about what an employer-based insurance has to cover. Second, make employer insurance a taxable benefit, just like wages.
On the supply side of health care, apparently building of new hospital facilities and expansion of existing facilities has been halted for a time. This needs to be restarted. Medical care competition needs to be encouraged.
I also believe some degree of unification of training programs for most medical professionals would be beneficial. For example, an RN’s work experience could partially count towards the residency requirement for physician and an RN could take medical school prerequisites as part of their continuing education requirement. Similarly, a medical school dropout shouldn’t have too much difficulty entering the RN training program. The idea in part is to encourage medical professions to move around in their careers (and in particular, to “upgrade” to a higher qualification). It might even be eventually that most doctors pass through an RN stage first.
Some reduction of the obstacles to accreditation should be considered. For example, as I understand it, the Veterans Administration has used cheaper foreign doctors for a considerable time (at least since the 80s). One of the reasons these doctors were cheaper was that they came from systems with lower requirements than US ones.
“Republicans really do want to allow insurers to take their money and deny them care…”
I thought they wanted people to die quickly.
“…we will win the argument.”
The point will be moot after the SC upholds Vinson.
“The Democrats are glad to have this debate.”
Which ones?
The problem with the 2008 McCain plan was this:
The tax benefit of the current system doesn’t go to the employer. They don’t care if they pay you $30,000 in cash with no benefits or $25,000 in cash plus $5,000 worth of health care. Either way, it’s compensation and a deductible expense.
The problem was that for the employee, employer provided health care didn’t count as income.
The simple solution was to say that employer provided health care was always compensation, and be thankful we let you get it tax free as long as you did.
The McCain solution was different. Nobody loses, pie for everyone. Employer provided health care becomes taxable compensation, but there will be a magical tax credit so nobody needs to pay more.
The magical tax credit was magical. If you questioned it you were a democrat or worse.
Carl Pham: seriously, start a blog. I’d read it and even leave occasional pithy comments.
Carl Pham: seriously, start a blog. I’d read it
He wouldn’t have to worry about Gerrib reading it. I’m not sure Gerrib actually reads Rand’s blog beyond posting TPM comments for certain subjects.
But pulling out the statistics and actually doing the math? That’s just a can of whup ass logic that kicks progressive talking points to the curb. If you really want to protect American citizens against predatory insurance companies; then how about starting by repealing a law that transfers medical policy from doctors and nurses and hands it over to insurance companies. After all, Obamacare’s primary reform is to force people to give more money to insurance companies. If you think that means they’ll always pay, then consider that Medicare denied patient medical claims at a rate of 3.82% in 2010. At about 35 million recipients, that’s over 1 million claims denied. Rescission is not the same as denial, but if you are denied; does the nuance really matter to you?
You’re like that anti-vaccine fellow, who would advance one wild hypothesis after another
Not to hijack the thread but this is a very tactic from those of the Chicago School of Vaccines (early and often). There is no substantial anti-vaccine movement; what there is is a vaccine safety movement. Even Jenny McCarthy and Andrew Wakefield (the Boris and Natasha of the “anti-vaccine” movement) only favor things like spreading out vaccinations, breaking up multiple antigen vaccines (MMR & DTaP) into single shots, removing some of the more recently added vaccines that are of questionable value (Chicken Pox, and Hep-B for example).
The deal in rational discussion is not that you get to advance any loony proposition you want and then wait for me to prove you wrong.
I’m not sure why it’s a loony proposition that vaccines can’t be ruled out as contributing to autism when of the 36 shots that children receive before the age of 5, only 2 (the MMR vaccine, given twice) have been tested for a connection to autism. When people like Bernedine Healy (former director of the NIH under Bush I), and Dr. Robert Sears (a nationally known pediatrician with 30 years clinical experience) (not a comprehensive list by any stretch) say the research hasn’t been done, it’s probably not an irrational position to take.
Carl Pham – First, your numbers are wrong. Employer-provided health coverage isn’t subject to recission. So, 60% to 70% of those 50 million policies don’t apply. Second, saying “it’s only X%” rather misses the point. It’s only X% of the population that gets murdered – so murder’s not a serious problem?
