Aside

Quick insurance thoughts (mandates and exemptions)

“The core problem is that inserting employers between health insurers and individuals created an unnecessary tension between the provision of certain goods and the consciences and preferences of employers.” More in response to 13 Feb’s The Daily Show. Bottom line: de-coupling insurance from employment would likely be a positive step.

Why the individual mandate was deemed important and a consideration of whether it is the right tool for the job. But if it isn’t, then what is?

The link between the mandate and interstate commerce is the claim…that the individual mandate will discourage people from “free riding”… But what if the individual mandate actually doesn’t accomplish that goal? That is, suppose the individual mandate, as written into the law passed by Congress, doesn’t actually apply to most of the people who obtain health care without paying for it (e.g. accessing the emergency room)?… Uninsured patients may be broadly divided into two groups – (1) those with (a) low income or (b) preexisting conditions, who can’t afford insurance; and (2) those who are generally healthy, have moderate or high incomes, and choose not to obtain insurance. The individual mandate will impact mainly the latter group – a group with very low rates of uncompensated care, and very low consumption of health care at all… Of the (1a) low-income uninsured, most will be either covered by the health reform law’s vast expansion of Medicaid eligibility… Individuals with (1b) expensive pre-existing conditions will be able to obtain coverage at premiums substantially below their health care expenditures, and thus have a powerful incentive to obtain insurance even without that mandate. This leaves those with (2) income high enough that their health insurance premium is less than 8% of their income, too high to qualify for Medicaid, and healthy enough that they are likely to find health insurance a bad deal financially.”

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