The problem with recission is that the insurance company is incentivized to cancel coverage. They get to keep the profits of premiums without the cost of paying claims. The article I linked to stated that, rather than CEOs being upset about recissions, they were happy. They got rid of non-profitable customers.
First, your numbers are wrong. Employer-provided health coverage isn’t subject to recission.
Yeah? I don’t believe you. I’m quite sure if my employer lied on his application to Blue Shield about the nature of the company, its employees, whatever they want to know, they would have the right to cancel the contract retroactively. As I said, fraud by one party annuls a contract by long tradition. I’ve never heard of a contract that can be enforced even if one party cheats. Have you?
Secondly, this doesn’t argue for your point. If the lack of rescission (assuming for the moment you are right) is a big problem for insurers, they’d avoid the employer-group market and favor the individual market. They don’t, of course. Which again suggests that your belief that insurers are highly motivated to keep and employ rescission to make extra cash is just so much FUD.
Once again, the right to cancel a contract when you find out the other party has come into it fraudulently is an ancient and reasonable right. If you want insurance companies, alone among all actors, to not have that right, you better make a very strong case that it’s being abused horribly. (That does not mean proof that it’s abused every now and then will work, any more than Tucson proved no one can be trusted with a gun, or Dred Scott proved that the Supreme Court is a fatally flawed institution.) So far, you haven’t done that.
The problem with recission is that the insurance company is incentivized to cancel coverage. They get to keep the profits of premiums without the cost of paying claims.
Chris, they get to keep the premiums without paying claims just by writing ordinary policies. That’s how they make money, dude. 80% (to pick a number out of a hat) of their policies never have huge claims, because the policyholders don’t get expensive diseases. Those premiums are gravy, used to subsidize the other 20%, pay shareholders, employee salaries, the rent on headquarters, et cetera. Don’t you know how insurance works?
So why would rescission be uniquely attractive, with all its nasty legal risks — a $100 million punitive damage award from a pissed-off jury is a pretty big risk to take — when they can make plenty of money by just writing more policies and playing by the rules? Why would a company pick a dangerous and possibly disastrous route to make money when they can just keep doing business in the usual way and make plenty? I have a decent job. I have no motivation to start a meth lab in my basement to make still more money faster.
rather than CEOs being upset about recissions, they were happy. They got rid of non-profitable customers.
Or maybe (from their point of view) they got rid of unscrupulous dishonest customers who would cost them a fortune and end up in some PR disaster. Surely you are not so naive that you don’t realize some customers are unscrupulous dishonest wretches any business would show the door. I am sure the CEOs are happy to have the right of rescission, but there is no chance I’d believe they are happy to have it happen. They would much rather have not written that contract in the first place, because they sure can’t be sued or slandered by cynical Senators and journalists for that.
Anyway, I’ve said above I don’t think it unreasonable to examine closely the mechanisms of rescission, to be sure the burden of proof is equitably distributed, and, as you say, the motivation provided both sides is in the right direction. But eliminating the right altogether is insane and absurdly unfair, just as much as if I told you you had to fulfill any contract you made no matter how badly the other party may have misled you in forming it.
Additionally, other people have pointed out that your notion (expressed elsewhere) that government would be a better agent with home to negotiate your healthcare contract is sheer lunacy from this point of view. At least, with private insurance, you can vote with your wallet if you don’t like how one company does business. You can encourage others to abandon them, too, and patronize companies that are honest. Who will compete with government to keep it honest, eh? And at least with companies you can appeal to the government (via the courts) to intervene and arbitrate if you think you’re being screwed. To whom will you appeal if the government screws you over? God? Or do you have some quaint cute belief that government bureaucrats are better people than insurance company bureaucrats, or that companies want to minimize costs so they can pay big salaries but government doesn’t think that way at all?
Don’t you know how insurance works?
Oh he understands perfectly well how insurance works. And he doesn’t like it AT ALL. It requires responsible citizens and rule of law, things that are anathema to him and his ilk. I’m guessing his next response will target your suggestion that his belief that government bureaucrats are better people than insurance company bureaucrats is “quaint and cute”. I don’t think he likes that at all either. It’s “progressive”. And “compassionate”.
RE: Educating Ezra.
As a friend of mine likes to say: “You can’t fix stupid.”
Why does this wet behind the ears know-nothing have the soap box he does?
ACA still allows recission in the event of fraud. It only prevents recission for unintentionally omitting a material fact about a preexisting condition.
Carl Pham – employer-based insurance used to do recissions as well. Then in 1996, Congress passed HIPPA, which fixed that.
I understand exactly how insurance works. Yes, the company is betting that 80% of the customers don’t make a claim, which subsidizes the other 20%. But if you bet 80 and 82 comes up, the 2 is pure profit. Therefore, the incentive is to deny claims.
Ignoring, for a moment, the fact that I am not advocating for a governmetn takeover of health care, I don’t assume that government employees are better or worse than anybody else. But in this case, the government employee doesn’t care if you cost the goverment money. The private employee does – because they are at risk of not getting bonuses. It’s a simple matter of how people are incentivized.
Regarding appeals, it’s the same appeals process as in Medicare now. (Yes, Virginia, there is appeals process.) There’s also the same process for any other government program – pressure your elected officials.
You also assume that CEOs are thinking long-term. They are not. Lawsuits take years to conclude, and are full of opportunities to appeal. Premium payouts are immediate, and impact this quarter’s earnings. Again, a matter of incentives.
Here’s the bottom line – I have provided and keep providing facts and data. You keep arguing theories based on how you think things should work. Facts trump theories, whether you care to admit that or not.
“And Obama kept his promise made in 2008 to pass health care reform.”
Which promise is this? The one where he said he would not back an individual mandate while he was debating Hillary? Or, when he promised hell or high water, he would pass a health reform act in his 1st term?
I understand exactly how insurance works. Yes, the company is betting that 80% of the customers don’t make a claim, which subsidizes the other 20%. But if you bet 80 and 82 comes up, the 2 is pure profit.
How do you square that with the fact that most of the large health insurance providers are non-profit?
Then in 1996, Congress passed HIPPA, which fixed that.
BWHAHAHAHAA! I’m sorry, that’s just funny. No Gerrib, HIPPA doesn’t mean you can commit fraud. You keep using the word rescission, but I don’t think you fully understand what it means. If a person fraudulently presents themself in a contract, then such act can be reason for the contract to be rescinded. That’s perfectly legal, even under HIPPA, even under PPACA.
But in this case, the government employee doesn’t care if you cost the goverment money.
You never met a government employee bucking for a promotion.
How do you square that with the fact that most of the large health insurance providers are non-profit?
That’s going to leave a mark.
Chris, maybe I don’t understand what you mean by “rescission.” So far as I understood you, you mean a case where the insurer issues a policy and sets a premium based on facts given by the applicant and then, later, “unwinds” the contract — therefore declining to pay benefits under it — because it claims the applicant concealed or misrepresented those facts. Is that it?
If so, I’m failing to see how HIPAA says anything about it. As far as I can see, if the employer misrepresents stuff to the insurer, the insurer can unwind that contract, too. And I expect if an amployee lies about his individual eligbility — for example, claims he just married someone to get her on his insurance, when it turns out she’s his adult sister or some random friend — then the insurance company has the right to unwind that contract, too. So what does HIPAA have to do with rescission?
By the way, as I understand rescission generally both ends of the contract are cancelled. If the insurer doesn’t have to pay the customer’s medical claims, it is also equally true the customer is entitled to a refund of all the premiums he ever paid. So I’m not really seeing how rescission ends up being profitable. How does the company make money on this?
But in this case, the government employee doesn’t care if you cost the goverment money. The private employee does – because they are at risk of not getting bonuses.
In the first place, since in both cases we’re talking about what both entities would call fraud prevention, what makes you think so? I can easily believe IRS auditors are rewarded with bonuses, raises and promotiosn if they ferret out more tax fraud cases. I can easily believe inspectors for Medicare fraud are incentivized to uncover more suspected Medicare fraud. How is that different from a private company’s audit division being rewarded for finding people who (the company says) lied on their insurance application?
In the second place, even if it were true that a government employee is not motivated against your interests, why would he be motivated for your interests? A private insurer is motivated to keep your business, because you can take it elsewhere. It is also motivated to avoid bad PR, which costs them business with other people, and lawsuits, which can cost it big money. What is the similar motivation on the part of a government employee? You can’t take your business elsewhere, and neither can anyone else, so bad PR means nothing, and of course you can’t sue the government unless the government allows you to, tee hee. So even if the government employee isn’t motivated to screw you, why should he be motivated to help you? Why not just ignore you? Why not just apply a rule carelessly and robotically, and if you complain suggest you write your Congressman?
You also assume that CEOs are thinking long-term. They are not
Then why do the CEOs of big pharma companies fund R&D departments that take 20 years and $800 million to come up with new products? Why do paper companies plant trees that take 20 years to come to maturity? Why did Toyota sink $billions and 10 long years into designing a hybrid car? Why did Bigelow design inflatable orbital habs before there was any commercial launch capability? And on and on. The observable facts say this is a stupid statement.
I have provided and keep providing facts and data.
Perhaps so, Chris. But so far, at least, the facts and data you have provided don’t support your conclusions.
I am not advocating for a government takeover of health care.
Strange then that you are advocating a position which would put private insurance out of business.
What no one is talking about that needs doing, to bring down costs and to make health care cheaper for everyone, we need a huge reform of Tort Law.
My Primary Care Physician is also a personal friend. His father was a doctor. I’m appalled at how much he pays for malpractice insurance as a % of his income vs what his father paid.
But what truly killed me was how many accusations of malpractice he and the other two doctors in that practice get in a year. I know these people, they are NOT bad doctors. But they still get sued and the insurance companies roll over way too often. (or so it seems to me)
Worse still, IF the money from these suits is supposed to be for damages, pain, suffering, future medical care, then why does half the money awarded wind up in the hands of lawyers, expert witnesses, their support staffs and such? Sounds like a thriving business set up to me.
No matter who wins or loses, the lawyers all make money.
Whenever I think health care, insurance and lawyers, I think of John Edwards. He got rich in court cases, pushing junk science and tears. If memory serves, he hit NC malpractice insurers for about a BILLION dollars all told. Then later, his ‘science’ was totally disproved. But the insurers can’t get the money back.
He’s just one of thousand of lawyers who do these things.
How much of MY office visit fee goes to the malpractice insurers to regain losses? And as someone who had a misdiagnosis that went for 4 years, that left me disabled sooner than need be, I have an axe to grind on this topic. (my disability was going to happen, but I lost a number of productive years)
But I wasn’t raised, nor do I think that suing some doctors would solve my problems. Tons of money would be nice, no doubt, but it doesn’t solve problems. Too bad more people aren’t as realistic about being dealt a bad hand in life.
Here you go, Der. An estimate from the Harvard School of Public Health is that malpractice costs $55 billion a year, of which the majority ($45 billion) is in “defensive” medicine, e.g. ordering useless tests to avoid being sued for not doing everything. It’s about 3% of total spending on health care.
Personally, I think that’s a very conservative estimate of how much defensive medicine costs. I know many physicians and nurses very well, and the degree of paranoia is astonishing. For example, if you have an emergency situation in an ER — arrest, stroke, trauma — there will be one trained nurse in that team whose only job is to write down exactly what everyone is doing, and when, so that the hospital can prove all the standard stuff was done if something goes wrong. That means your bill from the hospital includes $40/hour for an RN to be a fancy stenographer. The doc has to review this and add his own notes, too, so tack on some of his time at $200/hour, too.
Now theoretically a lawyer is subject to the exact same principles of malpractice. If your divorce lawyer screws up and costs you $100,000, in principle he’s on the hook for legal malpractice. If your children are involved, there could theoretically be massive pain and suffering damages. But do you ever see a lawyer feverishly taking notes in Court, so, in case he’s sued, he can prove he did everything the “standard of care” requires? Ha ha. That tells you all you need to know about how the system is rigged — it’s rigged to direct a steady stream of money from you to lawyers, with a brief stopover in the wallets of hospitals and physicians.